Closed vs. Open Economies
|
|
- Patrick Carr
- 6 years ago
- Views:
Transcription
1
2 Closed vs. Open Economies! A closed economy does not interact with other economies in the world.! An open economy interacts freely with other economies around the world. 1
3 Percent of GDP The U.S. Economy s Increasing Openness 20% 18% 16% 14% 12% Imports 10% 8% Exports 6% 4% 2% 0%
4 The Flow of Goods & Services! Exports: domestically-produced g&s sold abroad! Imports: foreign-produced g&s sold domestically! Net exports (NX), aka the trade balance = value of exports value of imports 3
5 ACTIVE LEARNING 1 Variables that affect NX What do you think would happen to U.S. net exports if: A. Canada experiences a recession (falling incomes, rising unemployment) B. U.S. consumers decide to be patriotic and buy more products Made in the U.S.A. C. Prices of goods produced in Mexico rise faster than prices of goods produced in the U.S.
6 Trade Surpluses & Deficits NX measures the imbalance in a country s trade in goods and services.! Trade deficit: an excess of imports over exports! Trade surplus: an excess of exports over imports! Balanced trade: when exports = imports 5
7 The Flow of Capital! Net capital outflow (NCO): domestic residents purchases of foreign assets minus foreigners purchases of domestic assets! NCO is also called net foreign investment. 6
8 The Flow of Capital The flow of capital abroad takes two forms:! Foreign direct investment: Domestic residents actively manage the foreign investment, e.g., McDonalds opens a fast-food outlet in Moscow.! Foreign portfolio investment: Domestic residents purchase foreign stocks or bonds, supplying loanable funds to a foreign firm. 7
9 The Flow of Capital NCO measures the imbalance in a country s trade in assets:! When NCO > 0, capital outflow Domestic purchases of foreign assets exceed foreign purchases of domestic assets.! When NCO < 0, capital inflow Foreign purchases of domestic assets exceed domestic purchases of foreign assets. 8
10 Variables that Influence NCO! Real interest rates paid on foreign assets! Real interest rates paid on domestic assets! Perceived risks of holding foreign assets! Govt policies affecting foreign ownership of domestic assets 9
11 The Equality of NX and NCO! An accounting identity: NCO = NX! arises because every transaction that affects NX also affects NCO by the same amount (and vice versa)! When a foreigner purchases a good from the U.S.,! U.S. exports and NX increase! the foreigner pays with currency or assets, so the U.S. acquires some foreign assets, causing NCO to rise. 10
12 The Equality of NX and NCO! An accounting identity: NCO = NX! arises because every transaction that affects NX also affects NCO by the same amount (and vice versa)! When a U.S. citizen buys foreign goods,! U.S. imports rise, NX falls! the U.S. buyer pays with U.S. dollars or assets, so the other country acquires U.S. assets, causing U.S. NCO to fall. 11
13 Saving, Investment, and International Flows of Goods & Assets Y = C + I + G + NX accounting identity Y C G = I + NX rearranging terms S = I + NX since S = Y C G S = I + NCO since NX = NCO! When S > I, the excess loanable funds flow abroad in the form of positive net capital outflow.! When S < I, foreigners are financing some of the country s investment, and NCO < 0. 12
14 Case Study: The U.S. Trade Deficit! The U.S. trade deficit reached record levels in 2006 and remained high in ! Recall, NX = S I = NCO. A trade deficit means I > S, so the nation borrows the difference from foreigners.! In 2007, foreign purchases of U.S. assets exceeded U.S. purchases of foreign assets by $775 million.! Such deficits have been the norm since
15 U.S. Saving, Investment, and NCO, % 21% 18% Investment (% of GDP) 15% 12% 9% 6% Saving 3% 0% NCO -3% -6%
16 Case Study: The U.S. Trade Deficit Why U.S. saving has been less than investment:! In the 1980s and early 2000s, huge govt budget deficits and low private saving depressed national saving.! In the 1990s, national saving increased as the economy grew, but domestic investment increased even faster due to the information technology boom. 15
17 Case Study: The U.S. Trade Deficit! Is the U.S. trade deficit a problem?! The extra capital stock from the 90s investment boom may well yield large returns.! The fall in saving of the 80s and 00s, while not desirable, at least did not depress domestic investment, since firms could borrow from abroad.! A country, like a person, can go into debt for good reasons or bad ones. A trade deficit is not necessarily a problem, but might be a symptom of a problem. 16
18 The Nominal Exchange Rate! Nominal exchange rate: the rate at which one country s currency trades for another! We express all exchange rates as foreign currency per unit of domestic currency.! Some exchange rates as of 29 January 2014, all per US$ Canadian dollar: 1.12 Euro: 0.73 Japanese yen: Mexican peso:
19 Appreciation and Depreciation! Appreciation (or strengthening ): an increase in the value of a currency as measured by the amount of foreign currency it can buy! Depreciation (or weakening ): a decrease in the value of a currency as measured by the amount of foreign currency it can buy! Examples: During 2007, the U.S. dollar! depreciated 9.5% against the Euro! appreciated 1.5% against the S. Korean Won 18
20 The Real Exchange Rate! Real exchange rate: the rate at which the g&s of one country trade for the g&s of another e x P! Real exchange rate = P* where P = domestic price P* = foreign price (in foreign currency) e = nominal exchange rate, i.e., foreign currency per unit of domestic currency 19
21 Example With One Good! A Big Mac costs $2.50 in U.S., 400 yen in Japan! e = 120 yen per $! e x P = price in yen of a U.S. Big Mac = (120 yen per $) x ($2.50 per Big Mac) = 300 yen per U.S. Big Mac! Compute the real exchange rate: e x P P* = 300 yen per U.S. Big Mac 400 yen per Japanese Big Mac = 0.75 Japanese Big Macs per U.S. Big Mac 20
22 Interpreting the Real Exchange Rate The real exchange rate = 0.75 Japanese Big Macs per U.S. Big Mac Correct interpretation: To buy a Big Mac in the U.S., a Japanese citizen must sacrifice an amount that could purchase 0.75 Big Macs in Japan. 21
23 ACTIVE LEARNING 2 Compute a real exchange rate e = 10 pesos per $ price of a tall Starbucks Latte P = $3 in U.S., P* = 24 pesos in Mexico A. What is the price of a U.S. latte measured in pesos? B. Calculate the real exchange rate, measured as Mexican lattes per U.S. latte.
