1.  What is meant by the exchange rate of a nation’s currency?

2.  What is meant by the “balance of payments”?
     What are the main items on the current account?
     What are the main items on the capital account?
     What is meant by a surplus or deficit for each line item?
     What is meant by “the US as a debtor nation”?

3.  What are a nation’s imports assumed to depend on (initially)?

4.  What effect does adding net exports to our simple “goods market” model (Chs. 8 and 9 )
     have on the size of the government spending multiplier?  Explain why.
     What is the formula for the “open economy multiplier”?

5.  What are other determinants of a nation’s exports besides income?
     What the determinants of a nation’s imports?

6.  What is meant by the “trade feedback effect”?

7.  You are not responsible for the “price feedback effect”.

8.  What determines the exchange rate of a nation’s currency?

9.  What are sources of the demand for dollars on foreign exchange markets?
     What are sources of the supply of dollars on foreign exchange markets?

10.  What is meant by the “appreciation” or “depreciation” of a nation’s currency?

11.  How do the relative interest rates in two countries affect the exchange rate between
       their currencies?

12.  What are the effects of a depreciation of a nation’s currency on its exports? on its imports?
       on its balance of trade?  on its GDP?

13. Explain what is meant by the “J-curve”.

14.  What is the effect of a depreciation of a nation’s currency on its rate of inflation?

15.  What are the effects of expansionary monetary policy with flexible exchange rates?
 
16.  What are the effects of expansionary fiscal policy with flexible exchange rates?