Econ study guide

A country has public savings of $60 billion, private savings of $40 billion, domestic investment of 10$ billion, and net capital of

$100 billion

A country has domestic investment of $235 billion. Its citizens purchase $365 billion of foreign assets and foreign citizens purchase

$300 billion

Suppose that a country imports $160 million worth of goods and services and exports $120 million worth of goods and services. What is the value of net exports?

-40 million

If the relevant money-demand curve is the one labeled MD1, then the equilibrium value of money is

0.61 and the equilibrium price level is 1.6.

REFER TO THE FIGURE. If the money supply is MS1, then the equilibrium value of money is

2, and the equilibrium price level is 1/2

if the price level increased from 130 to 156, then what was the inflation rate?

20 percent

Based on the quantity equation, if Y = 5,000, P = 3, and V = 6, then M =

2500$

If the exchange rate is 1.6 Euros per U.S. dollar and a meal in Lisbon costs 8 Euros, then how many U.S. dollars does it take to

5$ and your purchase increase the EU's net exports.

Jacob puts money into an account. One year later sees that he has 6 percent more dollars and that his money will buy 2 percent more goods. The nominal interest rate was

6 percent and the inflation rate was 4 percent

the nominal exchange rate is 0.8 British pounds per dollar. If a burger in the United States

8 pounds

suppose a country's saving does not change, but its investment declines by $420 billion, Its net capital outflow must have

Fallen by 420 billion dollars but its net exports are unchanged.

Which of the following statements about a country with a trade deficit is true?

Net capital outflow < 0

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

S=I+NCO

what do we call the government revenue that comes from issuing money?

Seigniorage

If real interest rates rose more in the United States than in Canada, then other things the same

U.S. Citizens would by fewer Canadian bonds and Canadians would by more U.S. bonds

the launch of a new software business in the U.S. by a German resident is an example of

U.S. imports

You bought some shares of stock and, over the next year, the price per share increased by 5 percent, as did the price level. Before taxes, you experienced

a nominal gain, but no real gain, and you paid taxes on the nominal gain

The initial effect of an increase in budget surplus in the loanable funds market shown in graph (a) can be

a to b

In general, when a country experiences a capital flight, it's net capital outflow

and net exports increase

If the U.S. government went from a balanced budget to a budget deficit, then the real interest rate

and the real exchange rate would increase

Domestic saving must equal domestic investment in

closed, but not open economies.

In the market for loanable funds, capital flight shifts the

demand curve left

If the money supply is MS1 and the value of money is 2, then there is an excess

demand for money that is represented by the distance between points B and C

Net exports of a country are the value of

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

An associate professor of physics gets a $200 a month raise. She figures that with her new monthly salary she can buy less goods and services than she could buy last year.

her real salary has fallen and her nominal salary has risen

you borrow some money from a bank when the CPI was at 230. After a year, the CPI went up to 250, but you were expecting it to be at

higher than he had expected, and the real value of the loan is higher than he expected

Paolo, a Brazilian investor decides to purchase U.S. government bonds with the U.S. dollars he had previously purchased what

increases U.S. net capital outflow by more than the value of the bond.

A country's trade balance will rise if either

investment falls or savings rises

A country's trade balance

is greater than zero only if exports are greater than imports

What does the theory of purchasing-power parity imply about the value of the real exchange rate between two countries?

it must be equal to 1

REFER TO THE FIGURE. In the market for foreign-currency exchange, the effects of an increase in the budget surplus shown

k

If the real exchange rate for the dollar is below the equilibrium level, the quantity of dollars supplied in the market for foreign-currency exchange is

less than the quantity demanded and the dollar will appreciate

According to the assumptions of the quantity theory of money, if the money supply increases by 7 percent, then

nominal GDP would rise by 7 percent, real GDP would be unchanged.

If a country has a negative net capital outflow, then

on net other countries are purchasing assets from it. This subtracts from its demand for domestically generated loanable funds.

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 U.S. goods.

If saving is greater than domestic investment, then there is a trade

surplus and Y>C+I+G

If the United States raised its tariff on tires, then at the original exchange rate there would be a

surplus in the market for foreign-currency exchange, so the real exchange rate would appreciate

According to the classical dichotomy, which of the following increases when the money supply increases?

the nominal wage

If a country has a national saving of $60 billion, government expenditures of $40 billion, domestic

to increase