Exam 18: Open-Economy Macroeconomics: Basic Concepts

If prices in the U.S. rise faster than prices in the United Kingdom, then according to the doctrine of purchasing- power parity the U.S. nominal exchange rate should rise

Last year a country had $700 billion of saving and $900 of investment. What was its net capital outflow? How is it possible for a country to have investment that exceeds saving?

Good that cost one half dollar in the U.S. cost one euro in Germany, the real exchange rate would be computed as how many German goods per U.S. goods?

Table 31-2 -Refer to Table 31-2. In real terms, U.S. goods are more expensive than goods in which countryies)?

Suppose the real exchange rate is 3/4 gallon of country A's gasoline per gallon of U.S. gasoline, a gallon of U.S. gasoline costs $3.00 U.S., and a gallon of gas in country A costs 6 units of their currency. What is the nominal exchange rate?

Purchasing-power parity says that the nominal exchange rate must equal the real exchange rate.

Which types) of economies interact with other economies?

Other things the same, which of the following could be a consequence of an appreciation of the U.S. real exchange rate?

The dollar is said to depreciate against the euro if

A country's trade balance

In the U.S. a television costs $400. In South Africa the same television costs 3000 rand the currency of South Africa). The nominal exchange rate is 8 rand per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the television cheapest?

Suppose the world had only two countries and domestic residents of country A purchased $50 billion of assets from country B and country B purchased $30 billion of assets from country A. What would the net capital outflows of both countries be?

Other things the same, an increase in the nominal exchange rate raises the real exchange rate.

A company in Panama pays for a U.S. architect to design a factory building. By itself this transaction

A U.S. mutual fund buys stocks issued by a Columbian company. This purchase is an example of

Suppose that the real exchange rate between the United States and South Korea is defined in terms of baskets of goods. Other things the same, which of the following will increase the real exchange rate that is increase the number of baskets of South Korean goods a basket of U.S goods buys)?

If a country's purchases of foreign assets exceeds foreign purchases of domestic assets, that country has

Lydia, a citizen of Italy, produces scarves and purses that she sells to department stores in the United States. Other things the same, these sales

From 2000 to 2012 the U.S. had a trade

If the U.S. real exchange rate appreciates, U.S. exports to Europe