Exam 29: Macroeconomics in an Open Economy

Currency traders expect the value of the dollar to rise.What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?

If the government finances an increase in government purchases with an increase in taxes,which of the following would you expect to see?

If the price level in the United States is 110,the price level is 135 in Mexico,and the nominal exchange rate is 12.5 pesos per dollar,what is the real exchange rate from the U.S.perspective?

How does a decrease in the federal budget deficit affect the demand for dollars and the supply of dollars on the foreign exchange market?

An increase in capital inflows will

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

A rise in the dollar price of the Chinese yuan signals an appreciation of the yuan and a depreciation of the dollar.

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

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

In recent decades the United States has incurred overall balance of payments deficits.

Table 29-3 Country Units of Foreign Currency per U.S. Dollar U.S. Dollars per Unit of Foreign Currency Danish krone 5.00 EU euro 0.70 -Refer to Table 29-3.Given the following exchange rates in the above table,what are the exchange rates stated as U.S.dollars per Danish krone and U.S.dollars per EU euro respectively?

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

In an open economy,the current account balance equals ________.(Assume that the capital account is zero and net transfers are zero. )

A real appreciation of the dollar is caused by either a nominal appreciation of the dollar,a rise in the foreign price level,or a fall in the U.S.price level.

In late 2014 and 2015 the value of the U.S.dollar increased relative to the currencies of most of its major trading partners.This rise in the price of the dollar against the other currencies was ________ for companies that exported to the United States and ________ for U.S.companies that exported to other countries.

Suppose that domestic investment in Japan is 20.2% of GDP,and Japanese national savings is 24% of GDP.What is Japan's foreign investment as a percentage of GDP?

When net capital flows are positive

Which of the following would you expect to decrease both interest rates and exchange rates? (Assume exchange rates are stated in terms of foreign currency per domestic currency. )