Macroeconomics 5th Edition by Olivier Blanchard

Exercise 3

Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.
a. If there are no statistical discrepancies, countries with current account deficits must receive net capital inflows.
b. While the export ratio can be larger than one-as it is in Singapore-the same cannot be true of the ratio of imports to GDP.
c. That a rich country like Japan has such a small ratio of imports to GDP is clear evidence of an unfair playing field for U.S. exporters to Japan.
d. Uncovered interest parity implies that interest rates must be the same across countries.
e. If the dollar is expected to appreciate against the yen, uncovered interest parity implies that the U.S. nominal interest rate will be greater than the Japanese nominal interest rate.
f. Given the definition of the exchange rate adopted in this chapter, if the dollar is the domestic currency and the euro the foreign currency, a nominal exchange rate of 0.75 means that 0.75 dollars is worth 0.75 euros.
g. A real appreciation means that domestic goods become less expensive relative to foreign goods.