Question 1

In the open-economy macroeconomic model, if net capital outflow increases then

Accepted Answer

A)  the demand for dollars in the market for foreign-currency exchange shifts right. 
B)  the demand for dollars in the market for foreign-currency exchange shifts left. 
C)  the supply of dollars in the market for foreign-currency exchange shifts right. 
D)  the supply of dollars in the market for foreign-currency exchange shifts left. 
A)  the demand for dollars in the market for foreign-currency exchange shifts right. 
B)  the demand for dollars in the market for foreign-currency exchange shifts left. 
C)  the supply of dollars in the market for foreign-currency exchange shifts right. 
D)  the supply of dollars in the market for foreign-currency exchange shifts left.

Question 2

At the original exchange rate an import quota

Accepted Answer

A)  creates a surplus in the market for foreign-currency exchange, so the exchange rate rises. 
B)  creates a surplus in the market for foreign-currency exchange, so the exchange rate falls. 
C)  creates a shortage in the market for foreign-currency exchange, so the exchange rate rises. 
D)  creates a shortage in the market for foreign-currency exchange, so the exchange rate falls. 
A)  creates a surplus in the market for foreign-currency exchange, so the exchange rate rises. 
B)  creates a surplus in the market for foreign-currency exchange, so the exchange rate falls. 
C)  creates a shortage in the market for foreign-currency exchange, so the exchange rate rises. 
D)  creates a shortage in the market for foreign-currency exchange, so the exchange rate falls.

Question 3

Refer to U.S. Investment Tax Credit. What happens to the interest rate, U.S. net capital outflow, and the net capital outflow of foreign countries?

Accepted Answer

The interest rate ri

Question 4

If a country places tariffs on imported goods, then

Accepted Answer

A)  its currency appreciates which reduces exports. 
B)  its currency appreciates which increases exports. 
C)  its currency depreciates which reduces exports. 
D)  its currency depreciates which increases exports. 
A)  its currency appreciates which reduces exports. 
B)  its currency appreciates which increases exports. 
C)  its currency depreciates which reduces exports. 
D)  its currency depreciates which increases exports.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Suppose a country experiences capital flight. Of the demand for loanable funds and the supply of currency in the market for foreign-currency exchange, which shifts right?

Accepted Answer

A)  only the demand for loanable funds 
B)  only the supply of its currency in the market for foreign-currency exchange 
C)  both curves shift right 
D)  neither curve shifts right 
A)  only the demand for loanable funds 
B)  only the supply of its currency in the market for foreign-currency exchange 
C)  both curves shift right 
D)  neither curve shifts right

Question 7

What is the source of the demand for dollars in the market for foreign-currency exchange?

Accepted Answer

The answer of What is the source of the demand...

Question 8

A rise in the budget deficit

Accepted Answer

A)  shifts both the supply of loanable funds in the market for loanable funds and the supply of dollars in the market for foreign-currency exchange right. 
B)  shifts both the supply of loanable funds in the market for loanable funds and the supply of dollars in the market for foreign-currency exchange left. 
C)  shifts both the demand for loanable funds in the market for loanable funds and the demand for dollars in the market for foreign-currency exchange right. 
D)  shifts both the demand for loanable funds in the market for loanable funds and the demand for dollars in the market for foreign-currency exchange left. 
A)  shifts both the supply of loanable funds in the market for loanable funds and the supply of dollars in the market for foreign-currency exchange right. 
B)  shifts both the supply of loanable funds in the market for loanable funds and the supply of dollars in the market for foreign-currency exchange left. 
C)  shifts both the demand for loanable funds in the market for loanable funds and the demand for dollars in the market for foreign-currency exchange right. 
D)  shifts both the demand for loanable funds in the market for loanable funds and the demand for dollars in the market for foreign-currency exchange left.

