Exam 32: A Macroeconomic Theory of the Open Economy

In an open economy, the source of the demand for loanable funds is

In the open-economy macroeconomic model, a higher domestic interest rate reduces the quantity of loanable funds demanded

Explain how a decrease in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate.

The open-economy macroeconomic model takes

In the open-economy macroeconomic model, if a country's interest rate rises, then its

Refer to Budget in Recession. What does this change in the budget deficit do to the equilibrium values of the interest rate and the quantity of loanable funds?

In the open-economy macroeconomic model, if investment demand decreases, then

A decrease in the budget deficit causes domestic interest rates

Which of the following is included in the supply of U.S. dollars in the market for foreign-currency exchange in the open-economy macroeconomic model?

A German company wants to buy dollars to purchase U.S. bonds. In the open-economy macroeconomic model of the U.S., this transaction would be accounted for in

If the demand for dollars in the market for foreign-currency exchange shifts right, then the exchange rate

Other things the same, an increase in the U.S. real interest rate induces

Political events convince people that the assets of country x are now riskier. As a result of this change which curves in the open-economy macroeconomic model shift and which direction do they shift for country x?

If a country experiences capital flight, which curves shift right?

During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would

Which of the following is most likely to result if foreigners decide to withdraw the funds that they have loaned to the United States?

A limit on the quantity of a good produced abroad that can be purchased domestically is called a(n)

If policymakers impose import restrictions on clothing, the U.S. trade deficit will shrink.

Figure 32-1 -Refer to Figure 32-1. The loanable funds market is in equilibrium at

Other things the same, an increase in the U.S. interest rate causes the quantity of loanable funds supplied to