Exam 15: Open Economy Macroeconomics

Assume that the yuan-dollar nominal exchange rate at the beginning of 2012 was 4 yuan per dollar and at the beginning of 2013 was 6 yuan per dollar.Given this information,identify the currency that appreciated and the currency that depreciated over 2012.

Scenario: Suppose India borrows $10,000 from the United States at the beginning of 2016. The flexible exchange rate is 50 Indian rupees per dollar. -Refer to the scenario above.If India pegs the exchange rate at 70 rupees per dollar,it will require ________ rupees to repay the loan in dollars.

What might have been one of the reasons for the severity and duration of the economic crisis in Europe?

The depreciation of the pound on Black Wednesday led to a decrease in the pound exchange rate,a(n)________ in net exports and a(n)________ in aggregate economic activity.

Last year the exchange rate between the U.S.dollar and the euro was 0.89.Today the exchange rate is 0.92.We can say that the dollar has ________ against the euro and the euro has ________ against the U.S.dollar.

The yuan-per-dollar exchange rate was constant at 8.28 yuan per dollar from ________.

If a country wants to keep a foreign currency undervalued against its domestic currency,________.

Which of the following is likely to occur when the U.S.dollar is overvalued relative to the peso?

Everything else being equal,if the dollar depreciates against the Chinese yuan,________.

A decrease in the value of the domestic currency in terms of the foreign currency means that ________.

Countries that borrow large amounts of money from foreign lenders prefer to ________.

Which of the following statements is true?

If the interest rate in India increases,how will it affect the net exports of India?

Everything else being equal,when the domestic currency depreciates against a foreign currency,________.

The main difference between a flexible and a fixed exchange rate system is that the flexible exchange rate ________.

The following figure shows the net exports curve for a country: -Refer to the figure above.When the real exchange rate is above R*,________.

A depreciating domestic currency is often perceived to be a sign of a(n)________.

If a currency is said to be overvalued relative to the dollar,then the dollar is understood to be worth ________.

When a currency is overvalued relative to the dollar,then its exchange rate with respect to the dollar is ________.

Assume that the dollar price of a basket of good in the United States is $2 and the Mexican price of the same basket in the United States is 40 pesos.In addition,the Mexican price of the same basket in Mexico is 100 pesos.Given this information,the dollar price of the same basket in Mexico will be ________.