2. What are the equilibrium prices in foreign exchange markets? 4. What important role does an exchange rate play in a nation s economy/

Transcription

1 International Trade and Economic Growth Chapters 6, 17, and 38 Chapter 6: The United States in the Global Economy 1. Explain the effect of trade restrictions. 2. List the factors that influence equilibrium foreign exchange rates 3. Using demand/supply analysis, show how market forces and public policy affect currency demand and currency supply 4. Define currency appreciation and depreciation and relate both to graphical analysis. 5. State the effects of appreciation and depreciation on a country s net exports. The Foreign Exchange Market p What is a foreign exchange market? 2. What are the equilibrium prices in foreign exchange markets? 3. How are foreign exchange markets like the markets for other goods? 4. What important role does an exchange rate play in a nation s economy/ 5. Using the Dollar-Yen market as an example: Who supplies yen? Who demands yen? Draw a supply/demand graph for yen. 6. What are the determinants of demand for and supply of yen? 7. When would you describe a change in exchange rates as depreciation? 8. When would you describe a change in exchange rates as appreciation?

2 Economic Growth Reading Guide Chapters 17 Chapter 17: Economic Growth and the New Economy 1. Define economic growth and list the factors that stimulate growth. 2. Assess the role of productivity in raising real output and standard of living. Ingredients of Growth p List the six ingredients of economic growth. Production Possibilities Analysis p Draw and properly label a production possibilities curve that shows economic growth. 3. What factors push the production possibilities curve outward? 4. What two things must happen in the economy before it can achieve its growth potential? 5. Even though demand and efficiency factors are important, what do economic growth discussions primarily focus on? 6. In what two ways can society increase its real output and income? 7. In what two ways can labor provide a way for economic growth?

3 8. What do the factors that shift the production possibilities curve do to the LRAS curve? 9. Why is the LRAS curve vertical? 10. How does a price level change effect: Production possibilities curve Economy s real output Long Run Aggregate Supply Curve Accounting for Growth p What has been the single most important source of growth in the U.S.? 12. What has been the most significant change in the workforce in the U.S.? 13. What are some of the difficult-to-measure factors that can influence a country s economic growth? Productivity Growth and the New Economy p What is the main way that an economy can increase its standard of living?

4 Chapter 38: Exchange Rates, the Balance of Payments, and Trade Deficits 1. Explain how the balance of payments accounts are recorded. 2. List the factors that influence equilibrium foreign exchange rates 3. State the effects of appreciation and depreciation on a country s net exports. 4. Understand how changes in net exports and capital flows affect financial and goods markets. The Balance of Payments p What is the balance of payments? 2. What is counted as part of the current account? 3. When would the balance of trade on goods be: Positive Negative 4. What is included in the capital account? Flexible Exchange Rates p Construct a graph of the market for foreign currency showing the supply and demand for pounds compared to the U.S. dollar. 6. What happens when a currency depreciates? 7. What happens when a currency appreciates?

5 8. What three generalizations can be made about what would cause a nation s currency to appreciate or depreciate? Explain how each of the following determinants would cause the demand or supply curve for a particular currency to shift. 1. Changes in taste 2. Changes in income 3. changes in price level 4. changes in interest rates