Exam 29: Macroeconomics in an Open Economy

Figure 29-3 -Refer to Figure 29-3.Consider the market for U.S.dollars against the Japanese yen shown above.An event which could have caused the changes shown in the graph would be

Expansionary monetary policy lowers interest rates and forces a real appreciation of the dollar in international currency markets.

An increase in capital inflows will

The United States is called a debtor nation because

Since 1999,the capital account has recorded

Why is the balance of payments always zero?

Figure 29-1 -Refer to Figure 29-1.The French fall in love with California wines and triple their purchases of this beverage.Assuming all else remains constant,this would be represented as a movement from

The saving and investment equation holds only when the federal budget is balanced.

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.

An increase in perceived risk of foreign assets increased both the financial account surplus and current account deficit in the United States during the late 1990s.

Net exports equals the balance of trade surplus.

Suppose the majority of the shares of British Airways stock were sold to a firm in the United States.Assuming all else remains constant,this will

If the current account is in surplus and the capital account is zero,then

How will an interest rate increase in the United States affect equilibrium in the market for dollars against foreign currencies? (Assume the exchange rate is stated in terms of foreign currency per U.S.dollar. )

The United States has a closed economy.

Suppose the Fed pursues a policy that 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 an open economy? This policy

You're traveling in Ireland and are thinking about buying a new digital camera.You've decided you'd be willing to pay $125 for a new camera,but cameras in Ireland are all priced in euros.If the camera you're looking at costs 115 euros,under which of the following exchange rates would you be willing to purchase the camera? (Assume no taxes or duties are associated with the purchase. )

Assuming no change in the nominal exchange rate,how will a decrease in the price level in the United States relative to France affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country. )

Public saving equals taxes minus government spending minus transfer payments.

Figure 29-2 -Refer to Figure 29-2.Consider the market for U.S.Dollars against the British pound shown in the graph above.From this graph we can conclude that the dollar price of a British pound has ________ to ________ dollars per pound