Exam 29: Macroeconomics in an Open Economy

In the United States, domestic investment is greater than national saving.

Between 2007 and 2011 the value of the U.S. dollar fell by more than 60 percent against the Japanese yen. This fall in the price of the dollar against the yen was ________ for Japanese companies that exported to the United States and ________ for U.S. companies that exported to Japan.

Figure 29-1 -Refer to Figure 29-1. The appreciation of the dollar is represented as a movement from

The decline in the value of the yen after 2012 occurred as a result of the Japanese central bank, the Bank of Japan, following an expansionary monetary policy. Investors expected that the result would be lower nominal Japanese interest rates and a higher inflation rate. In response, investors ________, causing the value of the yen to decline against the dollar.

If the United States has a current account deficit and the capital account is zero, which of the following must be true?

According to the saving and investment equation, if net foreign investment falls by $35 million,

Ceteris paribus, a rise in interest rates in the United States will cause the yen price of the dollar in international exchange markets to ________. I.e., the dollar ________ in value against the yen.

Assuming the United States is the "domestic" country, if the real exchange rate between the United States and Russia decreases from 28 to 23,

Expansionary fiscal policy crowds out both domestic investment and net exports.

The price of ________ in terms of ________ is referred to as the real exchange rate.

Which of the following would increase net exports in the United States?

Currency traders expect the value of the dollar to fall. What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

If currency speculators decide that the value of the dollar should rise in the future relative to the yen, this will increase the demand for dollars and decrease the supply of dollars.

If net exports are positive for China, it must be true that China is experiencing net outflows of capital.

Ceteris paribus, a real depreciation of the dollar will decrease net exports in the United States.

Which of the following transactions would be included in Germany's current account?

Figure 29-1 -Refer to Figure 29-1. Currency speculators believe that the value of the euro will increase relative to the dollar. Assuming all else remains constant, how would this be represented?

Based on the following information, what is the balance on the current account? Exports of goods and services = $12 billion Imports of goods and services = $14 billion Net income on investments = -$4 billion Net transfers = -$1 billion Increase in foreign holdings of assets in the United States = $6 billion Increase in U.S. holdings of assets in foreign countries = -$3 billion

Figure 29-2 -Refer to Figure 29-2. Consider the market for U.S. Dollars against the British pound shown in the graph above. From this graph we can conclude that the dollar price of a British pound has ________ to ________ dollars per pound

In 2013, global profits for McDonald's ________ when measured in local currencies than they did when measured in dollars. This occurred because the value of the U.S. dollar increased relative to most other currencies.