24 The Real Exchange Rate With Many Goods P = U.S. price level, e.g., Consumer Price Index, measures the price of a basket of goods P* = foreign price level Real exchange rate = (e x P)/P* = price of a domestic basket of goods relative to price of a foreign basket of goods! If U.S. real exchange rate appreciates, U.S. goods become more expensive relative to foreign goods. 23
25 Theory of FX Exchange Rates: Long-Run! We now study a theory of FX rate determination in the Long-Run.! It s called Purchasing-power parity. 24
26 The Law of One Price! Law of one price: the notion that a good should sell for the same price in all markets! Suppose coffee sells for $4/pound in Seattle and $5/pound in Boston, and can be costlessly transported.! There is an opportunity for arbitrage, making a quick profit by buying coffee in Seattle and selling it in Boston.! Such arbitrage drives up the price in Seattle and drives down the price in Boston, until the two prices are equal. 25
27 Purchasing-Power Parity (PPP)! Purchasing-power parity: a theory of exchange rates whereby a unit of any currency should be able to buy the same quantity of goods in all countries! based on the law of one price! implies that nominal exchange rates adjust to equalize the price of a basket of goods across countries 26
28 Purchasing-Power Parity (PPP)! Example: The basket contains a Big Mac. P = price of U.S. Big Mac (in dollars) P* = price of Japanese Big Mac (in yen) e = exchange rate, yen per dollar! According to PPP, e x P = P* price of U.S. Big Mac, in yen price of Japanese Big Mac, in yen! Solve for e: e = P* P 27
29 PPP and Its Implications! PPP implies that the nominal exchange rate between two countries should equal the ratio of price levels. e =! If the two countries have different inflation rates, then e will change over time:! If inflation is higher in Mexico than in the U.S., then P* rises faster than P, so e rises the dollar appreciates against the peso.! If inflation is higher in the U.S. than in Japan, then P rises faster than P*, so e falls the dollar depreciates against the yen. P* P 28
30 Limitations of PPP Theory Two reasons why exchange rates do not always adjust to equalize prices across countries:! Many goods cannot easily be traded.! Examples: haircuts, going to the movies! Price differences on such goods cannot be arbitraged away! Foreign, domestic goods not perfect substitutes.! E.g., some U.S. consumers prefer Toyotas over Chevys, or vice versa! Price differences reflect taste differences 29
31 Limitations of PPP Theory! Nonetheless, PPP works well in many cases, especially as an explanation of long-run trends.! For example, PPP implies: the greater a country s inflation rate, the faster its currency should depreciate (relative to a low-inflation country like the US).! The data support this prediction 30
32 Inflation & Depreciation in a Cross-Section of 31 Countries Ukraine Avg annual depreciation relative to US dollar (log scale) Romania Argentina Mexico Canada Kenya Japan Brazil Avg annual CPI inflation (log scale)
33 ACTIVE LEARNING 3 Chapter review questions 1. Which of the following statements about a country with a trade deficit is not true? A. Exports < imports B. Net capital outflow < 0 C. Investment < saving D. Y < C + I + G 2. A Ford Escape SUV sells for $24,000 in the U.S. and 720,000 rubles in Russia. If purchasing-power parity holds, what is the nominal exchange rate (rubles per dollar)?
34 Theory of FX Exchange Rates: Short-Run! We now study a theory of FX rate determination in the Short-Run.! One crucial assumption:! Price level in two countries are FIXED!! FX rates do NOT affect GDP! 33
35 The Market for Foreign-Currency Exchange! Another identity from the preceding chapter: Net capital outflow NCO = NX Net exports! In the market for foreign-currency exchange,! NX is the demand for dollars: Foreigners need dollars to buy U.S. net exports.! NCO is the supply of dollars: U.S. residents sell dollars to obtain the foreign currency they need to buy foreign assets. 34
36 The Market for Foreign-Currency Exchange! Recall: The U.S. real exchange rate (E) measures the quantity of foreign goods & services that trade for one unit of U.S. goods & services.! E is the real value of a dollar in the market for foreign-currency exchange. 35
37 The Market for Foreign-Currency Exchange E adjusts to balance supply and demand for dollars in the market for foreigncurrency exchange. E S = NCO An increase in E has no effect on saving or investment, so it does not affect NCO or the supply of dollars. E 1 D = NX Dollars 36
38 A Theory of the Open Economy! Now, we combine all these things together to come up with a theory of the open economy.! We will use this theory to see how govt policies and various events affect the trade balance, exchange rate, and capital flows.! We start with the loanable funds market 37
39 The Market for Loanable Funds! An identity from the preceding chapter: Saving S = I + NCO Domestic investment Net capital outflow! Supply of loanable funds = saving.! A dollar of saving can be used to finance:! the purchase of domestic capital! the purchase of a foreign asset! So, demand for loanable funds = I + NCO 38
40 The Market for Loanable Funds! Recall:! S depends positively on the real interest rate, r.! I depends negatively on r.! What about NCO? 39
41 How NCO Depends on the Real Interest Rate The real interest rate, r, is the real return on domestic assets. A fall in r makes domestic assets less attractive relative to foreign assets.! People in the U.S. purchase more foreign assets.! People abroad purchase fewer U.S. assets.! NCO rises. r 1 r 2 r Net capital outflow NCO NCO NCO 1 NCO 2 40
42 The Loanable Funds Market Diagram r 1 r Loanable funds S = saving D = I + NCO r adjusts to balance supply and demand in the LF market. Both I and NCO depend negatively on r, so the D curve is downward-sloping. LF 41
43 ACTIVE LEARNING 1 Budget deficits and capital flows! Suppose the government runs a budget deficit (previously, the budget was balanced).! Use the appropriate diagrams to determine the effects on the real interest rate and net capital outflow Cengage 2015 Cengage Learning. Learning. All Rights All Reserved. Rights Reserved. May not May be copied, not be copied, scanned, scanned, or duplicated, or duplicated, in whole in or whole in part, or in except part, for except use as for use as permitted permitted in a license in a distributed license distributed with a certain with a product certain product or service or or service otherwise or otherwise on a on a password-protected website website for classroom for classroom use. use. 42
44 ACTIVE LEARNING 2 Budget deficit, exchange rate, NX! Initially, the government budget is balanced and trade is balanced (NX = 0).! Suppose the government runs a budget deficit. As we saw earlier, r rises and NCO falls.! How does the budget deficit affect the U.S. real exchange rate? The balance of trade? 2015 Cengage 2015 Cengage Learning. Learning. All Rights All Reserved. Rights Reserved. May not May be copied, not be copied, scanned, scanned, or duplicated, or duplicated, in whole in or whole in part, or in except part, for except use as for use as permitted permitted in a license in a distributed license distributed with a certain with a product certain product or service or or service otherwise or otherwise on a on a password-protected website website for classroom for classroom use. use. 43
