Exam 13: Open-Economy Macroeconomics: Basic Concepts

It is possible for a country to have domestic investment that exceeds national saving.

Bob traps lobsters in Maine and sells them to a restaurant in Mexico. Other things the same, these sales

By itself, if a U.S. firm builds a new factory overseas, U.S. net capital outflow rises.

Mark, a U.S. citizen, buys stock in a British Shipping company. This purchase is an example of

Which of the following is always correct?

Other things the same, an increase in foreign prices raises the real exchange rate.

The nominal exchange rate is 90 Pakistani rupees per dollar. The price of a shirt in Pakistan is 1800 rupees. The same shirt sells for $25 in the U.S. A. What is the real exchange rate? Show your work. B. Can arbitragers make a profit? C. If your answer to C is yes, where would they buy and where would they sell?

While vacationing in Agra, India, the price of one night's stay at your hotel room rises from 6600 rupees to 7200 rupees. If the exchange rate was previously 55 rupees per dollar, what would the exchange rate need to be now in order for the number of dollars you pay for your room to remain the same? Does this imply the rupee depreciated or appreciated against the dollar?

If the purchasing power of the dollar is always the same at home and abroad, then the nominal exchange rate defined as units of foreign currency per dollar decreases if the U.S. price level rises more than the price level in foreign countries.

Other things the same, which of the following could explain a rise in Sweden's net capital outflow?

According to purchasing-power parity, if two countries have the same price level because they have the same prices for all goods and services, then which of the following would equal 1?

The nominal exchange rate is the

How do the nominal exchange rate and the real exchange rate differ?

Suppose that the nominal exchange rate is .80 euro per dollar, that the price of a basket of goods in the U.S. is $500 and the price of a basket of goods in Germany is 400 Euro. Suppose that these values change to .90 euro per dollar, $600, and 600 euro. Then the real exchange rate would

If a country changes its corporate tax laws so that domestic businesses build and manage more business in other countries, then the net capital outflow of that country

If the American company Stryker builds and operates a new factory in France,

The dollar is said to depreciate against the euro if

Firms in Saudi Arabia sell oil to the U.S. Other things the same, these oil sales

A German mutual fund sells euros to a U.S. bank for $20,000. The mutual fund then uses these dollars to purchase a bond issued by United Express, a U.S. delivery company. As a result of these two transactions, what happened to U.S. net capital outflow?

The ability to profit by purchasing wheat in the U.S. and selling it in China implies that the