Open economy

Foreign purchases of domestic assets are accounted for in...

• capital outflow

• trade surplus

• capital inflow

• trade deficit

What is the rate at which currency can be traded internationally called

• Real exchange

• Currency swap

• Nominal exchange rate

• Trade deficit

If a currency goes up in value then it is

• Depreciating

• Appreciating

• Squandering

• Aggregating

If the U.S. Imports exceed the U.S.'s exports then the U.S. is experiencing

• Trade Surplus

• Trade deficit

• Inflation

• Deflation

If the nominal exchange rate went from 100 yen per dollar to 80 yen per dollar, then

• The dollar appreciated relative to the yen

• The dollar depreciated realative to the yen

• Imports have increased in Japan

• Imports have decreased in the U.S.

When you read about an exchange rate in news, you are reading about the _____ exchange rate.

• real

• nominal

• inflation adjusted

• fixed

The real exchange rate is simply the nominal exchange rate adjusted for:

• cross country price levels

• the consumer price index

• trade imbalances across countries

• cross country debt ratios

Complete the formula: real exchange rate = nominal exchange rate*(domestic prices/_________)

• price of gold

• consumer price index

• foreign prices

• international price deflator

If real exchange rate doesn´t equal nominal exchange rate, it may be due to the presence of:

• multinational enterprises

• excess exports

• excess imports

• non-tradeables

Purchasing Power Parity (PPP) can be defined as a

• rate that controls for inflation to insure fair purchasing

• fixed price point to limit purchasing power of tourists

• rule for adjusting prices using sale tax

• rate at which good cost the same across currencies