Exam 18: Macroeconomics in an Open Economy

If New Yorkers decrease their purchases of French champagne,assuming all else remains constant,this will ________ of the United States.

How might a U.S.federal budget surplus affect the balance of trade? (Assume exchange rates are stated in terms of foreign currency per U.S.dollar.)

Explain why the budget deficit and the trade deficit are sometimes referred to as the "twin deficits."

If currency speculators decide that the value of the dollar should rise in the future relative to the yen,this will increase the demand for dollars and decrease the supply of dollars.

When the United States sends money to the Philippines to help typhoon survivors,the transaction is recorded in

If the demand for the yen increases relative to the dollar,which of the following would occur?

Article Summary Citing excessive currency regulation under the nation's previous regime,Uzbekistan's recently elected president,Shavkat Mirziyoev,announced a 50 percent devaluation of the Central Asian nation's currency,the soum,in September 2017.The devaluation changed the official exchange rate from 4,210.35 soum per U.S.dollar to 8,100 soum per U.S.dollar,putting it in line with the black market exchange rate.Economic slowdowns and falling currency values in China,Russia,and Kazikstan,Uzbekistan's largest export markets,have hurt this nation's economy which depends on commodity exports and remittances.According to Oleg Kouzmin,an economist at Renaissance Capital in Moscow,"The decision … helps reduce extreme disparities between official and 'grey market' exchange rates that were witnessed in Uzbekistan in the previous years.Economists generally love to see devaluations -- one of the things than makes them different from politicians -- devaluation always gives the country a chance for a fresh start." Source: Ksenia Galouchko "This Currency's Sudden 50% Devaluation May Attract Bargain Hunters," bloomberg.com,September 5,2017. -Refer to the Article Summary.All else equal,a depreciation of the Uzbekistani soum relative to a currency such as the U.S.dollar should ________ the current account balance in Uzbekistan and therefore ________ the financial account balance in Uzbekistan.

Figure 18-1 -Refer to Figure 18-1.The depreciation of the euro is represented as a movement from

Is fiscal policy more or less effective in manipulating aggregate demand in an open economy?

Based on the following information from a balance of payments table,what is the balance on the financial account? Exports of goods and services = $5 billion Imports of goods and services = $3 billion Net income on investments = -$2 billion Net transfers = -$2 billion Increase in foreign holdings of assets in the United States = $4 billion Increase in U.S.holdings of assets in foreign countries = -$1 billion

The United States has a closed economy.

A real appreciation of the dollar is caused by either a nominal appreciation of the dollar,a rise in the foreign price level,or a fall in the U.S.price level.

Expansionary monetary policy will have what effect on the components of aggregate demand?

The purchase of foreign stocks and bonds by a U.S.brokerage firm is an example of capital inflows to the United States.

Persistent current account deficits in the United States

Explain and show graphically how an increase in incomes in the United States will affect equilibrium in the foreign exchange market?

How is the impact of expansionary monetary policy different in an open economy than in a closed economy?

In the United States,domestic investment is greater than national saving.

Suppose the majority of the shares of Ford stock were sold to a Japanese firm.Assuming all else remains constant,this will

Currency traders expect the value of the dollar to fall.What effect will this have on the demand for dollars and the supply of dollars in the foreign exchange market?