Exam 29: Macroeconomics in an Open Economy

If net foreign investment in the United States is positive, how must national saving and domestic investment be related? (Assume that the capital account is zero and net transfers are zero.)

Suppose the Fed purchases Treasury Securities. Interest rates in the United States will ________ and the U.S. dollar will ________ against foreign currencies.

Public saving equals taxes minus government spending minus transfer payments.

Monetary policy has a ________ effect on aggregate demand in a(n) ________ economy, and fiscal policy has a ________ effect on aggregate demand in a(n) ________ economy.

Which of the following will shift the demand for the euro to the right?

The balance of trade is defined as

How does contractionary monetary policy affect net exports in the short run?

If American demand for purchases of Mexican goods has increased, how would you expect the equilibrium exchange rate in the market for dollars to respond? Support your answer graphically.

If the United States is a "net borrower" from abroad,

The balance of trade includes trade in

Explain and show graphically how an increase in incomes in the United States will affect equilibrium in the foreign exchange market?

What is the difference between net exports and the current account balance?

Assuming no change in the nominal exchange rate, how will a decrease in the price level in the United States relative to France affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country.)

How does expansionary monetary policy affect net exports?

An expansionary monetary policy in the United States should

Based on the following information, what is the balance on the financial 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 = $5 billion Increase in U.S. holdings of assets in foreign countries = -$3 billion

If there is currently a surplus of dollars, which of the following would you expect to see in the foreign exchange market?

How is the impact of contractionary monetary policy different in an open economy than in a closed economy?

The United States has a trade ________ with all its major trading partners and a trade ________ with every region of the world except for Latin America.

If the current account is in surplus and the capital account is zero, then