Exam 18: Macroeconomics in an Open Economy

What impact might an increase in the budget deficit have on interest rates and exchange rates?

Explain and show graphically how an increase in incomes in the United States will affect equilibrium in the foreign exchange market?

If foreign holdings of U.S.dollars decrease,holding all else constant,

Assuming no change in the nominal exchange rate,how will a decrease in the price level in the United States relative to France affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country. )

Suppose the majority of the shares of Ford stock were sold to a Japanese firm.Assuming all else remains constant,this will

If the dollar appreciates,how will aggregate demand in the United States be affected?

According to the saving and investment equation,if net foreign investment rises by $60 million,

The current account includes records of a country's

If the balance on the current account in the United States is $750 billion,which of the following is most likely to be true?

Refer to the Article Summary.All else equal,a depreciation of the Chinese yuan relative to a currency such as the U.S.dollar should ________ the current account balance in China and therefore ________ the financial account balance in China.

A country which incurs a current account deficit will most likely have a financial or capital account surplus.

When the United States sends money to the Philippines to help typhoon survivors,the transaction is recorded in

How does a decrease in value of a country's currency relative to other currencies affect its balance of trade?

Which of the following would you expect to decrease both interest rates and exchange rates? (Assume exchange rates are stated in terms of foreign currency per domestic currency. )

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 kimono you're looking at costs 14,000 yen,under which of the following exchange rates would you be willing to purchase the kimono? (Assume no taxes or duties are associated with the purchase. )

If the balance on the current account is $346 billion and the balance on the financial account is -$204 billion,what is the balance on the capital account,assuming no statistical discrepancy?

Why is the U.S.trade deficit almost always larger than the U.S.current account deficit?

How will an interest rate decrease in the United States affect equilibrium in the foreign exchange market?

Based on the following information,what is the balance on the current 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 is the impact of contractionary monetary policy different in an open economy than in a closed economy?