45 The Twin Deficits Percent of GDP 6% 5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% U.S. federal budget deficit Net exports and the budget deficit often move in opposite directions. U.S. net exports
46 The Connection Between Interest Rates and Exchange Rates r 2 r 1 r Anything Keep that in mind: The increases LF market r (not shown) will reduce determines NCO r. and the This supply value of r dollars then determines the foreign NCO exchange (shown in upper market. graph). This value of NCO then Result: determines supply of The real exchange dollars in foreign exchange rate appreciates. market (in lower graph). E 2 E 1 E NCO 2 S 2 NCO 2 NCO NCO NCO 1 S 1 = NCO 1 D = NX NCO 1 dollars 45
47 SUMMARY: The Effects of a Budget Deficit! National saving falls.! The real interest rate rises.! Domestic investment and net capital outflow both fall.! The real exchange rate appreciates.! Net exports fall (or, the trade deficit increases). 46
48 SUMMARY: The Effects of a Budget Deficit! One other effect: As foreigners acquire more domestic assets, the country s debt to the rest of the world increases.! Due to many years of budget and trade deficits, the U.S. is now the world s largest debtor nation. International Investment Position of the U.S. 31 October 2013 Value of U.S.-owned foreign assets $21.6 trillion Value of foreign-owned U.S. assets U.S. net debt to the rest of the world $25.8 trillion $ 4.2 trillion 47
49 ACTIVE LEARNING 3 Investment incentives! Suppose the government provides new tax incentives to encourage investment.! Use the appropriate diagrams to determine how this policy would affect:! the real interest rate! net capital outflow! the real exchange rate! net exports 2015 Cengage 2015 Cengage Learning. Learning. All Rights All Reserved. Rights Reserved. May not May be copied, not be copied, scanned, scanned, or duplicated, or duplicated, in whole in or whole in part, or in except part, for except use as for use as permitted permitted in a license in a distributed license distributed with a certain with a product certain product or service or or service otherwise or otherwise on a on a password-protected website website for classroom for classroom use. use. 48
50 Trade Policy! Trade policy: a govt policy that directly influences the quantity of g&s that a country imports or exports! Examples:! Tariff a tax on imports! Import quota a limit on the quantity of imports! Voluntary export restrictions the govt pressures another country to restrict its exports; essentially the same as an import quota 49
51 Trade Policy! Common reasons for policies that restrict imports:! Save jobs in a domestic industry that has difficulty competing with imports! Reduce the trade deficit! Do such trade policies accomplish these goals?! Let s use our model to analyze the effects of an import quota on cars from Japan designed to save jobs in the U.S. auto industry. 50
52 Analysis of a Quota on Cars from Japan An import quota does not affect saving or investment, so it does not affect NCO. (Recall: NCO = S I.) r Loanable funds r Net capital outflow S r 1 r 1 D NCO LF NCO 51
53 Analysis of a Quota on Cars from Japan Since NCO is unchanged, S curve does not shift. The D curve shifts: At each E, imports of cars fall, so net exports rise, D shifts to the right. At E 1, there is excess demand in the foreign exchange market. E rises to restore eq m. E 2 E 1 E Market for foreigncurrency exchange S = NCO D 1 D 2 Dollars 52
54 Analysis of a Quota on Cars from Japan What happens to NX? Nothing!! If E could remain at E 1, NX would rise, and the quantity of dollars demanded would rise.! But the import quota does not affect NCO, so the quantity of dollars supplied is fixed.! Since NX must equal NCO, E must rise enough to keep NX at its original level.! Hence, the policy of restricting imports does not reduce the trade deficit. 53
55 Analysis of a Quota on Cars from Japan Does the policy save jobs? The quota reduces imports of Japanese autos.! U.S. consumers buy more U.S. autos.! U.S. automakers hire more workers to produce these extra cars.! So the policy saves jobs in the U.S. auto industry. But E rises, reducing foreign demand for U.S. exports.! Export industries contract, exporting firms lay off workers. The import quota saves jobs in the auto industry but destroys jobs in U.S. export industries!! 54
56 CASE STUDY: Capital Flows from China! In recent years, China has accumulated U.S. assets to reduce its exchange rate and boost its exports.! Results in U.S.:! Appreciation of $ relative to Chinese renminbi! Higher U.S. imports from China! Larger U.S. trade deficit! Some U.S. politicians want China to stop, argue for restricting trade with China to protect some U.S. industries.! Yet, U.S. consumers benefit, and the net effect of China s currency intervention is probably small. 55
57 Political Instability and Capital Flight! 1994: Political instability in Mexico made world financial markets nervous.! People worried about the safety of Mexican assets they owned.! People sold many of these assets, pulled their capital out of Mexico.! Capital flight: a large and sudden reduction in the demand for assets located in a country! We analyze this using our model, but from the perspective of Mexico, not the U.S. 56
58 Capital Flight from Mexico The equilibrium values of r and NCO both increase. r Loanable funds r Net capital outflow S 1 r 2 r 2 r 1 r 1 D 1 D 2 LF NCO 2 NCO 1 NCO 57
59 Capital Flight from Mexico The increase in NCO causes an increase in the supply of pesos in the foreign exchange market. The real exchange rate value of the peso falls. E 1 E 2 E Market for foreigncurrency exchange S 1 = NCO 1 S 2 = NCO 2 D 1 Pesos 58
60 Examples of Capital Flight: Mexico,
61 Examples of Capital Flight: S.E. Asia,
62 Examples of Capital Flight: Russia,
63 Examples of Capital Flight: Argentina,
64 CONCLUSION! The U.S. economy is becoming increasingly open:! Trade in g&s is rising relative to GDP.! Increasingly, people hold international assets in their portfolios and firms finance investment with foreign capital. 63
65 CONCLUSION! Yet, we should be careful not to blame our problems on the international economy.! Our trade deficit is not caused by other countries unfair trade practices, but by our own low saving.! Stagnant living standards are not caused by imports, but by low productivity growth.! When politicians and commentators discuss international trade and finance, the lessons of this and the preceding chapter can help separate myth from reality. 64
66 Summary Net exports equal exports minus imports. Net capital outflow equals domestic residents purchases of foreign assets minus foreigners purchases of domestic assets. Every international transaction involves the exchange of an asset for a good or service, so net exports equal net capital outflow.
