Exam 19: Comparative Advantage, international Trade, and Exchange Rates

All else being equal,if the rate of growth in productivity in Spain is lower than the rate of growth in productivity in Australia,the euro will

Australian currency continues to be backed by the gold standard to this day.

If a firm in Thailand borrows dollars from a United States bank,its interest payments on the loan in Thai baht will decrease if the baht appreciates against the dollar.

Which of the following is not included in the financial account?

The purchasing power parity theory of exchange rate determination states that

Suppose that interest rates increase in Japan and at the same time the Japanese economy is experiencing a recession.What will happen to the value of the dollar relative to the yen?

If S = national saving,I = private investment and NFI = net foreign investments,then

The large current account deficits in Australia mean that

Assume that Australians develop a strong preference for German cars relative to cars manufactured in Australia.This will,ceteris paribus,

Why does continued foreign investment in Australian shares and bonds,and foreign companies continuing to build businesses in Australia,result in a current account deficit in Australia?

Suppose that the European Union experiences a recession and this causes a decline in income in the European Union relative to Australia.Because of this,the dollar will,ceteris paribus,

Many countries abandoned the gold standard during the Great Depression because

Assume that the exchange rate between the dollar and the yen is ¥100.= $1.Suppose the exchange rate changes to ¥150 = $1.What is the price in yen of a $200 iPod before and after the exchange rate change?

The countries that abandoned the gold standard the earliest during the Great Depression suffered the least loss of production.

Fill in the values for the implied exchange rate in the various currencies per United States (US)dollar in the following table.Assume that the Big Mac burger sells for $3.06 in the United States of America.Explain whether the US dollar is overvalued or undervalued relative to each currency,and predict what will happen in the future to each exchange rate.

Under the gold standard,if one United States dollar could be traded for one quarter of an ounce of gold,and one British pound could be redeemed for one half of an ounce of gold,the exchange rate would be

Australia's net foreign debt has risen from less than 5 per cent of GDP in the mid-1970s to over 50 per cent in 2013.

A goods trade deficit indicates that a

When can foreign debt become a problem for a country?

Figure 19.2 -Refer to Figure 19.2.Assume that Europe experiences an economic boom.Assuming all else remains constant,this would be represented as a movement from