ECO 232

If the exchange rate is 5 Egyptian pounds per U.S. dollar, a watch that costs $25 US dollars costs

$125

The country of Sylvania has a GDP of $900, investment of $200, government purchases of $200, and net capital outflow of -$100. What is consumption?

$600

If purchasing power parity holds, a dollar will buy

(as many goods in foreign countries than it does in the United States)

Monetary neutrality means that a change in the money supply affects nominal variable but

(does not change real variables. Most economist think this is a good description of the economy in the long run but not the short run)

A depreciation of the U.S. real exchange rate induces U.S. consumers to buy

(induces US consumers to buy more domestic goods and fewer foreign goods)

The inflation tax refers to

(the revenue a government creates by printing money)

Suppose that a country imports $90 million worth of goods and services and exports $80 million worth of goods and services. What is the value of net exports?

-10 million$

If U.S. exports are $300 billion and U.S. imports total $350 billion, which of the following is correct?

The U.S. has a trade deficit of $50 billion.

The nominal exchange rate is the

The nominal exchange rate is the

The shoeleather cost of inflation refers to

The shoeleather cost of inflation refers to

An increase in real interest rates in the United States

encourages both US and foreign residents to buy US assets) (capital inflow)

A country purchases $3 billion of foreign-produced goods and services and sells $2 billion dollars of domestically produced goods and services to foreign countries. It has

exports of $2 billion and a trade deficit of $1 billion.

Money demand refers to

how much wealth people want to hold in liquid form

The Fisher effect says that

inflation and nominal increase to together

Capital flight refers to

large and sudden movement in demand for assets located in a country)

Based on the quantity theory equation, If P = 4 and Y = 200, then which of the following pairs of values are possible?

m=800 y=16

The variable that links the market for loanable funds and the market for foreign-currency exchange is

nx=nco

The classical dichotomy refers to the separation of

real and nominal variables

In the open-economy macroeconomic model, the market for loanable funds identity can be written as

s=nco+I

The supply of money is determined by

the Federal reserve

Menu costs refers to

the cost of more frequent prices changes induced by higher inflation

The law of one price states that

the good should sell for the same price in all markets)