Exam 18: Macroeconomics in an Open Economy

You're traveling in Japan and are thinking about buying a new kimono.You've decided you'd be willing to pay $175 for a new kimono,but kimonos in Japan are all priced in yen.If the exchange rate is 89 yen per dollar,what is the highest price in yen you'd be willing to pay for a kimono? (Assume no taxes or duties are associated with the purchase. )

Which of the following would increase net exports in the United States?

A decision by foreign central banks to sell their holdings of U.S.Treasury bonds will

Table 18-2 -Refer to Table 18-2.Given the following exchange rates in the above table,what are the exchange rates stated as U.S.dollars per Mexican peso and U.S.dollars per British pound respectively?

An increase in net foreign investment is possible through a decrease in national saving or a decrease in domestic investment.

Use the saving and investment equation to explain why the United States experienced large current account deficits in the late 1990s.

The United States has a trade ________ with all its major trading partners and a trade ________ with every region of the world except for Latin America.

If the nominal exchange rate between the American dollar and the New Zealand dollar is 1.36 New Zealand dollars per American dollar,how many American dollars are required to buy a product that costs 3.50 New Zealand dollars?

If the current account is in deficit and the capital account is zero,then

If national saving increases,________.(Assume that the capital account is zero and net transfers are zero. )

If the United States is a "net borrower" from abroad,

An increase in the government budget deficit will not lead to a current account deficit if domestic investment declines.

Ceteris paribus,an increase in the government budget deficit increases interest rates in the United States and causes a real appreciation of the dollar.

If the price level in the United States is 110,the price level is 135 in Mexico,and the nominal exchange rate is 12.5 pesos per dollar,what is the real exchange rate from the U.S.perspective?

If there is currently a surplus of dollars,which of the following would you expect to see in the foreign exchange market?

The large budget deficits of the early 1990s resulted in large current account deficits.

If American demand for purchases of Mexican goods has increased,how would you expect the equilibrium exchange rate in the market for dollars to respond? Support your answer graphically.

If net foreign investment in the United States is negative,how must national saving and domestic investment be related?

Which of the following is true about the occurrence of the twin deficits?

Net exports equals the balance of trade surplus.