Question 1

If the dollar depreciates,both the aggregate demand curve and the aggregate supply curve shift inward.

Accepted Answer

A) True 
 B)False

Question 2

Depreciation of the Japanese Yen would lead to

Accepted Answer

A)  outward shift in the aggregate supply curve for Japan. 
B)  upward shift in the aggregate demand curve for Japan. 
C)  downward shift in the aggregate supply curve for Japan. 
D)  inward shift in the aggregate demand curve for Japan. 
A)  outward shift in the aggregate supply curve for Japan. 
B)  upward shift in the aggregate demand curve for Japan. 
C)  downward shift in the aggregate supply curve for Japan. 
D)  inward shift in the aggregate demand curve for Japan.

Question 3

What effect did the decrease in the value of the dollar have on the U.S.trade deficit in the period from 2006 to 2009?

Accepted Answer

A)  It decreased the trade deficit as Americans bought more U.S. capital goods. 
B)  It decreased the trade deficit as foreigners were attracted to the increased value of U.S. products and Americans bought fewer imports. 
C)  It increased the trade deficit as U.S. investors bought more domestic financial assets. 
D)  It increased the trade deficit as Americans bought more imports and foreigners bought fewer U.S. products. 
A)  It decreased the trade deficit as Americans bought more U.S. capital goods. 
B)  It decreased the trade deficit as foreigners were attracted to the increased value of U.S. products and Americans bought fewer imports. 
C)  It increased the trade deficit as U.S. investors bought more domestic financial assets. 
D)  It increased the trade deficit as Americans bought more imports and foreigners bought fewer U.S. products.

Question 4

A currency appreciation reduces aggregate demand and increases aggregate supply.

Accepted Answer

A) True 
 B)False

Question 5

A fall in the domestic interest rate leads to capital

Accepted Answer

A)  outflows and exchange rate appreciation. 
B)  outflows and exchange rate depreciation. 
C)  inflows and exchange rate depreciation. 
D)  inflows and exchange rate appreciation. 
A)  outflows and exchange rate appreciation. 
B)  outflows and exchange rate depreciation. 
C)  inflows and exchange rate depreciation. 
D)  inflows and exchange rate appreciation.

Question 6

Table 20-1
Suppose the economy of Macroland is described by the following:
C = 200 + .8DI (DI = disposable income)
I = 300 + .2Y − 50r (Y = GDP)
(r, the interest rate, is measured in percentage points. For example, a 9 percent interest rate is r = 9).
For this economy, assume that the Federal Reserve uses its monetary policy to peg the interest rate at
r = 5
G = 750
T = .25Y
X = 200
M = 150 + .2Y
Hint: DI = Y − T
-From Table 20-1,compute equilibrium GDP for Macroland.

Accepted Answer

A)  3,000 
B)  2,950 
C)  2,625 
D)  2,525 
A)  3,000 
B)  2,950 
C)  2,625 
D)  2,525

Question 7

An exchange rate depreciation acts to reduce inflation.

Accepted Answer

A) True 
 B)False

Question 8

A rise in interest rates tends to contract the economy by appreciating the currency and reducing net exports.Provide the reasoning behind this conclusion.

Accepted Answer

Interest rate differentials and capital

Question 9

The U.S.trade deficits of the late 1990s were due primarily to low saving rates.

Accepted Answer

A) True 
 B)False

Question 10

Figure 20-6
  
-In Figure 20-6,which of the following will cause a movement from equilibrium at point D to equilibrium at point B?

Accepted Answer

A)  an appreciation of the dollar 
B)  a depreciation of the dollar 
C)  a depreciation of the Japanese yen 
D)  an increase in the U.S. price level 
A)  an appreciation of the dollar 
B)  a depreciation of the dollar 
C)  a depreciation of the Japanese yen 
D)  an increase in the U.S. price level

Question 11

The combined effects of a fiscal contraction and a monetary expansion are

Accepted Answer

A)  higher real interest rates. 
B)  exchange rate depreciation. 
C)  increased current account deficit. 
D)  All of the above are correct. 
A)  higher real interest rates. 
B)  exchange rate depreciation. 
C)  increased current account deficit. 
D)  All of the above are correct.

Question 12

A favorable supply shock abroad would

Accepted Answer

A)  increase U.S. imports and decrease aggregate demand. 
B)  decrease U.S. net exports and reduce aggregate supply. 
C)  decrease U.S. net exports and decrease national income. 
D)  increase U.S. net exports and increase aggregate demand. 
A)  increase U.S. imports and decrease aggregate demand. 
B)  decrease U.S. net exports and reduce aggregate supply. 
C)  decrease U.S. net exports and decrease national income. 
D)  increase U.S. net exports and increase aggregate demand.

