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 Canadian dollar in terms of U.S. dollars. The following table gives data on these two variables, as provided by Statistics Canada.
a.What does our open-economy macro 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:
Voluntary Fixation
A consciously controlled process of stabilizing focus on a particular stationary or moving object.
EOG
Electrooculography, a technique for measuring the corneo-retinal standing potential that exists between the front and the back of the human eye.
Snellen Eye Chart
A chart used to measure visual acuity, consisting of rows of letters decreasing in size, which is read from a standard distance.
Ophthalmoscope
A medical device used by doctors to examine the inside of the eye, including the retina and the optic nerve.
Q31: Suppose that Chile has a budget surplus,
Q40: On behalf of your firm, you make
Q62: If a government increases its budget deficit,
Q67: Which of the following is consistent with
Q90: If a country had deflation, how would
Q123: Supply-side economists believe that a reduction in
Q140: Which of the following would a depreciation
Q157: Which of the following policies would stabilization
Q174: In the open economy macroeconomic model, what
Q180: Refer to Figure 15-2. In a closed