Question 1

If U.S. residents chose to travel overseas less due to concerns about the safety of foreign travel, then in the open- economy macroeconomic model

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

Which of the following leads to an increase in net exports in the long run?

Accepted Answer

A)  either a decrease in the budget deficit or imposing an import quota 
B)  a decrease in the budget deficit but not imposing an import quota 
C)  imposing an import quota but not a decrease in the budget deficit 
D)  neither a decrease in the budget deficit nor imposing an import quota 
A)  either a decrease in the budget deficit or imposing an import quota 
B)  a decrease in the budget deficit but not imposing an import quota 
C)  imposing an import quota but not a decrease in the budget deficit 
D)  neither a decrease in the budget deficit nor imposing an import quota

Question 3

If U.S. citizens decide to save a smaller fraction of their incomes, U.S. domestic investment

Accepted Answer

A)  increases, and U.S. net capital outflow increases. 
B)  increases, and U.S. net capital outflow decreases. 
C)  decreases, and U.S. net capital outflow increases. 
D)  decreases, and U.S. net capital outflow decreases. 
A)  increases, and U.S. net capital outflow increases. 
B)  increases, and U.S. net capital outflow decreases. 
C)  decreases, and U.S. net capital outflow increases. 
D)  decreases, and U.S. net capital outflow decreases.

Question 4

Other things the same, when the real exchange rate of the dollar appreciates, U.S. goods become more desirable to U.S. residents, but less desirable to foreign residents.

Accepted Answer

A) True 
 B)False

Question 5

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 6

Other things the same, if foreigners desire to purchase more U.S. bonds, then the demand for loanable funds shifts left.

Accepted Answer

A) True 
 B)False

Question 7

An import quota imposed by the U.S. would reduce U.S. imports, but have no impact on U.S. exports.

Accepted Answer

A) True 
 B)False

Question 8

If a country experiences capital flight, which curves shift right?

Accepted Answer

A)  the demand for loanable funds and the demand for its currency in the market for foreign-currency exchange 
B)  the demand for loanable funds and the supply of its currency in the market for foreign-currency exchange 
C)  the supply of loanable funds and the demand for its currency in the market for foreign-currency exchange 
D)  the supply of loanable funds and the supply of its currency in the market for foreign-currency exchange 
A)  the demand for loanable funds and the demand for its currency in the market for foreign-currency exchange 
B)  the demand for loanable funds and the supply of its currency in the market for foreign-currency exchange 
C)  the supply of loanable funds and the demand for its currency in the market for foreign-currency exchange 
D)  the supply of loanable funds and the supply of its currency in the market for foreign-currency exchange

Question 9

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 10

In the open-economy macroeconomic model, the supply of loanable funds comes from

Accepted Answer

A)  national saving. Demand comes from only domestic investment. 
B)  national saving. Demand comes from domestic investment and net capital outflow. 
C)  Only net capital outflow. Demand for loanable funds comes from national saving. 
D)  domestic investment and net capital outflow. Demand for loanable funds comes from national saving. 
A)  national saving. Demand comes from only domestic investment. 
B)  national saving. Demand comes from domestic investment and net capital outflow. 
C)  Only net capital outflow. Demand for loanable funds comes from national saving. 
D)  domestic investment and net capital outflow. Demand for loanable funds comes from national saving.

Question 11

Figure 32-4
Refer to this diagram of the open-economy macroeconomic model to answer the questions below.  
-Refer to Figure 32-4. Suppose that U.S. firms desire to purchase more capital in the U.S. The effects of this could be illustrated by

Accepted Answer

A)  shifting the demand curve in panel a to the right and the demand curve in panel c to the left. 
B)  shifting the demand curve in panel a to the right and the supply curve in panel c to the left. 
C)  shifting the supply curve in panel a to the right and the demand curve in panel c to the left. 
D)  shifting the supply curve in panel a to the right and the supply curve in panel c to the right. 
A)  shifting the demand curve in panel a to the right and the demand curve in panel c to the left. 
B)  shifting the demand curve in panel a to the right and the supply curve in panel c to the left. 
C)  shifting the supply curve in panel a to the right and the demand curve in panel c to the left. 
D)  shifting the supply curve in panel a to the right and the supply curve in panel c to the right.

Question 12

In the open-economy macroeconomic model, the supply of dollars in the market for foreign-currency exchange comes from

Accepted Answer

A)  national saving 
B)  domestic investment 
C)  net exports 
D)  net capital outflow 
A)  national saving 
B)  domestic investment 
C)  net exports 
D)  net capital outflow

Question 13

A country has GDP of $700 billion, consumption of $450 billion, government expenditures of $100 billion, and domestic investment of $200 billion. What is its supply of loanable funds?

