Econ Final True/False

A fiscal expansion, al other factors equal, tends to increase net exports

False

An increase in domestic interest rates, all other factors equal, increases exports

False

The interest rate parity condition means that interest rates are equal across countries

False

When a country is experiencing a trade surplus, dean for domestic goods is greater than the domestic demand for goods

False

Exports will decrease when there is an increase in the real exchange rate

True

If financial investors expect the dollar to depreciate against the yen over the coming year, on year interest rates will be higher in the United States than in Japan

True

If the expected exchange rate appreciates, the current exchange rate immediately appreciatesapprecitates

True

Other things being equal, the interest party condition implies that the domestic currency will appreciate in response to an increase in the expected exchange rate

True

The central bank influences the value of the exchange rate by changing the domestic interest rate relative to the foreign interest rate

True

Under a fixed exchange rate, the central bank must keep the domestic interest rate equal to the foreign interest rates.

True

When the goods market is in equilibrium, domestic output equals the demand for domestic goods

True

Fiscal policy has a greater effect on output in an economy with fixed exchange rates than in an economy with flexible exchange rates

Uncertain