Exam 18: Macroeconomics in an Open Economy

Based on the following information,what is the balance on the current 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 = $6 billion Increase in U.S.holdings of assets in foreign countries = -$3 billion

Why is the multiplier for contractionary fiscal policy smaller in an open economy?

Which of the following would increase the balance on the current account?

Assuming no change in the nominal exchange rate,how will a lower rate of inflation in the United States relative to Canada affect the real exchange rate between the two countries? (Assume the United States is the "domestic" country. )

If the dollar appreciates against the Mexican peso,

A decrease in United States net foreign direct investment would occur if

Investment (I)in the United States may increase with either an increase in national saving or an increase in net foreign investment.

Which of the following would result in a trade surplus for the United States?

Suppose China decides to sell a vast majority of their large holdings of U.S.Treasury bonds.If you are thinking of refinancing your house,how would China's action affect your decision to refinance?

Figure 18-1 -Refer to Figure 18-1.Europe suffers a recession.Assuming all else remains constant,this would be represented as a movement from

An increase in the demand for American-made goods will

The current account does not include which of the following?

An expansionary monetary policy in the United States should

The level of saving in Japan has historically been high relative to the level of domestic investment.Based on this information,we would expect that

Assuming the United States is the "domestic" country,if the real exchange rate between the United States and France increases from 1.5 to 1.8,

When Americans increase their demand for Japanese goods,

When exchange rates are not determined in the market but are instead set by a country's central bank,we say that the country's exchange rate is

When net capital flows are negative,

Which of the following would result in a trade surplus for the United States?

A federal budget deficit ________ interest rates,which ________ exchange rates (foreign currency per domestic currency),and ________ the balance of trade.