Unit 6: Open Economy: International Trade and Finance

Oceania and Driftland are trading partners with flexible exchange rates. Oceania's currency is the coral (OCR) and Driftland's currency is the drift (DFT). Both countries are currently in long-run equilibrium.

Thorndale imposes tariffs on imports from Redcrest. Both countries have flexible exchange rates. Thorndale's currency is the thorn (THN) and Redcrest's currency is the crest (CRT). Thorndale's capital and financial account (CFA) balance was zero befo

Valmont's central bank increases its policy interest rate. Valmont's currency is the vale (VLE). Valmont's major trading partner is Crestmore, whose currency is the mark (CMK). Both countries have flexible exchange rates.

The government of Grandview runs a large budget deficit financed by borrowing. Grandview is an open economy with flexible exchange rates. Grandview's currency is the grand (GRD).

The following data describe the international transactions for the country of Coastpoint in 2024 (in billions of dollars): • Goods exports: [math]600 • Service exports: [math]150 • Net income receipts from abroad: [math]20