Exam 18: Open-Economy Macroeconomic Models

If the exchange rate is 3 units of Peruvian currency per dollar and a hotel room in Lima costs 300 units of Peruvian currency, then how many dollars do you need to get a room?

Other things the same, an increase in the nominal exchange rate raises the real exchange rate.

If saving is greater than domestic investment, then

Perhaps the most dramatic change in the U.S. economy over the past four decades has been the increasing relative importance of international trade and finance.

An American farm equipment dealer sells dollars to obtain euros. It then uses the euros to buy farm equipment from a German company. This exchange

U.S. exports make up less than 20 percent of GDP.

Foreign-produced goods and services that are purchased domestically are called

Which of the following events would be consistent with purchasing-power parity?

If the nominal exchange rate e is foreign currency per dollar, the domestic price is P, and the foreign price is P*, then the real exchange rate is defined as

What does purchasing-power parity imply about the real exchange rate?

If a country changes its corporate tax laws so that foreign businesses build and manage more business in that country, then the net capital outflow of that country

Other things the same, if the dollar depreciates relative to the Japanese yen, then

Many economists believe that the theory of purchasing-power parity describes the forces that determine exchange rates in the long run.

If a country's net exports fall, then its net capital outflow falls by the same amount.

Suppose a Starbucks tall latte cost $4.00 in the United States, 5.00 euros in the euro area and $2.50 Australian dollars in Australia. Nominal exchange rates are .80 euros per dollar and 1.4 Australian dollars per U.S. dollar. Where does purchasing power parity hold?

The country of Freedonia has a GDP of $2,100, consumption of $1,200, and government purchases of $400. This implies that it has

If a U.S. textbook publishing company sells texts overseas, U.S. net exports

Suppose a bottle of wine costs 20 euros in France and 25 dollars in the United States. If the exchange rate is .80 euros per dollar, what is the real exchange rate?

From 1991-2000, U.S. net capital outflow as a percent of GDP became a

Mike, a U.S. citizen, buys $1,000 worth of olives from Greece. By itself this purchase