Exam 13: Exchange Rates,Business Cycles,and Macroeconomic Policy in the Open Economy

In an open economy,an increase in foreign output would cause the IS curve to shift and a decrease in the foreign real interest rate would cause the IS curve to shift .

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Question 1

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Describe how the euro was created.What are the benefits of the monetary union? What are the costs?

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Question 2

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The European countries unified their currencies to reduce the costs of trading goods and assets.This is beneficial as it reduces transactions costs and because the European economy would rival that of the United States in scope and wealth.The potential costs are that there may be political conflict if countries disagree about monetary policy,or if inflation isn't as stable or low as some countries desire.

A rise in the real exchange rate is called

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Question 3

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If the real exchange rate rises 4%,domestic inflation is 2%,and foreign inflation is 0%,what is the percent change in the nominal exchange rate?

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Question 4

Three-wheel cars made in North Edsel are sold for 5000 pounds.Four-wheel cars made in South Edsel are sold for 10,000 marks.The real exchange rate between North and South Edsel is four three-wheel cars for three four-wheel cars.The nominal exchange rate between the two countries is

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Question 5

The Maastricht treaty was the first step toward

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Question 6

Suppose purchasing power parity holds.If in 1997 the price level in the United States is 100,the price level in Japan is 10,000,and the nominal exchange rate is 100 yen per dollar,while in 1998 the price level in Japan rises to 10,500 and the nominal exchange rate rises to 105,then the price level in the United States in 1998 must be

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Question 7

To encourage more investment,Mexico has lowered its tax rates to reduce the user cost of capital.Argentina is unable to pay back its foreign debts,causing its expected future marginal product of capital to fall.Mexico's real exchange rate will and its net exports will .

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Question 8

Under a flexible-exchange-rate system,an increase in the demand for Japanese yen would cause the U.S.dollar/Japanese yen exchange rate to

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Question 9

The rapid depreciation in the dollar from 1985 to 1987 caused net exports during this period

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Question 10

If a country that fixes its exchange rate has an undervalued exchange rate,then it will reserves,unless it its money supply to the appropriate level.

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Question 11

Which of the following changes would cause American net exports to increase?

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Question 12

When the nominal exchange rate falls,

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Question 13

If the nominal exchange rate rises 5%,domestic inflation is 2%,and foreign inflation is 3%,what is the percent change in the real exchange rate?

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Question 14

For a given real exchange rate,a nominal appreciation of the domestic currency will result from

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Question 15

Describe the effects of contractionary fiscal policy by the domestic government on output,the real interest rate,and net exports in both the domestic and foreign country,using a Keynesian model.

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Question 16

Three-wheel cars made in North Edsel are sold for 5000 pounds.Four-wheel cars made in South Edsel are sold for 10,000 marks.The nominal exchange rate between the two countries is three marks per pound.The real exchange rate between the two countries is

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Question 17

The Japanese real interest rate declines relative to the German real interest rate.German net exports and the German exchange rate .

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Question 18

In a flexible-exchange-rate system,the value of a currency is determined by

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Question 19

Purchasing power parity does not hold in the short to medium run because

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Question 20

Showing 1 - 20 of 96

In an open economy,an increase in foreign output would cause the IS curve to shift and a decrease in the foreign real interest rate would cause the IS curve to shift .

Describe how the euro was created.What are the benefits of the monetary union? What are the costs?

A rise in the real exchange rate is called

If the real exchange rate rises 4%,domestic inflation is 2%,and foreign inflation is 0%,what is the percent change in the nominal exchange rate?

Three-wheel cars made in North Edsel are sold for 5000 pounds.Four-wheel cars made in South Edsel are sold for 10,000 marks.The real exchange rate between North and South Edsel is four three-wheel cars for three four-wheel cars.The nominal exchange rate between the two countries is

The Maastricht treaty was the first step toward

To encourage more investment,Mexico has lowered its tax rates to reduce the user cost of capital.Argentina is unable to pay back its foreign debts,causing its expected future marginal product of capital to fall.Mexico's real exchange rate will and its net exports will .

Under a flexible-exchange-rate system,an increase in the demand for Japanese yen would cause the U.S.dollar/Japanese yen exchange rate to

The rapid depreciation in the dollar from 1985 to 1987 caused net exports during this period

If a country that fixes its exchange rate has an undervalued exchange rate,then it will reserves,unless it its money supply to the appropriate level.

