chapter 18 homework final review

last year a country had exports of $100 billion, imports of $70 billion, and purchased $60 billion worth of foreign assets. what was the value of domestic assets purchased by foreigners?

$30 billion

in an open economy, gross domestic product equals $2,450 billion, consumption expenditure equals $1,390 billion, government expenditure equals $325 billion, and net capital outflow equals $225 billion. What is national saving?

$735 billion

during some year a country had exports of $50 billion, imports of $70 billion, and domestic investment of $100 billion. what was its saving during the year

$80 billion

if the price levels in the US and in Canada are unchanged, but the nominal exchange rate (Canadian dollars per US dollar) rises then the US dollar

appreciates and so US net exports fall

Which of the following equations is correct?

S = I + NCO

a Chinese company exchanges yuan (Chinese currency) for dollars. it uses these dollars to purchase scrap metal from a US company. As a result of these transactions, Chinese net exports

decrease and US net capital outflow decreases

suppose that real interest rates in the U.S rise relative to real interest rates in other countries. this increase would make foreigners

more willing to purchase U.S bonds, so U.S net capital outflow would fall

the nominal exchange rate it the

rate at which a person can trade the currency of one country for another.

when exchange rates are defined as foreign currency per dollar and foreign goods per US goods, the ability to profit by purchasing wheat in the united states and selling it in china implies that the

real exchange rate is less than 1.

if the Mexican nominal exchange rate (foreign currency per peso) does not change, but prices rise faster in Mexico than in all other countries, then the Mexican real exchange rate

rises

If the value of goods and services that Australia purchases from the United States are less than the value of goods and services that the United States purchases from Australia, then the United States has

negative net exports with Australia and a trade deficit with Australia.

a US company uses UK pounds it already owned to purchase bonds issued by a company in the UK which of these countries has an increase in net capital outflow?

neither the US nor the UK

which of the following is an example of U.S foreign direct investment

A US company opens an auto parts factory in canada

a depreciation of the US real exchange rate induces US consumers to buy

fewer domestic goods and fewer foreign goods

when Microsoft establishes a distribution center in France US net capital outflow

increases because Microsoft makes a foreign direct investment in France

A country's trade balance

is greater than zero only if exports are greater than imports

if a country has positive net capital outflows, then its net exports are

positive, and its saving is larger than its domestic investment

suppose that foreign citizens decide to purchase more U.S. pharmaceuticals and U.S. citizens decide to buy stock in foreign corporations. Other things the same, these actions

raise both U.S net exports and U.S net capital outflows

the dollar is said to appreciate against the euro if the exchange rate

rises. other things the same, it will cost more euros to buy US goods

a country's trade balance will fall if either

saving falls or investment rises