Exam 11: An Introduction to Open Economy Macroeconomics

If the government has a $100 million budget deficit,private saving is equal to $500 million,private investment is equal to $300 million,what is the value of the current account in equilibrium?

Describe the policies a nation would follow to correct a current account deficit.What are the primary purposes of each type of policy?

Coordination of macroeconomic policies between nation is uncommon.

It is more certain how expansionary monetary policy will affect the current account than how expansionary fiscal policy will affect it.

Describe the difficult choices in macroeconomic policy that Argentina faced in the late 1990s.

The J-curve effect that results from currency depreciation results is due to

Contractionary fiscal policy attempts to shift aggregate demand to the right.

What typically happens to imports as income and spending rise?

The recent trend internationally has been for the executive and legislative branches of elected governments to get more control over monetary policy,as has been the case in countries such as the United States.

Which of the following would cause an increase in aggregate supply?

Which of the following would NOT be a reason why developed nations would try to coordinate their macroeconomic policies?

Fiscal policy can be implemented more quickly than monetary policy.

The gold standard was helpful in stabilizing economies during the Great Depression.

Expansionary monetary policy is likely to lead to a depreciation of the nation's currency.

Which of the following correctly shows the relationship between savings,the government budget balance,and the current account?

A common response to stop a depreciation of a currency is to use contractionary monetary policy,which could lead to a recession.

Used alone,an expenditure-switching policy that turns spending from foreign goods to domestic goods

Describe some of the potential problems with using expansionary fiscal policy.

During the worldwide recession of 2007-2009,

In most cases,expenditure-switching policies must be accompanied by expenditure-reducing policies because