Exam 18: Open-Economy Macroeconomic Models

When a French vineyard establishes a distribution center in the U.S., U.S. net capital outflow

Use the (hypothetical) information in the following table to answer the following questions.Table 18-2 Country Currency Currency per U.S. Dollar U.S. Price Index Country Price Index Bolivia boloviano 8.00 200 1600 Japan yen 80.00 200 20,000 Morocco dinar 10.00 200 2,000 Norwegian kroner 6.5 200 1,500 Thailand baht 40.00 200 7,000 -Refer to Table 18-2. In real terms, U.S. goods are more expensive than goods in which country(ies)?

The increase in international trade in the United States is partly due to

A U.S. purchase of oil from overseas paid for with foreign currency it already owned

The ability to profit by purchasing wheat in the U.S. and selling it in China implies that the

From 2007 to 2009 the U.S. trade balance

An Italian company builds and operates a pasta factory in the United States. This is an example of Italian

Movies are a major export of the U.S.

When Microsoft establishes a distribution center in France, U.S. net capital outflow

In an open economy national saving equals domestic investment plus net capital outflow.

You are staying in London over the summer and you have a number of dollars with you. If the dollar depreciates relative to the British pound, then other things the same,

Suppose the world had only two countries and domestic residents of country A purchased $50 billion of assets from country B and country B purchased $30 billion of assets from country A. What would the net capital outflows of both countries be?

According to purchasing power parity, inflation in the U.S. causes the dollar to

A Canadian manufacturing company opens a factory the produces air conditioners in the United States. This is an example of Canadian

Suppose inflation is higher in the United States over the next six months than in foreign countries. If exchange rates are given in terms of how much foreign currency a dollar buys or how many foreign goods U.S. goods buy, then according to purchasing-power parity we should expect to see

If US goods cost 1/5 of one dollar for every kroner Danish goods cost, the real exchange rate would be computed as how many Danish goods per U.S. goods?

Net capital outflow

Ann, a U.S. citizen, uses some previously obtained euros to purchase a bond issued by a Spanish company. This transaction

A basket of goods costs $800 in the U.S. In Belgium the basket of goods costs 800 euros and the exchange rate is .80 euros per U.S. dollar. In Japan the basket of goods costs 720,000 yen and the exchange rate is 900 yen per dollar. Which country has purchasing-power parity with the U.S.?

In the United States, a three-pound can of coffee costs about $5. If the exchange rate is about 0.8 euros per dollar and a three-pound can of coffee in Belgium costs about 7 euros. What is the real exchange rate?