Question 13

Despite the monetary expansion of the 1992-2000 period,the inflation rate

Accepted Answer

A)  rose due to adverse supply shocks. 
B)  rose due to large increases in aggregate demand. 
C)  fell despite adverse supply shocks. 
D)  fell due to favorable supply shocks. 
A)  rose due to adverse supply shocks. 
B)  rose due to large increases in aggregate demand. 
C)  fell despite adverse supply shocks. 
D)  fell due to favorable supply shocks.

Question 14

Define the following terms and explain their importance to the study of macroeconomics:
a.open economy
b.closed economy
c.budget deficits and trade deficits
d.international capital flows

Accepted Answer

a.An open economy is one that trades wit

Question 15

What important lesson did American economists learn in the 1980s and again in 2001-2003?

Accepted Answer

A)  Large tax cuts can lead to a balance of trade surplus. 
B)  Large government budget deficits can crowd out consumption. 
C)  Large government budget deficits can bankrupt the nation. 
D)  Large government budget deficits can crowd out net exports. 
A)  Large tax cuts can lead to a balance of trade surplus. 
B)  Large government budget deficits can crowd out consumption. 
C)  Large government budget deficits can bankrupt the nation. 
D)  Large government budget deficits can crowd out net exports.

Question 16

A decrease in the price level in Japan will shift the U.S.aggregate demand curve outward.

Accepted Answer

A) True 
 B)False

Question 17

The sum of capital inflows and the trade balance must be zero.

Accepted Answer

A) True 
 B)False

Question 18

An economic boom in the United States would cause the aggregate demand curve in other countries to shift outward.

Accepted Answer

A) True 
 B)False

Question 19

An appreciation of the Japanese yen would shift the Japanese aggregate demand curve inward.

Accepted Answer

A) True 
 B)False

Question 20

Currently,the United States imports more than it exports.

Accepted Answer

A) True 
 B)False

If the dollar depreciates,both the aggregate demand curve and the aggregate supply curve shift inward.

Depreciation of the Japanese Yen would lead to

What effect did the decrease in the value of the dollar have on the U.S.trade deficit in the period from 2006 to 2009?

A currency appreciation reduces aggregate demand and increases aggregate supply.

A fall in the domestic interest rate leads to capital

An exchange rate depreciation acts to reduce inflation.

A rise in interest rates tends to contract the economy by appreciating the currency and reducing net exports.Provide the reasoning behind this conclusion.

The U.S.trade deficits of the late 1990s were due primarily to low saving rates.

Figure 20-6 -In Figure 20-6,which of the following will cause a movement from equilibrium at point D to equilibrium at point B?

The combined effects of a fiscal contraction and a monetary expansion are

A favorable supply shock abroad would

Despite the monetary expansion of the 1992-2000 period,the inflation rate

Define the following terms and explain their importance to the study of macroeconomics: a.open economy b.closed economy c.budget deficits and trade deficits d.international capital flows

What important lesson did American economists learn in the 1980s and again in 2001-2003?

A decrease in the price level in Japan will shift the U.S.aggregate demand curve outward.

The sum of capital inflows and the trade balance must be zero.

An economic boom in the United States would cause the aggregate demand curve in other countries to shift outward.

An appreciation of the Japanese yen would shift the Japanese aggregate demand curve inward.

Currently,the United States imports more than it exports.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

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Exam 20: Exchange Rates and the Macroeconomy

If the dollar depreciates,both the aggregate demand curve and the aggregate supply curve shift inward.

Depreciation of the Japanese Yen would lead to

What effect did the decrease in the value of the dollar have on the U.S.trade deficit in the period from 2006 to 2009?

A currency appreciation reduces aggregate demand and increases aggregate supply.

A fall in the domestic interest rate leads to capital

An exchange rate depreciation acts to reduce inflation.

A rise in interest rates tends to contract the economy by appreciating the currency and reducing net exports.Provide the reasoning behind this conclusion.

The U.S.trade deficits of the late 1990s were due primarily to low saving rates.

Figure 20-6 -In Figure 20-6,which of the following will cause a movement from equilibrium at point D to equilibrium at point B?

The combined effects of a fiscal contraction and a monetary expansion are

A favorable supply shock abroad would

Despite the monetary expansion of the 1992-2000 period,the inflation rate

Define the following terms and explain their importance to the study of macroeconomics: a.open economy b.closed economy c.budget deficits and trade deficits d.international capital flows

What important lesson did American economists learn in the 1980s and again in 2001-2003?

A decrease in the price level in Japan will shift the U.S.aggregate demand curve outward.

The sum of capital inflows and the trade balance must be zero.

An economic boom in the United States would cause the aggregate demand curve in other countries to shift outward.

An appreciation of the Japanese yen would shift the Japanese aggregate demand curve inward.

Currently,the United States imports more than it exports.

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Filters