Exam 29: Macroeconomics in an Open Economy

Contractionary monetary policy should increase foreign financial investment in the United States.

The United States usually exports ________ goods than it imports and exports ________ services than it imports.

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

Holding all else constant,a rise in interest rates in the United States will cause the dollar to appreciate in international exchange markets.

If currency speculators decide that the value of the dollar should rise in the future relative to the yen,this will increase the demand for dollars and decrease the supply of dollars.

The price of domestic goods in terms of foreign goods is referred to as

How does expansionary monetary policy affect net exports?

If net exports are positive

In 2014,global revenue for IBM was $2 billion lower when measured in dollars than when measured in local currencies.The reason for this discrepancy is the value of the

If the balance on the current account in the United States is $750 billion,which of the following is most likely to be true?

Which of the following equations is true in an open economy?

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

The level of saving in the United States has historically been low relative to the level of domestic investment.Based on this information,we would expect that

The late Hugo Chavez,Venezuela's former president,proposed that the independence of the Venezuelan central bank be eliminated.Given the research on the relationship between central bank independence and inflation,we should expect this event to cause inflation to ________ and the real exchange rate to ________ between the two counties.(Assume the nominal exchange does not change,and that the United States is the domestic country).

Following a tax cut by government,domestic investment will ________ and net exports will ________.

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.

Ceteris paribus,a real depreciation of the dollar will decrease net exports in the United States.

Article Summary In an effort to decrease an outflow of capital which has threatened to extend the country's economic slowdown,China's central bank sold $94 billion U.S.dollars in an attempt to support its currency,the yuan.The move followed the largest devaluation of the yuan in more than 20 years.According to analyst Li Miaoxian,"If the central bank continues its intervention,China's foreign-exchange reserves will continue to shrink -- the heavier the intervention,the deeper the fall.It's "inevitable" the nation will see continuous capital outflows and yuan depreciation pressure in the coming months.Over the past decade,the Chinese central bank had purchased dollars in an effort to stem the appreciation of the yuan during a period of a growing trade surplus.Now facing an increasing sell-off of the yuan,Bloomberg economists note that "The fear is that today's data will reinforce the market view that the only way for the yuan to go is down,and further accelerate capital outflows." -Refer to the Article Summary.All else equal,a depreciation of the Chinese yuan relative to a currency such as the U.S.dollar should ________ the current account balance in China and therefore ________ the financial account balance in China.

Which of the following would cause the dollar to depreciate?

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