110B_blanchard_4e_Ch 18 Homework Questions

110B_blanchard_4e_Ch 18 Homework Questions - D foreign...

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110B Ch 18 Homework Questions 1. Suppose E decreases by 2%. Which of the following will have occurred as a result of this reduction in E? A. nominal depreciation. B. real depreciation if P also increases by 2%. C. nominal appreciation. D. real appreciation if P also decreases by 2%. 2. The differences in the ratios of exports to GDP across countries are believed to be caused primarily by each country’s A. size. B. trade policy. C. fiscal policy 3. In 2003, which of the following countries had the highest ratio of exports to GDP? A. Japan. B. Canada. C. Belgium. 4. Assume that the nominal exchange rate increases by 4%. If prices (both domestic and foreign) do not change, we know that: A. American goods are more expensive to foreigners. B. foreign goods are more expensive to Americans. C. the dollar is less expensive to foreigners.
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Unformatted text preview: D. foreign currency is more expensive to Americans. 5. If a country’s citizens purchase buildings in foreign countries, it will lead to a _____ of the country’s _____ account. A .surplus, current. B. deficit, current. C. surplus, capital. D. deficit, capital. 6. If E increases, P increases, and P* decreases, it will result in A. real appreciation. B. real depreciation. C. nominal depreciation. D. no change in real exchange rate. 7. As a result of questions 6, A. American goods are more expensive to foreigners. B. foreign goods are more expensive to Americans. C. the dollar is more expensive to foreigners. D. foreign currency is less expensive to Americans. 8. If the U.S. bond pays a higher one-year interest rate than the U.K. bond does, why would you buy the U.K. bond? Explain your argument....
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This note was uploaded on 09/18/2008 for the course ECON 100B taught by Professor Rauch during the Winter '07 term at UCSD.

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