Exam 31: Open-Economy Macroeconomics: Basic Concepts

Suppose a bottle of wine costs 25 euros in France and 20 dollars in the United States.If the exchange rate is 1.25 euros per dollar,what is the real exchange rate?

Purchasing-power parity says that the nominal exchange rate must equal the real exchange rate.

A rational investor will always purchase the bond that pays the highest real interest rate.

If a Starbucks tall-latte cost $2.80 in the United States and 2.93 euros in the Euro area,then purchasing-power parity implies the nominal exchange rate is how many euros per dollar?

Suppose that more British decide to vacation in the U.S.and that the British purchase more U.S.Treasury bonds.Ignoring how payments are made for these purchases,

According to purchasing-power parity theory,the nominal exchange rate between the U.S.and another country should equal the price level for that country divided by the price level for the U.S..

Exchange rates are 120 yen per dollar,0.8 euro per dollar,and 10 pesos per dollar.A bottle of beer in New York costs 6 dollars,1,200 yen in Tokyo,7.2 euro in Munich,and 50 pesos in Cancun.Where is the most expensive and the cheapest beer in that order?

If the dollar buys fewer bananas in Guatemala than in Honduras,then traders could make a profit by

If the real exchange rate is 5/4 pounds of Chilean beef per pound of U.S.beef,a pound of U.S.beef costs $2 and the nominal exchange rate is 500 Chilean pesos per dollar,then Chilean beef costs

When the central bank of some country prints large quantities of money,that county's currency loses value both in terms of the goods and services it buys and in terms of the amount of foreign currencies it can buy.

If the U.S.real exchange rate appreciates,U.S.exports to Europe

Other things the same,if the U.S.real exchange rate appreciates,U.S.net exports

Bolivia buys railroad engines from a U.S.firm and pays for them with Bolivianos (Bolivian currency).By itself,this exchange

List the factors that might influence a country's exports,imports,and trade balance.

If U.S.exports are $150 billion and U.S.imports are $100 billion,which of the following is correct?

One year a country has positive net exports.The next year it still has positive but larger net exports

A U.S.firm exchanges dollars for yen and then uses them to buy Japanese goods.Overall as a result of these transactions

If a U.S.firm buys Chinese toys using previously obtained Chinese currency,then both U.S.net exports and U.S.net capital outflow decrease.

If a country has positive net capital outflows,then its net exports are

A firm in China sells toys to a U.S.department store chain.Other things the same,these sales