Exam 29: Macroeconomics in an Open Economy

Explain why economies with financial account surpluses usually have current account deficits.

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

Based on the following information,what is the balance on the current account? Exports of goods and services = $5 billion Imports of goods and services= $3 billion Net income on investments = -$2 billion Net transfers = -$2 billion Increase in foreign holdings of assets in the United States = $4 billion Increase in U.S.holdings of assets in foreign countries = -$1 billion

What impact might an increase in the budget deficit have on interest rates and exchange rates?

An open economy is an economy that has

Suppose the U.S.Congress is successful in enacting tariffs large enough to eliminate the current account deficit.What would happen to the level of domestic investment?

If the Fed is using policy to combat inflation,what is likely to happen in the foreign exchange market and to the foreign exchange value of the dollar?

Explain why the budget deficit and the trade deficit are sometimes referred to as the "twin deficits."

When Americans increase their demand for Japanese goods,

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

How does an increase in the budget deficit affect the demand for dollars and the supply of dollars on the foreign exchange market?

If the exchange rate changes from $1.45 = 1 euro to $1.37 = 1 euro,then

Is fiscal policy more or less effective in manipulating aggregate demand in an open economy?

Why is the balance of payments always zero?

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

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

If the dollar appreciates,how will aggregate demand in the United States be affected?

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

The current account does not include which of the following?

Which of the following would result in a trade surplus for the United States?