A. more expensive relative to foreign goods, which makes exports fall and imports rise. B. less expensive relative to foreign goods, which makes exports rise and imports fall. C. more expensive relative to foreign goods, which makes exports rise and imports fall. D. less expensive relative to foreign goods which makes

A. more expensive relative to foreign goods, which makes exports fall and imports rise. B. less expensive relative to foreign goods, which makes exports rise and imports fall. C. more expensive relative to foreign goods, which makes exports rise and imports fall. D. less expensive relative to foreign goods which makes

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: A Macroeconomic Theory Of The Open Economy

Section: Chapter Questions

Problem 4CQQ

See similar textbooks

Similar questions

If a countrys currency is expected to appreciate in value, what would you think will be the impact of expected exchange rates on yields (e.g., the Interest rate paid on government bonds) in that country? Hint: Think about how expected exchange rate changes and interest rates affect a currencys demand and supply.
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?
Imagine 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?
Does a higher rate of return in a nations economy, all other things being equal, affect the exchange rate of its currency? If so, how?
Use the demand-and-supply of foreign currency graph to determine what would happen to a small, open economy that experienced capital outflows.
If foreign investors buy more U.S. stocks and bonds, how would that show up in the current account balance?