Accepted Answer

A)  $350 billion 
B)  $250 billion 
C)  $200 billion 
D)  $150 billion 
A)  $350 billion 
B)  $250 billion 
C)  $200 billion 
D)  $150 billion

Question 14

If a country raises its budget deficit then

Accepted Answer

A)  both its supply of and demand for loanable funds shift. 
B)  its supply of but not its demand for loanable funds shifts. 
C)  its demand for but not its supply of loanable funds shifts. 
D)  neither its supply nor its demand for loanable funds shift. 
A)  both its supply of and demand for loanable funds shift. 
B)  its supply of but not its demand for loanable funds shifts. 
C)  its demand for but not its supply of loanable funds shifts. 
D)  neither its supply nor its demand for loanable funds shift.

Question 15

In the 1980s, both the U.S. government budget and U.S. trade deficits increased.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  the exchange rate falls so foreign residents want to buy more U.S. goods and services 
B)  the exchange rate falls so foreign residents want to buy fewer U.S. goods and services 
C)  the exchange rate rises so foreign residents want to buy more U.S. goods and services 
D)  the exchange rate rises so foreign residents want to buy fewer U.S. goods and services 
A)  the exchange rate falls so foreign residents want to buy more U.S. goods and services 
B)  the exchange rate falls so foreign residents want to buy fewer U.S. goods and services 
C)  the exchange rate rises so foreign residents want to buy more U.S. goods and services 
D)  the exchange rate rises so foreign residents want to buy fewer U.S. goods and services

Question 17

If the U.S. imposed an import quota on farm machinery, then sales of U.S. farm machinery equipment producers would

Accepted Answer

A)  rise and the exports of other U.S. industries would rise. 
B)  rise and the exports of other U.S. industries would fall. 
C)  fall and the exports of other U.S. industries would rise. 
D)  fall and the exports of other U.S. industries would fall. 
A)  rise and the exports of other U.S. industries would rise. 
B)  rise and the exports of other U.S. industries would fall. 
C)  fall and the exports of other U.S. industries would rise. 
D)  fall and the exports of other U.S. industries would fall.

Question 18

Which of the following is the most accurate statement?

Accepted Answer

A)  Trade policy has neither microeconomic nor macroeconomic effects. 
B)  Trade policy has similar microeconomic and macroeconomic effects. 
C)  The effects of trade policy are more macroeconomic than microeconomic. 
D)  The effects of trade policy are more microeconomic than macroeconomic. 
A)  Trade policy has neither microeconomic nor macroeconomic effects. 
B)  Trade policy has similar microeconomic and macroeconomic effects. 
C)  The effects of trade policy are more macroeconomic than microeconomic. 
D)  The effects of trade policy are more microeconomic than macroeconomic.

Question 19

If for some reason Americans desired to increase 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 20

Other things the same, as the real interest rate rises

Accepted Answer

A)  domestic investment and net capital outflow both rise. 
B)  domestic investment and net capital outflow both fall. 
C)  domestic investment rises and net capital outflow falls. 
D)  domestic investment falls and net capital outflow rises. 
A)  domestic investment and net capital outflow both rise. 
B)  domestic investment and net capital outflow both fall. 
C)  domestic investment rises and net capital outflow falls. 
D)  domestic investment falls and net capital outflow rises.

Exam 32: A Macroeconomic Theory of the Open Economy

If U.S. residents chose to travel overseas less due to concerns about the safety of foreign travel, then in the open- economy macroeconomic model

Which of the following leads to an increase in net exports in the long run?

If U.S. citizens decide to save a smaller fraction of their incomes, U.S. domestic investment

Other things the same, when the real exchange rate of the dollar appreciates, U.S. goods become more desirable to U.S. residents, but less desirable to foreign residents.

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

Other things the same, if foreigners desire to purchase more U.S. bonds, then the demand for loanable funds shifts left.

An import quota imposed by the U.S. would reduce U.S. imports, but have no impact on U.S. exports.

If a country experiences capital flight, which curves shift right?

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?

In the open-economy macroeconomic model, the supply of loanable funds comes from

Figure 32-4 Refer to this diagram of the open-economy macroeconomic model to answer the questions below. -Refer to Figure 32-4. Suppose that U.S. firms desire to purchase more capital in the U.S. The effects of this could be illustrated by

In the open-economy macroeconomic model, the supply of dollars in the market for foreign-currency exchange comes from

A country has GDP of $700 billion, consumption of $450 billion, government expenditures of $100 billion, and domestic investment of $200 billion. What is its supply of loanable funds?

If a country raises its budget deficit then

In the 1980s, both the U.S. government budget and U.S. trade deficits increased.

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

If the U.S. imposed an import quota on farm machinery, then sales of U.S. farm machinery equipment producers would

Which of the following is the most accurate statement?

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

Other things the same, as the real interest rate rises

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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

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