67 Summary Saving can be used to finance domestic investment or to buy assets abroad. Thus, saving equals domestic investment plus net capital outflow. The nominal exchange rate is the relative price of the currency of two countries. The real exchange rate is the relative price of the goods and services of the two countries.
68 Summary According to the theory of purchasing-power parity, a unit of any country s currency should be able to buy the same quantity of goods in all countries. This theory implies that the nominal exchange rate between two countries should equal the ratio of the price levels in the two countries. It also implies that countries with high inflation should have depreciating currencies.
69 Summary In an open economy, the real interest rate adjusts to balance the supply of loanable funds (saving) with the demand for loanable funds (domestic investment and net capital outflow). In the market for foreign-currency exchange, the real exchange rate adjusts to balance the supply of dollars (net capital outflow) with the demand for dollars (net exports). Net capital outflow is the variable that connects these markets Cengage 2015 Cengage Learning. Learning. All Rights All Reserved. Rights Reserved. May not May be copied, not be copied, scanned, scanned, or duplicated, or duplicated, in whole in or whole in part, or in except part, for except use as for use as permitted permitted in a license in a distributed license distributed with a certain with a product certain product or service or or service otherwise or otherwise on a on a password-protected website website for classroom for classroom use. use. 68
70 Summary A budget deficit reduces national saving, drives up interest rates, reduces net capital outflow, reduces the supply of dollars in the foreign exchange market, appreciates the exchange rate, and reduces net exports. A policy that restricts imports does not affect net capital outflow, so it cannot affect net exports or improve a country s trade deficit. Instead, it drives up the exchange rate and reduces exports as well as imports Cengage 2015 Cengage Learning. Learning. All Rights All Reserved. Rights Reserved. May not May be copied, not be copied, scanned, scanned, or duplicated, or duplicated, in whole in or whole in part, or in except part, for except use as for use as permitted permitted in a license in a distributed license distributed with a certain with a product certain product or service or or service otherwise or otherwise on a on a password-protected website website for classroom for classroom use. use. 69
71 Summary Political instability may cause capital flight, as nervous investors sell assets and pull their capital out of the country. As a result, interest rates rise and the country s exchange rate falls. This occurred in Mexico in 1994 and in other countries more recently Cengage 2015 Cengage Learning. Learning. All Rights All Reserved. Rights Reserved. May not May be copied, not be copied, scanned, scanned, or duplicated, or duplicated, in whole in or whole in part, or in except part, for except use as for use as permitted permitted in a license in a distributed license distributed with a certain with a product certain product or service or or service otherwise or otherwise on a on a password-protected website website for classroom for classroom use. use. 70
Economics. Open-Economy Macroeconomics: Basic Concepts CHAPTER. N. Gregory Mankiw. Principles of. Seventh Edition. Wojciech Gerson ( )
Seventh Edition Principles of Economics N. Gregory Mankiw Wojciech Gerson (1831-1901) CHAPTER 31 Open-Economy Macroeconomics: Basic Concepts In this chapter, look for the answers to these questions How
More informationOpen-Economy Macroeconomics: Basic Concepts
Wojciech Gerson (1831-1901) Seventh Edition Principles of Macroeconomics N. Gregory Mankiw CHAPTER 18 Open-Economy Macroeconomics: Basic Concepts Closed vs. Open Economies A closed economy does not interact
More informationOpen-Economy Macroeconomics: Basic Concepts
N. Gregory Mankiw Principles of Macroeconomics Sixth Edition 18 Open-Economy Macroeconomics: Basic Concepts Premium PowerPoint Slides by Ron Cronovich 2012 UPDATE In this chapter, look for the answers
More informationMacroeonomics. 18 this chapter, Open-Economy Macroeconomics: look for the answers to these questions: Introduction. N.
C H A P T E R In 18 this chapter, look for the answers to these questions: Open-Economy Macroeconomics: How are international flows of goods and assets Basic Concepts related? P R I N C I P L E S O F Macroeonomics
More informationMacroeconomics. Open-Economy Macroeconomics: Basic Concepts. Introduction. In this chapter, look for the answers to these questions: N.
