Exam 18: Open-Economy Macroeconomics: Basic Concepts

While vacationing in Agra, India, the price of one night's stay at your hotel room rises from 6600 rupees to 7200 rupees. If the exchange rate was previously 55 rupees per dollar, what would the exchange rate need to be now in order for the number of dollars you pay for your room to remain the same? Does this imply the rupee depreciated or appreciated against the dollar?

An American brewery sells dollars to obtain euros. It then uses the euros to buy brewing equipment from a German company. These transactions

If a country's imports exceed its exports it has a trade surplus.

A German mutual fund sells euros to a U.S. bank for $20,000. The mutual fund then uses these dollars to purchase a bond issued by United Express, a U.S. delivery company. As a result of these two transactions, what happened to U.S. net capital outflow?

An open economy's GDP is always given by

Dave, a U.S. citizen buys a bicycle manufactured in China. Dave's purchase is

If U.S. consumers increase their demand for apples from New Zealand, then other things the same New Zealand's

Colonial America had little industry and so had mostly raw materials to export. At the same time, there were many opportunities to purchase capital goods and earn a high rate of return because there was little existing capital so that the marginal product of capital was relatively high. What does this suggest about net exports and net capital outflow in colonial America?

Purchasing-power parity implies that the nominal exchange rate given as foreign currency per unit of U.S. currency must rise if the price levels) in

For an economy as a whole, net exports must equal minus one times net capital outflow.

Which of the following is correct?

If a nation produces more than it spends what do we know about: A. its net exports? B. its net capital outflow? C. its saving in relation to its domestic investment?

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

A U.S. firm opens a factory that produces power tools in Korea.

A U.S. purchase of oil from overseas paid for with foreign currency it already owned

If the unit of foreign currency is the peso, in which case is the real exchange rate 1.2?

If it took as many dollars to buy goods in the United States as it did to buy enough currency to buy the same goods in India, the real exchange rate would be computed as how many Indian goods per U.S. goods?

Suppose the real exchange rate is 5/4 of a Canadian textbook per U.S. textbook , a U.S. textbook costs $150, and a Canadian one costs 120 Canadian dollars. To the nearest penny, what is the nominal exchange rate?

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

During a hyperinflation the real domestic value of a country's currency