Exam 18: Macroeconomics in an Open Economy

Table 29-1 -Refer to Table 29-1.Use the information in the table to prepare a balance of payments account and find the value of the statistical discrepancy.Assume that the balance on the capital account is zero.

Following a tax cut by government,domestic investment will ________ and net exports will ________.

Suppose the Fed purchases Treasury Securities. Interest rates in the United States will ________ and the U.S.dollar will ________ against foreign currencies.

How will an increase in federal government spending without an increase in taxes affect real GDP and the price level in the short run in a closed economy and in an open economy?

In an open economy,expansionary monetary policy will cause

Saving exceeds domestic investment in Japan,which generates a financial account deficit in Japan's balance of payments.

What happens to national saving when the government runs a budget surplus? What happens to national saving when the government runs a budget deficit?

Ceteris paribus,a rise in interest rates in the United States will cause the yen price of the dollar in international exchange markets to ________. I.e.,the dollar ________ in value against the yen.

Based on the following information,what is the balance on the financial 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 = $5 billion Increase in U.S.holdings of assets in foreign countries = -$3 billion

Table 29-2 -If there is currently a shortage of dollars,which of the following would you expect to see in the foreign exchange market?

What impact might a decrease in the U.S.federal budget deficit have on interest rates and exchange rates in the market for the U.S.dollar? (Assume the exchange rate is stated in terms of foreign currency per U.S.dollar.)

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

Figure 29-3 -Refer to Figure 29-3. Europe experiences an economic boom.Assuming all else remains constant,this would be represented as a movement from

If a country has a ________ exchange rate,its central bank must buy and sell its holdings of currencies to maintain a given exchange rate.

Persistent current account deficits for the United States have

The federal budget deficit and the trade balance are often referred to as the

If New Yorkers decrease their purchases of French champagne,assuming all else remains constant,this will ________ of the United States.

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

If the Fed pursues an expansionary monetary policy,investment in the United States will ________ and net exports will ________.

If the current account is in surplus and the capital account is zero,then