Which of the following changes would cause American net exports to increase?

When the nominal exchange rate falls,

If the nominal exchange rate rises 5%,domestic inflation is 2%,and foreign inflation is 3%,what is the percent change in the real exchange rate?

For a given real exchange rate,a nominal appreciation of the domestic currency will result from

Describe the effects of contractionary fiscal policy by the domestic government on output,the real interest rate,and net exports in both the domestic and foreign country,using a Keynesian model.

Three-wheel cars made in North Edsel are sold for 5000 pounds.Four-wheel cars made in South Edsel are sold for 10,000 marks.The nominal exchange rate between the two countries is three marks per pound.The real exchange rate between the two countries is

The Japanese real interest rate declines relative to the German real interest rate.German net exports and the German exchange rate .

In a flexible-exchange-rate system,the value of a currency is determined by

Purchasing power parity does not hold in the short to medium run because

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, Output, and Employment

Consumption, Saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, Money, and Prices

Business Cycles

The IS-LM/AD-AS Model

Classical Business Cycle Analysis

Keynesianism: The Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

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Exam 13: Exchange Rates,Business Cycles,and Macroeconomic Policy in the Open Economy

In an open economy,an increase in foreign output would cause the IS curve to shift ________ and a decrease in the foreign real interest rate would cause the IS curve to shift ________.

Describe how the euro was created.What are the benefits of the monetary union? What are the costs?

A rise in the real exchange rate is called

If the real exchange rate rises 4%,domestic inflation is 2%,and foreign inflation is 0%,what is the percent change in the nominal exchange rate?

Three-wheel cars made in North Edsel are sold for 5000 pounds.Four-wheel cars made in South Edsel are sold for 10,000 marks.The real exchange rate between North and South Edsel is four three-wheel cars for three four-wheel cars.The nominal exchange rate between the two countries is

The Maastricht treaty was the first step toward

To encourage more investment,Mexico has lowered its tax rates to reduce the user cost of capital.Argentina is unable to pay back its foreign debts,causing its expected future marginal product of capital to fall.Mexico's real exchange rate will ________ and its net exports will ________.

Under a flexible-exchange-rate system,an increase in the demand for Japanese yen would cause the U.S.dollar/Japanese yen exchange rate to

The rapid depreciation in the dollar from 1985 to 1987 caused net exports during this period

If a country that fixes its exchange rate has an undervalued exchange rate,then it will ________ reserves,unless it ________ its money supply to the appropriate level.

Which of the following changes would cause American net exports to increase?

When the nominal exchange rate falls,

If the nominal exchange rate rises 5%,domestic inflation is 2%,and foreign inflation is 3%,what is the percent change in the real exchange rate?

For a given real exchange rate,a nominal appreciation of the domestic currency will result from

Describe the effects of contractionary fiscal policy by the domestic government on output,the real interest rate,and net exports in both the domestic and foreign country,using a Keynesian model.

Three-wheel cars made in North Edsel are sold for 5000 pounds.Four-wheel cars made in South Edsel are sold for 10,000 marks.The nominal exchange rate between the two countries is three marks per pound.The real exchange rate between the two countries is

The Japanese real interest rate declines relative to the German real interest rate.German net exports ________ and the German exchange rate ________.

In a flexible-exchange-rate system,the value of a currency is determined by

Purchasing power parity does not hold in the short to medium run because

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, Output, and Employment

Consumption, Saving, and Investment

Saving and Investment in the Open Economy

Long-Run Economic Growth

The Asset Market, Money, and Prices

Business Cycles

The IS-LM/AD-AS Model

Classical Business Cycle Analysis

Keynesianism: The Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

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In an open economy,an increase in foreign output would cause the IS curve to shift and a decrease in the foreign real interest rate would cause the IS curve to shift .

To encourage more investment,Mexico has lowered its tax rates to reduce the user cost of capital.Argentina is unable to pay back its foreign debts,causing its expected future marginal product of capital to fall.Mexico's real exchange rate will and its net exports will .

If a country that fixes its exchange rate has an undervalued exchange rate,then it will reserves,unless it its money supply to the appropriate level.

The Japanese real interest rate declines relative to the German real interest rate.German net exports and the German exchange rate .