C H A P T E R 18 Open-Economy Macroeconomics: Basic Concepts P R I N C I P L E S O F Macroeconomics N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich 2010 South-Western, a part of Cengage Learning,
More informationChapter 31 Open Economy Macroeconomics Basic Concepts
Chapter 31 Open Economy Macroeconomics Basic Concepts 0 In this chapter, look for the answers to these questions: How are international flows of goods and assets related? What s the difference between
More informationOpen-Economy Macroeconomics: Basic Concepts
Lesson 10 Open-Economy Macroeconomics: Basic Concepts Henan University of Technology Sino-British College Transfer Abroad Undergraduate Programme 0 In this lesson, look for the answers to these questions:
More informationOpen Economy. Sherif Khalifa. Sherif Khalifa () Open Economy 1 / 70
Sherif Khalifa Sherif Khalifa () Open Economy 1 / 70 Definition A closed economy is an economy that does not interact with other economies. Definition An open economy is an economy that interacts freely
More informationOpen Economy. Sherif Khalifa. Sherif Khalifa () Open Economy 1 / 66
Sherif Khalifa Sherif Khalifa () Open Economy 1 / 66 International Flows Definition A closed economy is an economy that does not interact with other economies. Definition An open economy is an economy
More informationA Macroeconomic Theory of the Open Economy
A Macroeconomic Theory of the Open Economy PowerPoint Slides prepared by: Andreea CHIRITESCU Eastern Illinois University 1 Market for Loanable Funds In an open economy S = I + NCO Saving = Domestic investment
More informationOPEN-ECONOMY MACROECONOMICS: BASIC CONCEPTS
18 OPEN-ECONOMY MACROECONOMICS: BASIC CONCEPTS LEARNING OBJECTIVES: By the end of this chapter, students should understand: how net exports measure the international flow of goods and services. how net
More informationChapter 6. The Open Economy
Chapter 6 0 IN THIS CHAPTER, YOU WILL LEARN: accounting identities for the open economy the small open economy model what makes it small how the trade balance and exchange rate are determined how policies
More informationThe Open Economy. Inflation Worth Publishers, all rights reserved CHAPTER 5
6 The Open Economy Inflation CHAPTER 5 Modified by Ming Yi 2016 Worth Publishers, all rights reserved 5 IN THIS CHAPTER, YOU WILL LEARN: Accounting identities for the open economy The small open economy
More informationLECTURE XIII. 30 July Monday, July 30, 12
LECTURE XIII 30 July 2012 TOPIC 15 Exchange Rates BIG PICTURE How do we evaluate currency across countries? How is the exchange rate determined? What is the relationship of the foreign exchange market
More informationNational Income & Business Cycles
National Income & Business Cycles accounting identities for the open economy the small open economy model what makes it small how the trade balance and exchange rate are determined how policies affect
More informationOPEN-ECONOMY MACROECONOMICS: BASIC CONCEPTS
17 OPEN-ECONOMY MACROECONOMICS: BASIC CONCEPTS LEARNING OBJECTIVES: By the end of this chapter, students should understand: how net exports measure the international flow of goods and services. how net
More informationThe Macroeconomic Theory of the Open Economy: Chapter 13 Continued Net Capital Outflow: The Link between the two markets
The Macroeconomic Theory of the Open Economy: Chapter 13 Continued In an open economy: o National saving o Domestic investment o Net foreign investment (NCO) o The exchange rate o Net exports (NX) Are
More information6 The Open Economy. This chapter:
6 The Open Economy This chapter: Balance of Payments Accounting Savings and Investment in the Open Economy Determination of the Trade Balance and the Exchange Rate Mundell Fleming model Exchange Rate Regimes
More informationECON 3010 Intermediate Macroeconomics Chapter 6
ECON 3010 Intermediate Macroeconomics Chapter 6 The Open Economy Imports and exports of selected countries, 2010 60 50 Exports Imports Percent of GDP 40 30 20 10 0 Australia China Germany Greece S. Korea
More informationA Macroeconomic Theory of the Open Economy
CHAPTER 32 A Macroeconomic Theory of the Open Economy Goals in this chapter you will Build a model to explain an open economy s trade balance and exchange rate Use the model to analyze the effects of government
More informationTrade & capital flows
N. Gregory Mankiw Chapter 17 & 18 Trade & capital flows 18 Open-Economy Macroeconomics: Basic Concepts Premium PowerPoint Slides by Ron Cronovich 2012 UPDATE Trade, net exports (NX) and capital flows What
More informationEC 205 Lecture 20 04/05/15
EC 205 Lecture 20 04/05/15 Remaining material till the end of the semester: Finish Chp 14 (1 subsection left) Open economy version of IS-LM (Chp 6.1&6.3+13) Chp 16 OR Dynamic macro models (As time permits)
More information2. (Figure: Change in the Demand for U.S. Dollars) Refer to the information
Name: Date: Use the following to answer questions 1-3: Figure: Change in the Demand for U.S. Dollars 1. (Figure: Change in the Demand for U.S. Dollars) Refer to the information in the figure. The change
More informationThe Open Economy. (c) Copyright 1998 by Douglas H. Joines 1
The Open Economy (c) Copyright 1998 by Douglas H. Joines 1 Module Objectives Know the major items in the Balance of Payments Accounts Know the determinants of the trade balance Know the major determinants
More informationECON Intermediate Macroeconomic Theory
ECON 322 - Intermediate Macroeconomic Theory Fall 2018 Mankiw, Macroeconomics, 8th ed., Chapter 6 Chapter 6: Open Economy Macroeconomics Key points: Know both sides of the trade balance - the current account
More informationAssignment 6. Deadline: July 29, 2005
ECON 1010C Principles of Macroeconomics Instructor: Sharif F. Khan Department of Economics Atkinson College York University Summer 2005 Assignment 6 Deadline: July 29, 2005 Part A Multiple-Choice Questions
More informationA Macroeconomic Theory of the Open Economy. Chapter 30
A Macroeconomic Theory of the Open Economy Chapter 30 Key Macroeconomic Variables in an Open Economy The important macroeconomic variables of an open economy include: net exports net foreign investment
More informationTest 3: April 4, Multiple Choice 30 points (1 each) Select the best answer for each question. Answer the questions on the Scantron sheet.
Test 3: April 4, 2002 Multiple Choice 30 points (1 each) Select the best answer for each question. Answer the questions on the Scantron sheet. 1. Suzanne, a Canadian resident, purchases stock in a Thai
More informationChapter 15. The Foreign Exchange Market. Chapter Preview
Chapter 15 The Foreign Exchange Market Chapter Preview In the mid-1980s, American businesses became less competitive relative to their foreign counterparts. By the 2000s, though, competitiveness increased.
More informationIn this chapter, look for the answers to these questions
In this chapter, look for the answers to these questions What are the main types of financial institutions and what is their function? What are the three kinds of saving? What s the difference between
More informationMacroeonomics. Saving, Investment, and the Financial System 8/29/2012. Financial Institutions
C H A P T E R 13 Saving, Investment, and the Financial System P R I N C I P L E S O F Macroeonomics N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich 2009 South-Western, a part of Cengage Learning,
More informationTOPIC 9. International Economics
TOPIC 9 International Economics 2 Goals of Topic 9 What is the exchange rate? NX back!! What is the link between the exchange rate and net exports? What is the trade deficit? How do different shocks affect
More informationGoals of Topic 8. NX back!! What is the link between the exchange rate and net exports? How do different policies affect the trade deficit?
TOPIC 8 International Economics Goals of Topic 8 What is the exchange rate? NX back!! What is the link between the exchange rate and net exports? What is the trade deficit? How do different shocks affect
More information45% Imports Exports 40% 35% 30% 25% 20% 15% 10% 0% Canada France Germany Italy Japan U.K. U.S.
