Exam 18: Open-Economy Macroeconomics: Basic Concepts

Consider an identical basket of goods in both the U.S. and Taiwan. For a given nominal exchange rate, in which case is it certain that the U.S. real exchange rate with Taiwan falls?

A U.S. firm buys apples from New Zealand with New Zealand dollars it got in exchange for U.S. dollars. New Zealand residents then use these dollars to purchase oranges from the U.S. Which of the following increases?

A nation's domestic investment is greater than its savings. Which of the following is correct?

A nation with a trade surplus will necessarily have saving that is greater than domestic investment.

If the Canadian nominal exchange rate does not change, but prices rise faster abroad than in Canada, then the Canadian real exchange rate

Which of the following is an example of U.S. foreign portfolio investment?

If purchasing-power parity holds, when a country's central bank increases the money supply, its

Other things the same, which of the following could explain a rise in Sweden's net capital outflow?

If the exchange rate is 2 Brazilian reals per dollar and a meal in Rio costs 20 reals, then how many dollars does it take to buy a meal in Rio?

From 1970 to 1998 the U.S. dollar

The nominal exchange rate is the

While vacationing in Turkey you see a rug you consider purchasing. The seller tells you the rug costs 1,200 Turkish lire. A. If the exchange rate is .60 lira per dollar, how many dollars does the rug cost? B. If the dollar depreciates against the lira, will it take more or fewer dollars to buy the rug? Explain.

According to purchasing-power parity, if it took 58 Indian rupees to buy a dollar today, but it took 55 to buy it a year ago, then the dollar has

During 2011, the price level in the U.S. rose at a faster rate than the price level in Japan. Other things the same, according to purchasing-power parity, this difference in inflation rates should have caused

Egypt has exports of $500 million and imports of $750 million. Egypt

A depreciation of the U.S. real exchange rate induces U.S. consumers to buy

If a country had a trade surplus of $100 billion and then its exports rose by $40 billion and its imports rose by $30 billion, its net exports would now be

The theory of purchasing­power parity states that a unit of a country's currency should be able to buy the same quantity of goods in foreign countries as it does in the domestic economy.

Carl and Carly are American residents. Carl buys stock of a corporation in Austria. Carly opens a coffee shop in Austria. Whose purchase, by itself, decreases Austria's net capital outflow?

Suppose that a U.S. dollar buys more gold in Australia than it buys in Russia. What does purchasing-power parity imply should happen?