Exam 29: Macroeconomics in an Open Economy

Table 29-1 Increase in foreign holdings of assets in the United States \ 2,560 Exports of goods 925 Imports of services -456 Statistical discrepancy ? Net trarsfers -77 Exports of services 623 Imports of goods -1,211 Income payments on investments -444 Increase in U.s. holdings of assets in foreipr countries -2,478 Income received on irvestrnents 502 -Refer to Table 29-1.Use the information in the table to prepare a balance of payments account and find the value of the statistical discrepancy.Assume that the balance on the capital account is zero.

How does a decrease in value of a country's currency relative to other currencies affect its balance of trade?

If the nominal exchange rate between the American dollar and the Canadian dollar is 0.89 Canadian dollars per American dollar,how many American dollars are required to buy a product that costs 2.5 Canadian dollars?

The current account does not include which of the following?

Explain the relationship between net exports and net foreign investment.

Ceteris paribus,a rise in interest rates in the United States will cause the yen price of the dollar in international exchange markets to ________.I.e. ,the dollar ________ in value against the yen.

When the market value of the dollar rises relative to other currencies around the world,we say that

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

A country which incurs a current account deficit will most likely have a financial or capital account surplus.

Persistent current account deficits in the United States

When the United States sends money to Indonesia to help tsunami survivors,in what account is this transaction recorded?

Suppose that Federal Reserve policy leads to higher interest rates in the United States.How will this policy affect real GDP in the short run if the United States is a closed economy,and how will it affect real GDP in the short run if the United States is an open economy?

Monetary policy has a greater impact in an open economy than it does in a closed economy.

Although based in the United States,IBM is a global company with more than ________ of its revenue earned outside of the United States.

When Americans decrease their demand for Japanese goods

Which of the following transactions would be included in Germany's current account?

How will contractionary monetary policy in Japan affect the demand for the yen and the supply of the yen in the foreign exchange market?

How is the impact of contractionary monetary policy different in an open economy than in a closed economy?

If the United States has a net export deficit,which of the following must be true? (Assume that the capital account is zero and net transfers are zero. )

If the dollar depreciates against the Indian rupee