Exam 18: Macroeconomics in an Open Economy

Net foreign investment is equal to

In recent decades the United States has incurred overall balance of payments deficits.

Public saving equals taxes minus government spending minus transfer payments.

The price of ________ in terms of ________ is referred to as the real exchange rate.

Which of the following would cause the dollar to appreciate?

When exchange rates are ________,we say that the country's exchange rate is fixed.

If we take into account transfer payments (TR)when we derive the saving and investment relationship,the saving and investment equation becomes

Monetary policy has a ________ effect on aggregate demand in a(n)________ economy,and fiscal policy has a ________ effect on aggregate demand in a(n)________ economy.

Why does continued foreign investment in U.S.stocks and bonds and foreign companies continuing to build factories in the United States result in a current account deficit in the United States?

Figure 18-1 -Refer to Figure 18-1.Suppose that the U.S.government deficit decreases,causing interest rates in the United States to fall relative to those in the European Union.Assuming all else remains constant,how would this be represented?

What impact might a decrease in the U.S.federal budget deficit have on interest rates and exchange rates in the market for the U.S.dollar? (Assume the exchange rate is stated in terms of foreign currency per U.S.dollar. )

The difference between the value of the goods a country exports and the value of the goods a country imports is the country's

Figure 18-1 -Refer to Figure 18-1.The appreciation of the dollar is represented as a movement from

Which of the following would increase the current account balance of the United States?

An HMO hires radiology services from India to cut costs.If all else remains equal,this will

Contractionary monetary policy and expansionary fiscal policy both reduce net exports in an open economy.

A decrease in U.S.federal government budget deficits that lowers U.S.interest rates relative to the rest of the world should

The United States has a closed economy.

Figure 18-1 -Refer to Figure 18-1.Suppose that the U.S.government deficit causes interest rates in the United States to rise relative to those in the European Union.Assuming all else remains constant,how would this be represented?

If the Fed is using policy to combat inflation,what is likely to happen in the foreign exchange market and to the foreign exchange value of the dollar?