Exam 29: Macroeconomics in an Open Economy

You're traveling in Japan and are thinking about buying a new kimono.You've decided you'd be willing to pay $175 for a new kimono,but kimonos in Japan are all priced in yen.If the exchange rate is 89 yen per dollar,what is the highest price in yen you'd be willing to pay for a kimono? (Assume no taxes or duties are associated with the purchase. )

Which of the following would you expect to increase both interest rates and exchange rates?

If the exchange rate changes from $2.00 = £1 to $2.01 = £1 then

Suppose China decides to sell a vast majority of their large holdings of U.S.Treasury bonds.If you are thinking of refinancing your house,how would China's action affect your decision to refinance?

If foreign holdings of U.S.dollars increase,holding all else constant

Assuming the United States is the "domestic" country,if the real exchange rate between the United States and France increases from 1.5 to 1.8

What is the relationship among the current account,the financial account,and the balance of payments?

If the Fed pursues an expansionary monetary policy,investment in the United States will ________ and net exports will ________.

How would an increase in the U.S.federal budget deficit affect the exchange rate in the market for dollars?

The relative price of a country's goods and services in terms of foreign goods and services is the real exchange rate.

The recession of 2007-2009 decreased the demand for imports in Japan,which caused the ________ curve for the yen to shift to the ________,increasing the exchange rate and the value of the yen.

China runs a current account surplus with the United States.Which of the following must be true about China's balance of payments with the United States?

Which of the following is not included in the balance of the financial account of the United States?

Figure 29-1 -Refer to Figure 29-1.Europe experiences an economic boom.Assuming all else remains constant,this would be represented as a movement from

If net exports are equal to net foreign investment

If the dollar appreciates,how will aggregate demand in the United States be affected?

Explain why economies with financial account surpluses usually have current account deficits.

An increase in United States net foreign direct investment would occur if

Investment (I)in the United States may increase with either an increase in national saving or an increase in net foreign investment.

The balance of payments includes all of the following accounts except