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Exam 13: Open-Economy Macroeconomics: Basic Concepts

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Question 171

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A country recently had a trade deficit of 350 billion euros. Its residents also purchased 400 billion euros of foreign assets. What was the value of this country's assets purchased by foreigners?

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Foreigners purchased...

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Question 172

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Other things the same, if a country saves less, then

A) net capital outflow rises, so net exports rise.
B) net capital outflow rises, so net exports fall.
C) net capital outflow falls, so net exports rise.
D) net capital outflow falls, so net exports fall.

E) B) and C)
F) C) and D)

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Question 173

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Derive the relation between savings, domestic investment, and net capital outflow using the national income accounting identity.

A country recently had a GDP of $1000 billion. Its consumption expenditures were $650 billion, its government spent $250 billion, and it had domestic investment of $150 billion. What was the value of this country's net capital outflow? Explain how you found your answer.

If a nation is selling more goods and services to foreigners than it is buying from them, then on net it must be buying assets abroad.

Table 31-2 -Refer to Table 31-2. Which currencies is/are have a higher nominal exchange rate than predicted by the doctrine of purchasing-power parity?

During 2011 the inflation rate in Brazil was about 6.6% while in the U.S. it was about 3.3%. At the start of 2011 the nominal exchange rate was about 1.7 Brazilian real per U.S. dollar. If purchasing-power parity holds, about what should the nominal exchange rate have been at the end of 2011? Show your work.

When a Japanese auto maker opens a factory in the U.S., U.S. net capital outflow

An Italian company builds and operates a pasta factory in the United States. This is an example of Italian

Other things the same, an increase in the U.S. real exchange rate makes U.S. goods more expensive relative to foreign goods.

The value of Austria's exports minus the value of Austria's imports is called

If the dollar buys less cotton in Egypt than in the United States, then traders could make a profit by

A pair of hiking boots costs $120 in the U.S., if the real exchange rate is 6/5 and the nominal exchange rate is 2 Brazilian reais per dollar, what is the price of the same hiking boots in Brazil? Show your work.

If prices in Mexico rise at a higher rate than prices in the U.S., then according to purchasing-power parity the U.S. nominal exchange rate with Mexico should rise.

Last year a country sold $500 billion euros worth of goods to foreigners and had a trade deficit of $100 billion euros. What was the value of its imports?

A nation with a trade surplus will necessarily have saving that is greater than domestic investment.

In an open economy, gross domestic product equals $3,500 billion, consumption expenditure equals $2100 billion, government expenditure equals $400 billion, investment equals $800 billion, and net exports equals $200 billion. What is national savings?

In the U.S. a television costs $400. In South Africa the same television costs 3000 rand the currency of South Africa). The nominal exchange rate is 8 rand per dollar. A. Find the real exchange rate. Show your work. B. In terms of dollars where is the television cheapest?

Domestic saving must equal domestic investment in

If a country has business opportunities that are relatively attractive to other countries, we would expect it to have