Exam 14: A Macroeconomic Theory of the Open Economy

In the open economy model, the supply of loanable funds comes from national saving and net capital outflow.

Which of the following is the most likely response to an increase in the U.S. real interest rate?

In the market for foreign-currency exchange, capital flight shifts

Capital flight increases a country's interest rate. This increase in the interest rate makes net capital outflow lower than it would be had the interest rate stayed the same.

Which of the following would make the equilibrium real interest rate decrease and the equilibrium quantity of loanable funds increase?

If a country has a positive net capital outflow, then

Other things the same, which of the following would shift the supply of dollars in the market for foreign exchange to the right?

The open-economy macroeconomic model takes

Other things the same, a decrease in the real interest rate raises the quantity of

A country has I = $200 billion, S = $400 billion, and purchased $600 billion of foreign assets, how many of its assets did foreigners purchase?

In an open economy,

If a country has a negative net capital outflow, then

If people thought that many banks in a certain country were at or near the point of bankruptcy, then that country's interest rate

Other things the same, if the expected return on U.S. assets increases, the

In the open-economy macroeconomic model, if the supply of loanable funds shifts right

A U.S. bank wants to buy euros in order to buy German bonds. In the open-economy macroeconomic model, this transaction would be part of

The open-economy macroeconomic model examines the determination of

A U.S.-imposed quota on automobiles would shift

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

Other things the same, if the U.S. real exchange rate depreciated, then U.S. net exports would