Suppose the same basket of goods costs $100 in the US and 50 pounds in Britain. According to purchasing power parity, what is the nominal exchange rate? ()
A. 2 pounds per dollar
B. 1 pound per dollar
C. 1/2 pound per dollar
D. None of the above is correct
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At a given real exchange rate, which of the following, by itself, would increase the supply of dollars in the market for foreign-currency exchange? ()
A. foreign citizens buy more US bonds
B. US citizens buy more foreign bonds
C. foreign citizens buy more US goods
D. US citizens buy more foreign goods
In the open-economy macroeconomic model, equilibrium is determined by the equality between the supply of dollars which comes from ()
A. US national saving and the demand for dollars for US net exports.
B. US net capital outflow and the demand for dollars for US net exports.
C. domestic investment and the demand for US net exports.
D. foreign demand for US goods and US demand for foreign goods.
In the open-economy macroeconomic model, if a country's interest rate increases, its net capital outflow ()
A. and the real exchange rate increase.
B. and the real exchange rate decrease.
C. increases and the real exchange rate decreases.
D. decreases and the real exchange rate increases.
In the open-economy macroeconomic model, if the supply of loanable funds increases, net capital outflow ()
A. and the real exchange rate increase.
B. and the real exchange rate decrease.
C. increases and the real exchange rate decreases.
D. decreases and the real exchange rate increases.