45% 40% 35% Imports Exports 30% 25% 20% 15% 10% 5% 0% Canada France Germany Italy Japan U.K. U.S. spending need not equal output spending need not equal output saving need not equal investment A country
More information684 PART ELEVEN THE MACROECONOMICS OF OPEN ECONOMIES rate were above the equilibrium level, the quantity of dollars supplied would exceed the quantity
CHAPTER 30 A MACROECONOMIC THEORY OF THE OPEN ECONOMY 683 Real Exchange Rate Equilibrium real exchange rate Equilibrium quantity Supply of dollars (from net foreign investment) Demand for dollars (for
More informationUnit 5: International Trade
Unit 5: International Trade 1 International Trade 2 Where does your stuff come from? (Check the tags on your clothes, shoes, watch, calculator, etc.) Why have your clothes and personal items traveled all
More informationMacroeconomics in an Open Economy
Chapter 17 (29) Macroeconomics in an Open Economy Chapter Summary Nearly all economies are open economies that trade with and invest in other economies. A closed economy has no interactions in trade or
More informationInternational Finance
International Finance 19 1 Balance of Payments International economic transactions Flow of transactions period of time May not involve cash payments Double-entry bookkeeping Credits Inflow of receipts
More informationNet Exports and Capital Flows: Linking Financial and Goods Markets
ACTIVITY 7-5 Net Exports and Capital Flows: Linking Financial and Goods Markets The term capital flow refers to the movement of financial capital (money) between economies. Capital inflows consist of foreign
More informationTOBB-ETU, Iktisat Bölümü Macroeconomics II (IKT 234) Part III (Open Economy, Long-Run) Çal şma Sorular -Cevaplar (Ozan Eksi)
TOBB-ETU, Iktisat Bölümü Macroeconomics II (IKT 234) Part III (Open Economy, Long-Run) Çal şma Sorular -Cevaplar (Ozan Eksi) 1 INTRODUCTORY DEFINITIONS 1-) An economy that interacts with other economies
More informationMankiw Chapter 13 lecture & reading questions:
Mankiw Chapter 13 lecture & reading questions: What are the main types of financial institutions in the U.S. economy, and what is their function? What are the 4 types of saving? (Private savings, public
More informationBBM2153 Financial Markets and Institutions Prepared by Dr Khairul Anuar
BBM2153 Financial Markets and Institutions Prepared by Dr Khairul Anuar L8: The Foreign Exchange Market www. notes638.wordpress.com Copyright 2015 Pearson Education, Ltd. All rights reserved. 8-1 Chapter
More informationChapter 13 The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime
Chapter 13 The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime Modified by Yun Wang Eco 3203 Intermediate Macroeconomics Florida International University Summer 2017 2016
More informationECON 1002 E. Come to the PASS workshop with your mock exam complete. During the workshop you can work with other students to review your work.
It is most beneficial to you to write this mock midterm UNDER EXAM CONDITIONS. This means: Complete the midterm in 2.5 hour(s). Work on your own. Keep your notes and textbook closed. Attempt every question.
More informationTHE GLOBAL ECONOMY AND POLICY Macroeconomics in Context (Goodwin, et al.)
Chapter 14 THE GLOBAL ECONOMY AND POLICY Macroeconomics in Context (Goodwin, et al.) Chapter Overview This chapter will take you through the basics of international trade and finance. The chapter introduces
More informationChapter 29 The Global Economy and Policy Principles of Economics in Context (Goodwin et al)
Chapter 29 The Global Economy and Policy Principles of Economics in Context (Goodwin et al) Chapter Overview This chapter will take you through the basics of international trade and finance. The chapter
More informationThe Foreign Exchange Market
INTRO Go to page: Go to chapter Bookmarks Printed Page 421 The Foreign Exchange Module 43: Exchange Policy 43.1 Exchange Policy Module 44: Exchange s and 44.1 Exchange s and The role of the foreign exchange
More informationEconomics. Saving, Investment, and the Financial System CHAPTER. N. Gregory Mankiw. Principles of. Seventh Edition. Wojciech Gerson ( )
Seventh Edition Principles of Economics N. Gregory Mankiw Wojciech Gerson (1831-1901) CHAPTER 26 Saving, Investment, and the Financial System In this chapter, look for the answers to these questions What
More informationOpening the Economy. Topic 9
Opening the Economy Topic 9 Goals of Topic 9 What is the exchange rate? NX is back!! What is the link between the exchange rate and net exports? What is the trade deficit? How do different shocks affect
More informationStudy Questions (with Answers) Lecture 15 International Macroeconomics
Study Questions (with Answers) Page 1 of 5 Study Questions (with Answers) Lecture 15 International Macroeconomics Part 1: Multiple Choice Select the best answer of those given. 1. If the aggregate supply
More informationA CLOSED ECONOMY. 2-) In a closed economy, Y-C-G equals: a-) national saving. b-) private saving. c-) public saving. d-) nancial saving.
TOBB-ETU, Economics Department Macroeconomics II (IKT 234) Closed and Open Economies in the Medium Run Intro 1 - Practice Questions (Ozan Eksi) A CLOSED ECONOMY 1-) In the classical model with xed output,
More informationSaving, Investment, and the Financial System. Premium PowerPoint Slides by Ron Cronovich, Updated by Vance Ginn
C H A P T E R 26 Saving, Investment, and the Financial System Economics P R I N C I P L E S O F N. Gregory Mankiw Premium PowerPoint Slides by Ron Cronovich, Updated by Vance Ginn 2009 South-Western, a
More informationEastern Mediterranean University Faculty of Business and Economics Department of Economics Spring Semester
Eastern Mediterranean University Faculty of Business and Economics Department of Economics 2015-16 Spring Semester Duration: 90 minutes ECON102 - Introduction to Economics II Final Exam Type A 2 June 2016
More informationThe answer lies in the role of the exchange rate, which is determined in the foreign exchange market.
In yesterday s lesson we saw that the market for loanable funds shows us how financial capital flows into or out of a nation s financial account. Goods and services also flow, but this flow is tracked
More informationPractice Problems 41-44
Practice Problems 41-44 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. If a country sold more goods and services to the rest of the world than they purchased
More informationINTERNATIONAL FINANCE TOPIC
INTERNATIONAL FINANCE 11 TOPIC The Foreign Exchange Market The dollar ($), the euro ( ), and the yen ( ) are three of the world s monies and most international payments are made using one of them. But
More informationA Macroeconomic Theory of the Open Economy. Lecture 9
1 A Macroeconomic Theory of the Open Economy Lecture 9 2 What we learn in this Chapter? In Chapter 29 we defined the basic concepts of an open economy, such as the Balance of Payments, NX = NFI and the
More informationEcon 340. Forms of Exchange Rates. Forms of Exchange Rates. Forms of Exchange Rates. Forms of Exchange Rates. Outline: Exchange Rates
Econ 34 Lecture 13 In What Forms Are Reported? What Determines? Theories of 2 Forms of Forms of What Is an Exchange Rate? The price of one currency in terms of another Examples Recent rates for the US
More informationHomework Assignment #2, part 1 ECO 3203, Fall According to classical macroeconomic theory, money supply shocks are neutral.
