Exam 31: Open-Economy Macroeconomics: Basic Concepts

A U.S. bank loaned a Canadian oil company 1 million U.S. dollars. The Canadian company then used the entire loan to buy mining equipment from a U.S. company. As a result of these transactions, by how much and in which direction did: A. U.S. net exports change? B. U.S. net capital outflow change?

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

Prices in both the U.S. and India rise, but prices in India increase by a smaller percentage. According to purchasing- power parity the U.S. dollar

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?

Paul, a Canadian citizen, purchases oranges grown in Florida. This purchase is an example of

The nominal exchange rate is 3 Malaysian ringgits per dollar. The real exchange rate is 8/5. If a Big Mac costs 7.5 ringgits in Malaysia, how much does a Big Mac cost in the U.S.? Show your work.

Which of the following is correct?

The value of Austria's exports minus the value of Austria's imports is called

The country of Sylvania has a GDP of $900, investment of $200, government purchases of $200, and net capital outflow of -$100. What is consumption?

A country's saving is greater than its domestic investment. This difference means that its

Last year a country had $700 billion of saving and $900 of investment. This year it had $1000 billion of saving and $800 billion of investment. By how much did net capital outflow change? By how much did net exports change? How is it possible for a country to have saving that is greater than investment?

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

The nominal exchange rate is 32 Russian rubles per dollar. The price of a bushel of wheat is 260 rubles in Russia and $7 in the U.S. A. What is the real exchange rate? Show your work. B. Can arbitragers make a profit? C. If your answer to B is yes, where would arbitragers buy and where would they sell.

If the U.S. price level is increasing by 3 percent annually and the Japanese price level is increasing by 1 percent annually, then according to purchasing-power parity, by about what percent would the nominal exchange rate be changing?

If purchases of foreign assets by U.S. residents exceed purchases of U.S. assets by foreign residents, then U.S. net capital outflow is positive.

A country has $50 million of domestic investment and net capital outflow of $15 million. What is saving?

If the U.S. has a trade deficit and the nominal exchange rate depreciates, then other things the same

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

According to purchasing-power parity, if a basket of goods costs $100 in the U.S. and the same basket costs 800 pesos in Argentina, then what is the nominal exchange rate?

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