Exam 19: Open-Economy Macroeconomics

Which of the following would supply euros in the foreign exchange market? I. Americans who want to buy U.S. goods, services, and assets II. Americans who want to buy European goods, services, and assets III. Europeans who want to buy U.S. goods, services, and assets

Use the following to answer questions : Scenario: Japan and the United States Suppose that the interest rate in the United States is 4%, in Japan it is 7%, and financial assets in the two countries are equal in risk. -(Scenario: Japan and the United States) Refer to the scenario Japan and the United States. Assuming that loans in India and the United States carry equal risk, this implies that:

Holding everything else constant, a decrease in political risk in a country will MOST likely cause:

If the exchange rate for the yen is $0.009784, $1 exchanges for ¥9.784.

A decrease in U.S. interest rates causes the dollar to _____ and aggregate demand to _____.

Real exchange rates are those that are recognized by the International Monetary Fund.

If a government fixes the exchange rate _____ the market equilibrium, there will be a shortage of the domestic currency and a tendency for the exchange rate (U.S. dollars per unit of the other currency) to _____.

Which of the following is a method to maintain a fixed exchange rate? I. exchange market intervention II. monetary policy III. foreign exchange controls

All other things equal, an expansionary monetary policy will cause the domestic currency to appreciate.

If the U.S. is in an inflationary gap, the appropriate policy is to _____ the money supply to _____ interest rates.

If Europeans begin to view the United States as a more attractive investment opportunity, the outcome will be a(n) _____ of the dollar, which will _____.

The Japanese yen is a floating currency. If the exchange rate for the yen changes from $0.0098 to $0.01, the yen has appreciated.

Which of the following was an argument AGAINST Britain's adopting the euro? I. Using the same currency as many other European countries would discourage trade and decrease productivity. II. Using the euro would decrease the effectiveness of monetary policy.

Currencies can be exchanged for each other in the _____ market.

Expansionary monetary policy in the United States causes U.S. interest rates to _____ and the dollar to _____.

If the U.S. dollar changes from $1 = €1 to $0.80 = €1:

Open-economy macroeconomics deals with:

Under a floating exchange rate regime, raising the interest rate has all of the following effects EXCEPT:

The balance between spending flowing into a country from other countries and spending flowing out of that country to other countries is the:

Since they reduce uncertainty, fixed exchange rates are good for business.