Exam 16: International Trade in Goods and Assets

In the New Keynesian open economy model with a flexible exchange rate, suppose that the output gap is initially zero and there is an increase in labour supply. What is the correct policy response To keep the output gap at zero?

The acquisition of a domestic financial asset by a foreign resident is called

A hard peg may be achieved by

In the monetary small open-economy model with a fixed exchange rate, a temporary decrease in domestic total factor productivity in the absence of any other shocks

In the monetary small open-economy model with a flexible exchange rate, an increase in the foreign price level decreases

In the New Keynesian open economy model with a flexible exchange rate, an increase in anticipate future total factor productivity

A revaluation of the exchange rate is a policy action that

In the New Keynesian open economy model with a fixed exchange rate, an increase by the domestic government in tariffs on imports results in

Under purely flexible exchange rates

In the New Keynesian open economy model

A principal reason that purchasing power parity does NOT hold exactly in practice is

In response to a temporary change in total factor productivity, the adoption of capital controls under a flexible exchange rate

Dollarization is a policy action that

The nominal exchange rate is the

In the monetary small open-economy model with a flexible exchange rate, an increase in the domestic money supply causes

A devaluation of the exchange rate is a policy action that

In the New Keynesian open economy model, if the exchange rate is fixed

Which of the following was specifically instituted to ensure a successful hard peg?

In the monetary small open-economy model with a fixed exchange rate, a devaluation of the domestic currency in the absence of any other shocks

In the monetary small open-economy model with a fixed exchange rate, the supply of money