Exam 18: Macroeconomics in an Open Economy

When net capital flows are positive,

When the market value of the dollar falls relative to other currencies around the world,we say that

When Americans decrease their demand for Japanese goods,

How would an increase in the U.S.federal budget deficit affect the exchange rate in the market for dollars?

Ceteris paribus,a decrease in the government's budget deficit will increase domestic investment and net foreign investment.

Why is the balance of payments always zero?

Based on the following information,what is the balance on the financial account? Exports of goods and services = $5 billion Imports of goods and services = $3 billion Net income on investments = -$2 billion Net transfers = -$2 billion Increase in foreign holdings of assets in the United States = $4 billion Increase in U.S.holdings of assets in foreign countries = -$1 billion

How would a decrease in the U.S.budget deficit affect the exchange rate in the market for dollars?

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

Figure 18-2 -Refer to Figure 18-2.Which of the events below cause the shifts in the supply and demand curves in the market for dollars against the British pound shown in the graph above?

Persistent current account deficits in the United States

Figure 18-1 -Refer to Figure 18-1.The French fall in love with California wines and triple their purchases of this beverage.Assuming all else remains constant,this would be represented as a movement from

An increase in capital inflows will

Based on the following information,what is the balance on the financial account? Exports of goods and services = $12 billion Imports of goods and services = $14 billion Net income on investments = -$4 billion Net transfers = -$1 billion Increase in foreign holdings of assets in the United States = $5 billion Increase in U.S.holdings of assets in foreign countries = -$3 billion

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.

If you know that a country's net foreign investment is positive,what does that tell you about the relationship between the country's national saving and private investment? (Assume that the capital account is zero and net transfers are zero. )

Assume the United States is the "domestic" country and China is the "foreign" country.Which of the following might increase the real exchange rate between the United States and China?

Based on the following information,calculate public saving,net foreign investment,and national income.Assume that the capital account is zero and net transfers are zero. private saving = $145 billion exports = $285 billion imports = $240 billion consumption = $600 billion private investment = $125 billion government purchases = $75 billion

If net exports are positive for China,it must be true that China is experiencing net outflows of capital.

Does the saving and investment equation imply that a country's national saving must always equal its domestic investment? Explain.