Question 1

When current account deficits are used to finance investment spending, such deficits may be self-correcting because

Accepted Answer

A)  they promote more responsible government policies. 
B)  the resulting increase in the capital stock over time shifts the output supply curve to the right. 
C)  the resulting increase in the capital stock over time shifts the output demand curve to the right. 
D)  the resulting increase in national indebtedness increases labour demand. 
E)  interest rates decline. 
A)  they promote more responsible government policies. 
B)  the resulting increase in the capital stock over time shifts the output supply curve to the right. 
C)  the resulting increase in the capital stock over time shifts the output demand curve to the right. 
D)  the resulting increase in national indebtedness increases labour demand. 
E)  interest rates decline.

Question 2

International trade has increased for all of the following reasons except

Accepted Answer

A)  better monetary policy. 
B)  the cost of transporting goods has gone down. 
C)  international trade agreements. 
D)  more integrated world financial markets. 
E)  more efficient credit markets. 
A)  better monetary policy. 
B)  the cost of transporting goods has gone down. 
C)  international trade agreements. 
D)  more integrated world financial markets. 
E)  more efficient credit markets.

Question 3

In the two-period SOE model with production and investment, the total government expenditure multiplier is

Accepted Answer

A)  zero. 
B)  greater than one. 
C)  less than one. 
D)  two. 
E)  one. 
A)  zero. 
B)  greater than one. 
C)  less than one. 
D)  two. 
E)  one.

Question 4

If current taxes increase, then

Accepted Answer

A)  the current account surplus rises. 
B)  the current account surplus falls. 
C)  there is no effect on the current account surplus. 
D)  government spending must rise. 
E)  government spending must fall. 
A)  the current account surplus rises. 
B)  the current account surplus falls. 
C)  there is no effect on the current account surplus. 
D)  government spending must rise. 
E)  government spending must fall.

Question 5

In the two-period model with default,

Accepted Answer

A)  there is no default in equilibrium. 
B)  there is never default in the future period. 
C)  there is always default. 
D)  the government commits to never default. 
E)  private sector economic agents can default, but the nation never defaults as a whole. 
A)  there is no default in equilibrium. 
B)  there is never default in the future period. 
C)  there is always default. 
D)  the government commits to never default. 
E)  private sector economic agents can default, but the nation never defaults as a whole.

When current account deficits are used to finance investment spending, such deficits may be self-correcting because

International trade has increased for all of the following reasons except

In the two-period SOE model with production and investment, the total government expenditure multiplier is

If current taxes increase, then

In the two-period model with default,

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

Exam 16: International Trade in Goods and Assets

When current account deficits are used to finance investment spending, such deficits may be self-correcting because

International trade has increased for all of the following reasons except

In the two-period SOE model with production and investment, the total government expenditure multiplier is

If current taxes increase, then

In the two-period model with default,

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters