Exam 19: Open-Economy Macroeconomics

A reduction in the value of a fixed rate currency is called a depreciation.

Suppose the economy of Alpha in 2008 imported $800 billion in goods and $400 billion in services. The nation exported $500 billion in goods and $600 billion in services. Citizens of foreign nations also purchased $200 billion of Alpha's assets. a. What was the merchandise trade balance? b. What was the balance of payments on the current account? c. What was the balance of payments on the financial account, and what was the value of Alpha's purchases of assets from the rest of the world?

In the early twenty-first century, the United States has had a current account:

After a revaluation, all other things equal, exports will likely _____ and imports will likely _____ .

If a country's current account is positive, its:

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. As a result:

Under fixed exchange rates, a revaluation decreases aggregate demand by:

When a currency appreciates, the prices of its exports to other countries will:

When interest rates are higher in country A than in other countries:

Purchasing power parity refers to:

When the U.S. dollar price of a foreign currency rises:

If the rate of exchange is €1 = US$2, then US$1 =

Exchange market intervention is government trading in the foreign exchange market to maintain a target exchange rate for its currency.

Which of the following would be included in the U.S. financial account?

If the United States exports $100 billion of goods and services and imports $150 billion of goods and services and there is no other factor income or transfers, the balance on the financial account is:

The advantage of a fixed exchange rate is that it:

If the exchange rate is $1 = 12.95 Mexican pesos, then the price of a $10,000 Harley Davidson motorcycle is _____ pesos in Mexico.

If the euro depreciates, then a Mediterranean cruise will be cheaper for U.S. tourists.

Devaluation of a currency occurs under _____ exchange rates when the price of the domestic currency in terms of foreign currency _____.

If the U.S. dollar depreciates relative to currencies in other countries, then U.S. imports will _____ and exports will _____.