Question 1

In the two-period SOE model, equal increases in current and future income imply that

Accepted Answer

A) C + G decreases. 
B) we can't say what happens to the current account surplus. 
C) the current account surplus decreases. 
D) there is no change in the current account surplus. 
E) the current account surplus increases. 
A) C + G decreases. 
B) we can't say what happens to the current account surplus. 
C) the current account surplus decreases. 
D) there is no change in the current account surplus. 
E) the current account surplus increases. B

Question 2

The key effect of the current account surplus is

Accepted Answer

A) to improve fiscal policy. 
B) to smooth consumption for the nation as a whole. 
C) to destabilize the economy. 
D) to constrain the central bank. 
E) to smooth aggregate output. 
A) to improve fiscal policy. 
B) to smooth consumption for the nation as a whole. 
C) to destabilize the economy. 
D) to constrain the central bank. 
E) to smooth aggregate output. B

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

Question 4

In the 19th century, Canada had a period of significant current account deficits, which contributed to economic growth. These deficits most notably

Accepted Answer

A) financed construction of railroads. 
B) financed lower taxes. 
C) allowed for a substantial increase in government spending's share of GDP. 
D) financed the development of land-grant universities. 
E) financed consumer spending. 
A) financed construction of railroads. 
B) financed lower taxes. 
C) allowed for a substantial increase in government spending's share of GDP. 
D) financed the development of land-grant universities. 
E) financed consumer spending.

Question 5

What would be the impact of a persistent increase in total factor productivity on domestic aggregate output,
consumption, investment, and the current account surplus?

Accepted Answer

A persistent increase in total factor pr

Question 6

In the two-period model with default

Accepted Answer

A) default occurs because of monetary policy. 
B) a country will always default in equilibrium. 
C) a country will never default in equilibrium. 
D) a country will default on its debts because of asymmetric information. 
E) a country has a limited commitment problem. 
A) default occurs because of monetary policy. 
B) a country will always default in equilibrium. 
C) a country will never default in equilibrium. 
D) a country will default on its debts because of asymmetric information. 
E) a country has a limited commitment problem.

Question 7

In a two-period SOE model with production, a negative total factor productivity shock abroad

Accepted Answer

A) increases foreign output and decreases domestic output. 
B) decreases foreign output and increases domestic output. 
C) increases foreign output and increases domestic output. 
D) decreases foreign output and leaves domestic output unchanged. 
E) decreases foreign output and decreases domestic output. 
A) increases foreign output and decreases domestic output. 
B) decreases foreign output and increases domestic output. 
C) increases foreign output and increases domestic output. 
D) decreases foreign output and leaves domestic output unchanged. 
E) decreases foreign output and decreases domestic output.

Question 8

A current account deficit is

Accepted Answer

A) it does not matter. 
B) good because it allows to smooth consumption. 
C) bad because every country should have a surplus. 
D) good because a country wants to own the others. 
E) bad because it permits consumption smoothing. 
A) it does not matter. 
B) good because it allows to smooth consumption. 
C) bad because every country should have a surplus. 
D) good because a country wants to own the others. 
E) bad because it permits consumption smoothing.

Question 9

The following are all trade agreements

Accepted Answer

A) GATT, EU, and BU. 
B) EU, NAFTA, and GATT. 
C) ECB, Fed, and GM. 
D) UK, US, and EU. 
E) NAFTA, DNC, and EU. 
A) GATT, EU, and BU. 
B) EU, NAFTA, and GATT. 
C) ECB, Fed, and GM. 
D) UK, US, and EU. 
E) NAFTA, DNC, and EU.

Question 10

When a country runs a current account deficit to finance an increase in domestic investment expenditures, it causes

Accepted Answer

A) consumption smoothing over time. 
B) the real interest rate to increase. 
C) a government deficit to occur. 
D) taxes to rise. 
E) an increase in capital stock and future productive capacity. 
A) consumption smoothing over time. 
B) the real interest rate to increase. 
C) a government deficit to occur. 
D) taxes to rise. 
E) an increase in capital stock and future productive capacity.

Question 11

International trade has increased for which of the following reasons?

Accepted Answer

A) NAFTA was repealed. 
B) The cost of transporting goods has gone down. 
C) the Asian crisis 
D) the financial crisis 
E) Brexit 
A) NAFTA was repealed. 
B) The cost of transporting goods has gone down. 
C) the Asian crisis 
D) the financial crisis 
E) Brexit

Question 12

One of the reasons why the growth in world trade has occurred is due to

Accepted Answer

A) economies have become more materialistic. 
B) barriers to trade have been relaxed. 
C) the income inequality gap is narrowing among countries. 
D) countries are getting more prosperous. 
E) more stable political environments. 
A) economies have become more materialistic. 
B) barriers to trade have been relaxed. 
C) the income inequality gap is narrowing among countries. 
D) countries are getting more prosperous. 
E) more stable political environments.

Question 13

In the two-period SOE model, the current account surplus is equal to

Accepted Answer

A) savings plus investment. 
B) output minus consumption plus government spending. 
C) output minus consumption minus government spending. 
D) output plus consumption plus government spending. 
E) output plus consumption minus government spending. 
A) savings plus investment. 
B) output minus consumption plus government spending. 
C) output minus consumption minus government spending. 
D) output plus consumption plus government spending. 
E) output plus consumption minus government spending.

Question 14

In the two-period model with default, default can be prevented because

Accepted Answer

A) collateral can be seized. 
B) the government makes it illegal. 
C) no one will lend of a country that might default. 
D) default can be too costly, so a country does not choose it. 
E) a country does not want to reveal itself to be a bad borrower. 
A) collateral can be seized. 
B) the government makes it illegal. 
C) no one will lend of a country that might default. 
D) default can be too costly, so a country does not choose it. 
E) a country does not want to reveal itself to be a bad borrower.

