Exam 18: Open-Economy Macroeconomic Models

If a bushel of wheat costs $6.40 in the United States, costs 40 pesos in Mexico, and the nominal exchange rate is 10 pesos per dollar, then the real exchange rate is

Mark, a U.S. citizen, buys stock in a British Shipping company. This purchase is an example of

Jill, a U.S. citizen, uses some euros to purchase a bond issued by a French vineyard. This exchange

To increase domestic investment, a country must increase its saving.

A Japanese bank buys U.S. government bonds this purchase

An American hardware chain sells dollars to obtain Indian rupees. It then uses the rupees to buy electrical generators manufactured by an Indian firm. This exchange

In an open economy, national saving can be less than investment.

Which of the following does purchasing-power parity conclude should equal 1?

U.S. international trade has

A U.S. citizen buys bonds issued by an automobile manufacturer in Japan. Her expenditures are U.S.

According to purchasing power parity, if two countries have the same price level because they have the same prices for all goods and services, then which of the following would equal 1?

If a Dutch firm buys goods from a U.S. firm with dollars it obtains by exchanging euros for dollars, both U.S. net exports and U.S. net capital outflow increase.

A German company exchanges euros for dollars from U.S. residents and then uses the dollars to buy U.S. products to sell in Germany. U.S. residents who exchanged their dollars for euros use the euros to buy bonds issued by Spanish corporations. At this point

Bob traps lobsters in Maine and sells them to a restaurant in Mexico. Other things the same, these sales

A U.S. pharmacy buys drugs from a British company and pays for them with US dollars. This transaction

Other things the same, the real exchange rate between American and Mexican goods would be lower if

According to purchasing power parity what should the nominal exchange rate between the U.S. and another country be equal to?

Suppose a McDonalds Big Mac cost $4.00 in the United States and 3.20 euros in the euro area and 5.20 Australian dollars in Australia. If exchange rates are .75 euros per dollar and 1.3 Australian dollars per dollar, where does purchasing power parity hold?

If the unit of foreign currency is the peso, in which case is the real exchange rate 1.2?

The country of Wiknam has net capital outflow of $1,000, government purchases of $5,000 and consumption of $20,000. Which of the following is correct?