Suppose we measure Canada's net capital outflow by what Statistics Canada calls "net international investment position," and we approximate the real exchange rate of the dollar by the price of the Canadian dollar in terms of U.S. dollars. The following table gives some fictitious data on these two variables.
a. What does our open-economy macroeconomic model predict with regard to the relationship between net capital outflow and the real exchange rate?
b. Do you find evidence in the data to support the theory?
c. If you find discrepancies between the data and the theory, what could cause them?
Definitions:
Neurons
Nerve cells that transmit information through electrical and chemical signals in the body.
Pons
A part of the brainstem that links the medulla oblongata and the thalamus, involved in the control of breathing, communication between different parts of the brain, and sensations such as hearing, taste, and balance.
Leg-Muscle Movements
Physical actions involving the muscles in the legs, which can include walking, running, jumping, or other forms of locomotion or exercise.
Psychoactive Drugs
Substances that affect the mind, mood, or other mental processes, often used for medicinal, recreational, or spiritual purposes.
Q21: Refer to Figure 11-1. If the money
Q39: Which statement best predicts the effects of
Q62: What has been suggested as a cause
Q75: In the long run, what do changes
Q87: For Canada, the most important reason for
Q94: A decrease in the money supply causes
Q136: Where does the supply of dollars in
Q183: Make a list of things that would
Q206: Suppose the exchange rate is 5 units
Q213: In 1991, Canada was in a recession.