Homework Assignment #2, part 1 ECO 3203, Fall 2017 Due: Friday, October 27 th at the beginning of class. 1. According to classical macroeconomic theory, money supply shocks are neutral. a. Explain what
More informationClass Notes. Chapter 5 Saving and Investment in the Open Economy Learning Objectives
1 Chapter 5 Saving and Investment in the Open Economy Learning Objectives A. Explain how the balance of payments is calculated (Sec. 5.1) B. Discuss goods market equilibrium in an open economy (Sec. 5.2)
More informationA Macroeconomic Theory of the Open Economy
Wojciech Geson (1831-1901) Seventh dition Pinciples of Macoeconomics N. Gegoy Mankiw CHAPTR 19 A Macoeconomic Theoy of the Open conomy The Maket fo Loanable Funds An identity fom the peceding chapte: Saving
More informationThe Open Economy Revisited: the Exchange-Rate Regime
C H A P T E R 12 : the Mundell-Fleming Model and the Exchange-Rate Regime MACROECONOMICS SIXTH EDITION N. GREGORY MANKIW PowerPoint Slides by Ron Cronovich 2008 Worth Publishers, all rights reserved In
More informationUniversity of Toronto January 25, 2007 ECO 209Y MACROECONOMIC THEORY. Term Test #2 L0101 L0201 L0401 L5101 MW MW 1-2 MW 2-3 W 6-8
Department of Economics Prof. Gustavo Indart University of Toronto January 25, 2007 SOLUTION ECO 209Y MACROECONOMIC THEORY Term Test #2 LAST NAME FIRST NAME STUDENT NUMBER Circle your section of the course:
More informationProblem Set 13. Name: Class: Date: Multiple Choice Identify the letter of the choice that best completes the statement or answers the question.
Name: Class: Date: Problem Set 13 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. International trade a. raises the standard of living in
More informationMACROECONOMICS. The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime MANKIW N. GREGORY
C H A P T E R 12 The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime MACROECONOMICS N. GREGORY MANKIW 2007 Worth Publishers, all rights reserved SIXTH EDITION PowerPoint
More informationAnswers to Questions: Chapter 7
Answers to Questions in Textbook 1 Answers to Questions: Chapter 7 1. Any international transaction that creates a payment of money to a U.S. resident generates a credit. Any international transaction
More informationUnit 5: International Trade
Unit 5: International Trade 1 International Trade Why do people trade? 2 Magic of Markets Brown Bag Activity 3 Why do people trade? 1. Assume people didn t trade. What things would you have to go without?
More informationChapter 5. Saving and Investment in the Open Economy. Copyright 2009 Pearson Education Canada
Chapter 5 Saving and Investment in the Open Economy Copyright 2009 Pearson Education Canada Balance of Payments Accounting The balance of payments accounts are the record of country s international transactions.
More informationLecture 1b. The open economy. The international flows of capital and goods, balance of payments and exchange rates.
Lecture 1b. The open economy. The international flows of capital and goods, balance of payments and exchange rates. Carlos Llano (P) & Nuria Gallego (TA) References: these slides have been developed based
More informationConsumption expenditure The five most important variables that determine the level of consumption are:
The aggregate expenditure model: A macroeconomic model that focuses on the relationship between total spending and real GDP, assuming the price level is constant. Macroeconomic equilibrium: AE = GDP Consumption
More informationThe classical model of the SMALL OPEN economy
The classical model of the SMALL OPEN economy Open Economy Macroeconomics Dr hab. Joanna Siwińska-Gorzelak Overview This lecture is based on the chapter The Open Economy from G. Mankiw Macroeconomics This
More informationY = C + I + G + NX Y C G = I + NX S = I + NX
Economics 285 Chris Georges Help With Practice Problems 2 Chapter 6: 1. Questions For Review: 1,3,5. Please see text and notes. 2. Problems and Applications: 1a-d,2,4,10,11. Recall that national saving
More informationECO 209Y MACROECONOMIC THEORY AND POLICY. Term Test #2. December 13, 2017
ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test #2 December 13, 2017 U of T E-MAIL: @MAIL.UTORONTO.CA SURNAME (LAST NAME): GIVEN NAME (FIRST NAME): UTORID (e.g., LIHAO118): INSTRUCTIONS: The total time
More informationINTERNATIONAL FINANCE. Objectives. Financing International Trade. Financing International Trade. Financing International Trade CHAPTER
INTERNATIONAL 34 FINANCE CHAPTER Objectives After studying this chapter, you will able to Explain how international trade is financed Describe a country s balance of payments accounts Explain what determines
More informationIntroduction to Exchange Rates and the Foreign Exchange Market
Introduction to Exchange Rates and the Foreign Exchange Market 2 1. Refer to the exchange rates given in the following table. Today One Year Ago June 25, 2010 June 25, 2009 Country Per $ Per Per Per $
More informationBUSI 101 Capital Markets and Real Estate
BUSI 101 Capital Markets and Real Estate PURPOSE AND SCOPE The Capital Markets and Real Estate course (BUSI 101) is intended to acquaint the student with the basic principles of macroeconomics and to give
More informationChapter 13 Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy
Chapter 13 Exchange Rates, Business Cycles, and Macroeconomic Policy in the Open Economy 1 Goals of Chapter 13 Two primary aspects of interdependence between economies of different nations International
More informationMacroeonomics. 19 this chapter, A Macroeconomic Theory of the Open Economy. look for the answers to these questions: The Market for Loanable Funds
C H A P T E R In 19 this chapte, look fo the answes to these questions: A Macoeconomic Theoy of the Open Economy P R I N C I P L E S O F Macoeonomics N. Gegoy Mankiw Pemium PowePoint Slides by Ron Conovich
More informationChapter 6. Government Influence on Exchange Rates. Lecture Outline
Chapter 6 Government Influence on Exchange Rates Lecture Outline Exchange Rate Systems Fixed Exchange Rate System Freely Floating Exchange Rate System Managed Float Exchange Rate System Pegged Exchange
More informationLecture 7 Savings, Investment, & the Market for Loanable Funds (Ch26)
Lecture 7 Savings, Investment, & the Market for Loanable Funds (Ch26) In this chapter, look for the answers to these questions What are the main types of financial insftufons in the U.S. economy, and what
More informationDemand and Supply Shifts in Foreign Exchange Markets *
OpenStax-CNX module: m57355 1 Demand and Supply Shifts in Foreign Exchange Markets * OpenStax This work is produced by OpenStax-CNX and licensed under the Creative Commons Attribution License 4.0 By the
More informationChapter 25 The Exchange Rate and the Balance of Payments The Foreign Exchange Market
Chapter 25 The Exchange Rate and the Balance of Payments 25.1 The Foreign Exchange Market 1) Foreign currency is A) the market for foreign exchange. B) the price at which one currency exchanges for another
More informationExchange rate: the price of one currency in terms of another. We will be using the notation E t = euro
Econ 330: Money and Banking Fall 2014, Handout 8 Chapter 17 : Foreign Exchange Market 1. Foreign Exchange Market Exchange rate: the price of one currency in terms of another. We will be using the notation
More informationEcon 98- Chiu Spring 2005 Final Exam Review: Macroeconomics
Disclaimer: The review may help you prepare for the exam. The review is not comprehensive and the selected topics may not be representative of the exam. In fact, we do not know what will be on the exam.