Question 9

If the French government increases its expenditures and reduces taxes, then France's interest rate

Accepted Answer

A)  and its exchange rate rise. 
B)  rises and its exchange rate falls. 
C)  falls and its exchange rate rises. 
D)  and its exchange rate fall. 
A)  and its exchange rate rise. 
B)  rises and its exchange rate falls. 
C)  falls and its exchange rate rises. 
D)  and its exchange rate fall.

Question 10

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

Accepted Answer

A)  and net exports would rise. 
B)  would rise and its net exports would fall. 
C)  would fall and its net exports would rise. 
D)  and its net exports would fall. 
A)  and net exports would rise. 
B)  would rise and its net exports would fall. 
C)  would fall and its net exports would rise. 
D)  and its net exports would fall.

Question 11

A U.S. grocery chain borrows money to buy a warehouse in Ohio and another in Italy. Borrowing for which warehouses) is included in the demand for loanable funds in the U.S.?

Accepted Answer

A)  both the one in Ohio and the one in Italy 
B)  only the one in Ohio 
C)  only the one in Italy 
D)  neither the one in Ohio nor the one in Italy 
A)  both the one in Ohio and the one in Italy 
B)  only the one in Ohio 
C)  only the one in Italy 
D)  neither the one in Ohio nor the one in Italy

Question 12

If the budget deficit increases, then

Accepted Answer

A)  U.S. residents will want to purchase more foreign assets and foreign residents will want to purchase more U.S. assets 
B)  U.S. residents will want to purchase more foreign assets and foreign residents will want to purchase fewer U.S. assets 
C)  U.S. residents will want to purchase fewer foreign assets and foreign residents will want to purchase more U.S. assets 
D)  U.S. residents will want to purchase fewer foreign assets and foreign residents will want to purchase fewer U.S. assets 
A)  U.S. residents will want to purchase more foreign assets and foreign residents will want to purchase more U.S. assets 
B)  U.S. residents will want to purchase more foreign assets and foreign residents will want to purchase fewer U.S. assets 
C)  U.S. residents will want to purchase fewer foreign assets and foreign residents will want to purchase more U.S. assets 
D)  U.S. residents will want to purchase fewer foreign assets and foreign residents will want to purchase fewer U.S. assets

Question 13

Which of the following is consistent with moving from a surplus to equilibrium in the market for foreign currency exchange?

Accepted Answer

A)  the exchange rate falls causing U.S. residents to import more 
B)  the exchange rate falls causing U.S. residents to import less 
C)  the exchange rate rises causing U.S. residents to import more 
D)  the exchange rate rises causing U.S. residents to import less 
A)  the exchange rate falls causing U.S. residents to import more 
B)  the exchange rate falls causing U.S. residents to import less 
C)  the exchange rate rises causing U.S. residents to import more 
D)  the exchange rate rises causing U.S. residents to import less

Question 14

In equilibrium a country has a net capital outflow of $200 billion and domestic investment of $150 billion. What is the quantity of loanable funds demanded?

Accepted Answer

A)  $50 billion 
B)  $150 billion 
C)  $200 billion 
D)  $350 billion 
A)  $50 billion 
B)  $150 billion 
C)  $200 billion 
D)  $350 billion

Question 15

If for some reason Americans desired to decrease their purchases of foreign assets, then other things the same

Accepted Answer

A)  both the real exchange rate and the quantity of dollars exchanged in the market for foreign-currency exchange would fall. 
B)  both the real exchange rate and the quantity of dollars exchanged in the market for foreign-currency would rise. 
C)  the real exchange rate would rise and the quantity of dollars exchanged in the market for foreign-currency would fall. 
D)  the real exchange rate would fall and the quantity of dollars exchanged in the market for foreign-currency would rise. 
A)  both the real exchange rate and the quantity of dollars exchanged in the market for foreign-currency exchange would fall. 
B)  both the real exchange rate and the quantity of dollars exchanged in the market for foreign-currency would rise. 
C)  the real exchange rate would rise and the quantity of dollars exchanged in the market for foreign-currency would fall. 
D)  the real exchange rate would fall and the quantity of dollars exchanged in the market for foreign-currency would rise.

