Exam 31: Open-Economy Macroeconomics: Basic Concepts

In an open economy,gross domestic product equals $1,850 billion,consumption expenditure equals $975 billion,government expenditure equals $225 billion,investment equals $500 billion,and net exports equals $150 billion.What is national savings?

A country purchases $3 billion of foreign-produced goods and services and sells $2 billion dollars of domestically produced goods and services to foreign countries.It has

If it took as many dollars to buy goods in the United States as it did to buy enough currency to buy the same goods in India,the real exchange rate would be computed as how many Indian goods per U.S.goods?

According to purchasing-power parity,what is the relationship between changes in price levels between two countries and changes in nominal exchange rates?

According to purchasing power parity,if over the course of a year the price level in the U.S.rises more than in Japan,then which of the following falls?

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries,then it has

You hold currency from a foreign country.If that country has a higher rate of inflation than the United States,then over time the foreign currency will buy

Gabrielle,an Italian citizen,uses some previously obtained dollars to purchase a bond issued by a U.S.company.This transaction

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?

Suppose that Bill,a resident of the U.S. ,buys software from a company in Japan.Explain why and in what directions this changes U.S.net exports and U.S.net capital outflow.

Purchasing-power parity implies that the nominal exchange rate given as foreign currency per unit of U.S.currency must rise if the price levels in

Suppose that money supply growth continues to be higher in Turkey than it is in the United States.What does purchasing-power parity imply will happen to the real and to the nominal exchange rate?

An open economy's GDP is always given by

Which of the following equations is correct?

Other things the same,a country could move from having a trade surplus to having a trade deficit if either

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?

Suppose a Starbucks tall-latte cost $4.00 in the United States and 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?

If purchasing-power parity holds,a dollar will buy

A firm in the United Kingdom hires a firm in the U.S.to train its managers.By itself this transaction

Other things the same,an increase in the foreign price level leads to an increase in the real exchange rate.