Econ 2301 MacroEconomics Unit 8 Review

If the number of Japanese yen a dollar buys falls, but neither country's price level changes, then the real exchange rate

depreciates which causes U.S. net exports to increase.

In France a loaf of bread costs 3 euros. In Great Britain a loaf of bread costs 4 pounds. If the exchange rate is .9 pounds per euro, what is the real exchange rate?

2.7/4 loaves of British bread per loaf of French bread

If the real exchange rate between the U.S. and Japan is 1, the nominal exchange rate is 100 yen per U.S. dollar and the price of chicken in the U.S. is $2.50 per pound, what is the price of chicken in Japan?

250 yen per pound

According to purchasing-power parity, inflation in the U.S. causes the dollar to

depreciate relative to currencies of countries that have lower inflation rates.

A Starbucks Grande Latte costs $3.75 in the U.S. and 28 yuan in China. The nominal exchange rate is 6.75 yuan per dollar. The real exchange rate is

.904. If purchasing power parity held the nominal exchange rate would be higher.

The nominal exchange rate between US and France is 0.82 Euros per Dollar. The price of a good in France is 62 Euros. How many US Dollars does one need to be able to purchase this good in France?

75.6

According to purchasing-power parity, if the Federal Reserve increased the money supply

U.S. prices would rise and the nominal exchange rate would fall.

If purchasing-power parity holds, a dollar will buy

enough foreign currency to buy as many goods as it does in the United States.

A Texas ranch sells beef to a U.S. company that sells it to a grocery chain in Japan. These sales

increase both U.S. exports and U.S. net exports.

You are the CEO of a U.S. firm considering building a factory in Chile. If the dollar appreciates relative to the Chilean peso, then other things the same

it takes fewer dollars to build the factory. By itself building the factory increases U.S. net capital outflow.

If over the next few years inflation is higher in Mexico than in the U.S., then according to purchasing-power parity which of the following should rise?

the U.S. nominal exchange rate but not the U.S. real exchange rate

If you are vacationing in France and the dollar depreciates relative to the euro, then

the dollar buys fewer euros. It will take more dollars to buy a good that costs 50 euros

The same good sells for $10 in the US and for 54 Chinese Yuan in China. The real exchange rate between the US and China is 0.99. How many yuan does a dollar buy?

5.35

A country's NCO is $5,067 and its national savings are $12,750. What is its level of domestic investment?

7683

According to purchasing-power parity, if a basket of goods costs $100 in the U.S. and the same basket costs 800 pesos in Argentina, then what is the nominal exchange rate?

8 pesos per dollar