Exam 18: Open-Economy Macroeconomics: Basic Concepts

In the U.S. a delivery van costs $30,000. In Uruguay the same delivery van costs 720,000 pesos. The nominal exchange rate is 20 pesos per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the television cheaper?

A Texas ranch sells beef to a U.S. company that sells it to a grocery chain in Japan. These sales

In an open economy, national saving can be less than investment.

A Japanese bank buys bonds sold by Minnesota Manufacturing. Minnesota Manufacturing then uses these funds to buy machinery from Canada. Which of the following decreases?

A country recently had a GDP of $1000 billion. Its consumption expenditures were $650 billion, its government spent $250 billion, and it had domestic investment of $150 billion. What was the value of this country's net capital outflow? Explain how you found your answer.

In which period was most of the change in U.S. net capital outflow due to an increase in investment in the U.S.?

If the exchange rate is 8 Moroccan dirhams per U.S. dollars, a crate of oranges costs 400 dirhams in the Moroccan capital of Rabat, and a similar crate of oranges in Miami sells for $55 dollars, then

If a country has a trade surplus then

Jason plans to buy shrimp in Florida and sell them in Manhattan, Kansas where the price is higher. Jason plans to engage in arbitrage.

International trade

According to the theory of purchasing-power parity, the nominal exchange rate between two countries must reflect the differing

Other things the same, which of the following would both make Americans more willing to buy Italian goods?

Table 31-2 -Refer to Table 31-2. Which currencyies) isare) have a nominal exchange rate less than that predicted by the doctrine of purchasing-power parity?

In 2011 the U.S. began with a trade deficit. During the year exports rose by more than imports. What should have happened to the U.S. trade deficit?

Net exports measures the difference between a country's

If the dollar buys fewer bananas in Guatemala than in Honduras, then traders could make a profit by

According to the doctrine of purchasing-power parity, which of the following should depreciate if over the next year the inflation rate is higher in the U.S. than in the Euro area?

Movies are a major export of the U.S.

While vacationing in Italy, you see an interesting meal on a menu. The price is 24 euros. A. If the exchange rate is .80 euros per dollar, how many dollars would you have to give up to buy the meal? B. If the dollar appreciated against the euro, but the price of the meal remained 24 euro, would the meal cost more or fewer dollars? Explain.

A quality men's suit in the U.S. costs $400. The same suit costs 300 British pounds in the U.K. The nominal exchange rate is .60 pounds per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the suit cheaper?