Exam 29: Macroeconomics in an Open Economy

What happens to national saving when the government runs a budget surplus? What happens to national saving when the government runs a budget deficit?

Assume the United States is the "domestic" country and Switzerland is the "foreign" country. Which of the following might decrease the real exchange rate between the United States and Switzerland?

Which of the following is an example of foreign direct investment in China?

The recession of 2007-2009 decreased the demand for imports in Japan, which caused the ________ curve for the yen to ________, increasing the exchange rate and the value of the yen.

When exchange rates are not determined in the market but are instead set by a country's central bank, we say that the country's exchange rate is

How would an increase in the U.S. federal budget deficit affect the exchange rate in the market for dollars?

Japan has a fairly high saving rate and the level of saving in Japan is above domestic investment. Use the saving and investment equation to explain what Japan is doing with this excess of saving above domestic investment.

Figure 29-1 -Refer to Figure 29-1. Suppose that the U.S. government deficit decreases, causing interest rates in the United States to fall relative to those in the European Union. Assuming all else remains constant, how would this be represented?

When exchange rates are ________, we say that the country's exchange rate is fixed.

Contractionary monetary policy and expansionary fiscal policy both reduce net exports in an open economy.

If we take into account transfer payments (TR) when we derive the saving and investment relationship, the saving and investment equation becomes

If the balance of the current account in the United States is -$900 billion, which of the following is most likely to be true?

Based on the following information, calculate public saving, net foreign investment, and national income. Private saving = $83 billion Exports = $125 billion Imports = $130 billion Consumption = $200 billion Private investment = $56 billion Government purchases = $38 billion

Figure 29-1 -Refer to Figure 29-1. Suppose that the U.S. government deficit causes interest rates in the United States to rise relative to those in the European Union. Assuming all else remains constant, how would this be represented?

A decrease in U.S. federal government budget deficits that lowers U.S. interest rates relative to the rest of the world should

When a foreign investor buys a bond issued in the United States,

Monetary policy has a greater impact in an open economy than it does in a closed economy.

Suppose that domestic investment in Canada is 10.7% of GDP, and Canadian national savings is 13% of GDP. What is Canada's foreign investment as a percentage of GDP?

Suppose the majority of the shares of British Airways stock were sold to a firm in the United States. Assuming all else remains constant, this will

If the nominal exchange rate between the American dollar and the Canadian dollar is 0.89 Canadian dollars per American dollar, how many American dollars are required to buy a product that costs 2.5 Canadian dollars?