Question 16

Over the past three decades, the United States has

Accepted Answer

A)  generally had, or been very near to a trade balance. 
B)  had trade deficits in about as many years as it has trade surpluses. 
C)  persistently had a trade deficit. 
D)  persistently had a trade surplus. 
A)  generally had, or been very near to a trade balance. 
B)  had trade deficits in about as many years as it has trade surpluses. 
C)  persistently had a trade deficit. 
D)  persistently had a trade surplus.

Question 17

When a country experiences capital flight, its net capital outflow,

Accepted Answer

A)  which is part of the demand for loanable funds, increases. 
B)  which is part of the supply of loanable funds, increases. 
C)  which is part of the demand for loanable funds, decreases. 
D)  which is part of the supply of loanable funds, decreases. 
A)  which is part of the demand for loanable funds, increases. 
B)  which is part of the supply of loanable funds, increases. 
C)  which is part of the demand for loanable funds, decreases. 
D)  which is part of the supply of loanable funds, decreases.

Question 18

What happens to each of the following if the supply of loanable funds shifts right?
a. the interest rate
b. net capital outflow
c. the exchange rate

Accepted Answer

The interest rate fa

Question 19

In the open-economy macroeconomic model, the market for loanable funds equates national saving with

Accepted Answer

A)  domestic investment. 
B)  net capital outflow. 
C)  the sum of national consumption and government spending. 
D)  the sum of domestic investment and net capital outflow. 
A)  domestic investment. 
B)  net capital outflow. 
C)  the sum of national consumption and government spending. 
D)  the sum of domestic investment and net capital outflow.

Question 20

In the open-economy macroeconomic model, net capital outflow rises if

Accepted Answer

A)  either the exchange rate rises or the real interest rate falls. 
B)  either the exchange rate falls or the real interest rate rises. 
C)  the real interest rate rises. Net capital outflow does not depend on the exchange rate. 
D)  the real interest rate falls. Net capital outflow does not depend on the exchange rate. 
A)  either the exchange rate rises or the real interest rate falls. 
B)  either the exchange rate falls or the real interest rate rises. 
C)  the real interest rate rises. Net capital outflow does not depend on the exchange rate. 
D)  the real interest rate falls. Net capital outflow does not depend on the exchange rate.

Exam 19: A Macroeconomic Theory of the Open Economy

In the open-economy macroeconomic model, if net capital outflow increases then

At the original exchange rate an import quota

Refer to U.S. Investment Tax Credit. What happens to the interest rate, U.S. net capital outflow, and the net capital outflow of foreign countries?

If a country places tariffs on imported goods, then

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

Suppose a country experiences capital flight. Of the demand for loanable funds and the supply of currency in the market for foreign-currency exchange, which shifts right?

What is the source of the demand for dollars in the market for foreign-currency exchange?

A rise in the budget deficit

If the French government increases its expenditures and reduces taxes, then France's interest rate

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

A U.S. grocery chain borrows money to buy a warehouse in Ohio and another in Italy. Borrowing for which warehouses) is included in the demand for loanable funds in the U.S.?

If the budget deficit increases, then

Which of the following is consistent with moving from a surplus to equilibrium in the market for foreign currency exchange?

In equilibrium a country has a net capital outflow of $200 billion and domestic investment of $150 billion. What is the quantity of loanable funds demanded?

If for some reason Americans desired to decrease their purchases of foreign assets, then other things the same

Over the past three decades, the United States has

When a country experiences capital flight, its net capital outflow,

What happens to each of the following if the supply of loanable funds shifts right? a. the interest rate b. net capital outflow c. the exchange rate

In the open-economy macroeconomic model, the market for loanable funds equates national saving with

In the open-economy macroeconomic model, net capital outflow rises if

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters