Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 13, Problem 4QQ
To determine
The activity that expands the aggregate
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If the U.S. interest rate rises, the exchange rate value of the dollar ________ and net exports ________.
a. rises; increase
b. rises; decrease
c. falls; increase
d. falls; decrease
If there is a decrease in the desire of foreigners to purchase goods and services from the United States and a lower desire to invest in U.S. banks and businesses, then how would this affect the U.S. foreign exchange market?
A. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would depreciate.
B. The equilibrium quantity of foreign currency would decrease and the U.S. dollar would appreciate.
C. The equilibrium quantity of foreign currency would increase and the U.S. dollar would depreciate.
D. The equilibrium quantity of foreign currency would increase and the U.S. dollar would appreciate.
If the value of the US dollar appreciates, then US exports will tend to __ and US imports will tend to
A. increase, increase
B. decrease, increase
C. increase, decrease
D. decrease, decrease
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- Is a country for which imports and exports comprise a large fraction of the GDP more likely to adopt a flexible exchange rate or a fixed (hard peg) exchange rate?arrow_forwardImagine that the economy of Germany finds itself in the following situation: the government budget has a surplus of 1 of Germanys GDP; private savings is 20 of GDP; and physical investment is 18 of GDP. Based on the national saving and investment identity, what is the current account balance? If the government budget surplus falls to zero, how will this affect the current account balance?arrow_forwardState whether each of the following events Involves a financial flow to the Mexican economy or a financial flow out of the Mexican economy: Mexico Imports sen4ces from Japan Mexico exports goods to Canada U.S. investors receive a return from past financial investments in Mexicoarrow_forward
- Would each of the following transactions be includedin U.S. net exports or in U.S. net capital outflow?Indicate whether it would represent an increase or adecrease in that variable.a. An American buys a Sony TV.b. An American buys a share of Sony stock.c. The Sony pension fund buys a bond from theU.S. Treasury.d. A worker at a Sony plant in Japan buys someGeorgia peaches from an American farmer.arrow_forwardThe supply of U.S. dollars on foreign exchange markets is A. derived from the supply of U.S. goods. B. determined directly by open market operations at the Federal Reserve Bank. C. derived from the demand for U.S. products by foreigners. D. derived from the demand by United States for imported goods and services.arrow_forwardAn increase in U.S. interest rates relative to German interest rates would likely ____ the U.S. demand for euros and ____ the supply of euros for sale. A. reduce; increase B. increase; reduce C. reduce; reduce D. increase; increasearrow_forward
- Why would a country want to impose an exchange rate ceiling? a. A strong currency encourages imports and can be used to fight inflation. b. A strong currency stimulates an economy. c. A weak currency encourages imports and can be used to fight inflation. d. A weak currency will encourage exports and stimulate the economy.arrow_forwardThe graph shows the supply curve of Canadian dollars. Draw a new supply curve that shows the effect of a rise in the expected future exchange rate. Label it. A change in the expected future exchange rate changes the supply of Canadian dollars________, and a change in Canadian demand for imports changes the supply of Canadian dollars O A. today; today B. in the future; today C. today; in the future D. in the future; in the future 120 MacBook Pro 110 100- 90- 80- 70- Exchange rate (Canadian cents per Canadian dollar) Click the graph, choose a tool in the palette and follow the instructions to create your graph. So 70 80 90 100 10 20 30 40 50 60 Quantity (billions of Canadian dollars per day) >>> Draw only the objects specified in the question.arrow_forward"In a small open economy with perfect capital mobility, if the government implements a fiscal expansion policy, what is the likely impact on the national interest rate and net exports under a fixed exchange rate regime? A. Increase in interest rate, increase in net exports B. Increase in interest rate, decrease in net exports C. No change in interest rate, increase in net exports D. No change in interest rate, decrease in net exports"arrow_forward
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