Question 15

In the two-period model with default, default will occur when

Accepted Answer

A) the government debt is larger than the discounted value of the future penalty from defaulting. 
B) the government debt is smaller than the discounted value of the future penalty from defaulting. 
C) the government surplus is smaller than the discounted value of the future penalty from defaulting. 
D) the government surplus is smaller than national income. 
E) the government debt is larger than the total taxes. 
A) the government debt is larger than the discounted value of the future penalty from defaulting. 
B) the government debt is smaller than the discounted value of the future penalty from defaulting. 
C) the government surplus is smaller than the discounted value of the future penalty from defaulting. 
D) the government surplus is smaller than national income. 
E) the government debt is larger than the total taxes.

Question 16

In a small open economy model

Accepted Answer

A) the domestic government takes account of the behaviour of foreign governments. 
B) domestic producers have monopoly power. 
C) the government cannot affect economic outcomes. 
D) real interest rates are set by central banks. 
E) domestic economic agents cannot affect world real interest rates. 
A) the domestic government takes account of the behaviour of foreign governments. 
B) domestic producers have monopoly power. 
C) the government cannot affect economic outcomes. 
D) real interest rates are set by central banks. 
E) domestic economic agents cannot affect world real interest rates.

Question 17

In two-period SOE model with production, an increase in the world real interest rate

Accepted Answer

A) increase aggregate consumption and have no effect on the current account surplus. 
B) decreases domestic output and decreases the current account surplus. 
C) increases domestic output and decreases the current account surplus. 
D) increases domestic output and increases the current account surplus. 
E) decreases domestic output and increases the current account surplus. 
A) increase aggregate consumption and have no effect on the current account surplus. 
B) decreases domestic output and decreases the current account surplus. 
C) increases domestic output and decreases the current account surplus. 
D) increases domestic output and increases the current account surplus. 
E) decreases domestic output and increases the current account surplus.

Question 18

One of the reasons why the growth in world trade has occurred is due to

Accepted Answer

A) the cost of transporting goods and services has fallen dramatically. 
B) economies have become more materialistic. 
C) countries are getting more prosperous. 
D) the income inequality gap is narrowing among countries. 
E) more stable political environments. 
A) the cost of transporting goods and services has fallen dramatically. 
B) economies have become more materialistic. 
C) countries are getting more prosperous. 
D) the income inequality gap is narrowing among countries. 
E) more stable political environments.

Question 19

In the two-period SOE model with production, the destruction of part of the nation's capital stock

Accepted Answer

A) causes investment to increase. 
B) causes output to increase. 
C) causes investment to decline. 
D) causes the current account surplus to increase. 
E) causes the current account surplus to decline. 
A) causes investment to increase. 
B) causes output to increase. 
C) causes investment to decline. 
D) causes the current account surplus to increase. 
E) causes the current account surplus to decline.

Question 20

In the two-period SOE model, if the real interest rate decreases and the current account is initially in deficit, then

Accepted Answer

A) the current account deficit falls. 
B) the current account surplus stays the same. 
C) the current account deficit stays the same. 
D) the current account surplus rises. 
E) the current account surplus falls. 
A) the current account deficit falls. 
B) the current account surplus stays the same. 
C) the current account deficit stays the same. 
D) the current account surplus rises. 
E) the current account surplus falls.

In the two-period SOE model, equal increases in current and future income imply that

The key effect of the current account surplus is

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

In the 19th century, Canada had a period of significant current account deficits, which contributed to economic growth. These deficits most notably

What would be the impact of a persistent increase in total factor productivity on domestic aggregate output, consumption, investment, and the current account surplus?

In the two-period model with default

In a two-period SOE model with production, a negative total factor productivity shock abroad

A current account deficit is

The following are all trade agreements

When a country runs a current account deficit to finance an increase in domestic investment expenditures, it causes

International trade has increased for which of the following reasons?

One of the reasons why the growth in world trade has occurred is due to

In the two-period SOE model, the current account surplus is equal to

In the two-period model with default, default can be prevented because

In the two-period model with default, default will occur when

In a small open economy model

In two-period SOE model with production, an increase in the world real interest rate

One of the reasons why the growth in world trade has occurred is due to

In the two-period SOE model with production, the destruction of part of the nation's capital stock

In the two-period SOE model, if the real interest rate decreases and the current account is initially in deficit, then

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure 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 Consumptionsavings Decision and Credit Markets

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

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models With Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: a Deeper Look

Filters

Exam 15: Inflation: Phillips Curves and Neo-Fisherism

In the two-period SOE model, equal increases in current and future income imply that

The key effect of the current account surplus is

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

In the 19th century, Canada had a period of significant current account deficits, which contributed to economic growth. These deficits most notably

What would be the impact of a persistent increase in total factor productivity on domestic aggregate output, consumption, investment, and the current account surplus?

In the two-period model with default

In a two-period SOE model with production, a negative total factor productivity shock abroad

A current account deficit is

The following are all trade agreements

When a country runs a current account deficit to finance an increase in domestic investment expenditures, it causes

International trade has increased for which of the following reasons?

One of the reasons why the growth in world trade has occurred is due to

In the two-period SOE model, the current account surplus is equal to

In the two-period model with default, default can be prevented because

In the two-period model with default, default will occur when

In a small open economy model

In two-period SOE model with production, an increase in the world real interest rate

One of the reasons why the growth in world trade has occurred is due to

In the two-period SOE model with production, the destruction of part of the nation's capital stock

In the two-period SOE model, if the real interest rate decreases and the current account is initially in deficit, then

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure 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 Consumptionsavings Decision and Credit Markets

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

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models With Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: a Deeper Look

Filters