Ch. 18 macro

in an open economy, gross domestic product equals $1.950 billion, government expenditure equals $280 billion, investment equals $500, and net capital outflow equals $280 billion. what is consumption expenditure?

$890 billion

if the exchange rate is .70 euro per dollar, the price of an MP3 player in paris is 150 euros and the price of an MP3 player in the U.S. is $150, then what is the real exchange rate?

.70 French MP3 players per U.S. MP3 player

if a country has net exports of 8 billion and sold 40 billion of goods and services abroad, then it has

40 billion of exports and 32 billion of imports

if a country has a trade deficit then

S<I and Y<C+I+G

An open economy's GDP is always given by

Y = C + I + G + NX

the law of of one price states that

a good must sell at the same price at all locations

A country sells more to foreign countries than it buys from them. It has

a trade surplus and positive exports

which of the following is an example of us foreign direct investment

a us based restaurant chain opens new restaurants in india

if the exchange rate changes from 148 kazakhstan tenge per dollar to 155 kazakhastan tenge per dollar the dollar has

appreciated. other things the same it now takes fewer dollars to buy kazakhstani goods

If purchasing-power parity holds, a dollar will buy

as many goods in foreign countries as it does in the united states

If the U.S. has exports of $1.5 trillion and imports of $2.2 trillion, then the U.S.

buys more from overseas then it sells overseas, it has a trade deficit

according to purchasing power parity, inflation in the us causes the dollar to

depreciate relative to currencies of countries that have lower inflation rates

During a hyperinflation the real domestic value of a country's currency

falls and its nominal exchange rate depreciates

An appreciation of the U.S. real exchange rate induces U.S. consumers to buy

fewer domestic goods and more foreign goods

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

foreign direct investment that increases italian net capital outflow

Net exports of a country are the value of

goods and services exported minus the value of goods and services imported

U.S international trade has

increased because of an increase in trade of goods with a high value per pound

sheri, a us citizen, builds and operates a bookstore in spain. this action is an example of

investment for sheri and us foreign direct investment

A country's trade balance

is greater than zero only if exports are greater than imports

according to purchasing power parity, which of the following would happen if a country raised its money supply growth rate

its nominal exchange rate would fall

a basket of goods costs $800 in the us. in belgium the basket of goods costs 800 euros and the exchange rate is .80 euros per us dollar. in japan the basket of goods 720000 yen and the exchange rate is 900 yen per dollar. which country has purchasing power parity with the us?

japan but not belguim

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

net capital outflow falls, so net exports fall

other things the same, if a country saves more, then

net capital outflows rises, so net exports rise

if the real exchange rate is greater than 1, then the

nominal exchange rate x us price> foreign price. the dollars required to purchase a good in the us would buy more than enough foreign currency to buy the same good overseas

if a country has y>c+i+g then it has

positive net capital outflow and positive net exports

Mark, a U.S. citizen, buys stock in a British Shipping company. This purchase is an example of

saving for mark and us foreign portfolio investment

You are staying in London over the summer and you have a number of dollars with you. If the dollar depreciates relative to the British pound, then other things the same,

the dollar would buy fewer pounds. the depreciation would discourage you from buying as many british goods and services

net capital outflow measures

the imbalance between the amount of foreign assets bought by domestic residents and the amount of domestic assets bought by foreigners

according to purchasing power parity, which of the following necessarily equals the ratio of the foreign price level divided by the domestic price level?

the nominal exchange rate, but not the real exchange rate

if a dollar buys more potatoes in the us than in france then

the real exchange rate is less than 1, a profit might be made by buying potatoes in the us and selling them in france

nominal exchange rates

vary substantially over time