More informationThe classical model of the SMALL OPEN
The classical model of the SMALL OPEN economy Open Economy Macroeconomics Dr hab. Joanna Siwińska-Gorzelak Overview This lecture is based on the chapter The Open Economy from G. Mankiw Macroeconomics This
More informationEcon 340. Recall Macro from Econ 102. Recall Macro from Econ 102. Recall Macro from Econ 102. Recall Macro from Econ 102
Econ 34 Lecture 5 International Macroeconomics Outline: International Macroeconomics Recall Macro from Econ 2 Aggregate Supply and Demand Policies Effects ON the Exchange Expansion Interest Rate Depreciation
More informationECON Intermediate Macroeconomics (Professor Gordon) Second Midterm Examination: Fall 2013 Answer sheet
ECON 311 - Intermediate Macroeconomics (Professor Gordon) Second Midterm Examination: Fall 2013 Answer sheet YOUR NAME: Student ID: Circle the TA session you attend: Chris - 10AM Chris - 1PM Andreas -
More informationStudy Questions (with Answers) Lecture 15 International Macroeconomics
Study Questions (with Answers) Page 1 of 5 Study Questions (with Answers) Lecture 15 International Macroeconomics Part 1: Multiple Choice Select the best answer of those given. 1. If the aggregate supply
More informationEconomics N. Gregory Mankiw. A Macroeconomic Theory of the Open Economy. Introduction. In this chapter, look for the answers to these questions
Seventh Edition Pinciples of Economics N. Gegoy Mankiw CHAPTER 32 A Macoeconomic Theoy of the Open Economy In this chapte, look fo the answes to these questions In an open economy, what detemines the eal
More informationmacro macroeconomics Aggregate Demand in the Open Economy N. Gregory Mankiw CHAPTER TWELVE PowerPoint Slides by Ron Cronovich fifth edition
macro CHAPTER TWELVE Aggregate Demand in the Open Economy macroeconomics fifth edition N. Gregory Mankiw PowerPoint Slides by Ron Cronovich 2002 Worth Publishers, all rights reserved Learning objectives
More informationMidterm - Economics 160B, Spring 2012 Version A
Name Student ID Section (or TA) Midterm - Economics 160B, Spring 2012 Version A You will have 75 minutes to complete this exam. There are 6 pages and 111 points total. Good luck. Multiple choice: Mark
More informationB.Sc. International Business and Politics International Economics Copenhagen Business School. Final Exam October 22, 2010
B.Sc. International Business and Politics International Economics Copenhagen Business School Final Exam October, 00 Note: Your grade depends not just on the right answer but on the quality of the explanation
More informationECO 209Y MACROECONOMIC THEORY AND POLICY. Term Test #2. December 13, 2017
ECO 209Y MACROECONOMIC THEORY AND POLICY Term Test #2 December 13, 2017 U of T E-MAIL: @MAIL.UTORONTO.CA SURNAME (LAST NAME): GIVEN NAME (FIRST NAME): UTORID (e.g., LIHAO118): INSTRUCTIONS: The total time
More informationThe Final Exam is Tuesday May 4 th at 1:00 in the normal Todd classroom
The Final Exam is Tuesday May 4 th at 1:00 in the normal Todd classroom The final exam is comprehensive. The best way to prepare is to review tests 1 and 2, the reviews for Test 1 and Test 2, and the Aplia
More information2. Interest rates in the United States rise faster than interest rates in Canada.
Exchange Rates Interaction Between Currencies When Americans buy more foreign goods, U.S. dollars are sold in the international currency market to purchase foreign currencies that are used to pay producers
More informationChapter 7. Production and Growth Saving, Investment and the Financial System
Chapter 7 Production and Growth Saving, Investment and the Financial System Source: Chapter 25-26 of Principles of Economics textbook (Mankiw) Objectives: By the end of this chapter, students should understand
More informationLesson 11 Aggregate demand and Aggregate Supply
Lesson 11 Aggregate demand and Aggregate Supply Henan University of Technology Sino-British College Transfer Abroad Undergraduate Programme 0 In this lesson, look for the answers to these questions: What
More informationEconomics Sixth Edition
N. Gregory Mankiw Principles of Economics Sixth Edition 26 Saving, Investment, and the Financial System Premium PowerPoint Slides by Ron Cronovich In this chapter, look for the answers to these questions:
More informationInternational Trade. International Trade, Exchange Rates, and Macroeconomic Policy. International Trade. International Trade. International Trade
, Exchange Rates, and 1 Introduction Open economy macroeconomics International trade in goods and services International capital flows Purchases & sales of foreign assets by domestic residents Purchases
More informationLuiggi Donayre Summer 2009 Department of Economics Economics 104 Washington University Session 2. Exam 3
Luiggi Donayre Summer 2009 Department of Economics Economics 104 Washington University Session 2 Exam 3 Name (Print Clearly!) This is a 115 point exam. There are 25 multiple choice questions worth 2 points
More information