Exam 32: A Macroeconomic Theory of the Open Economy

In the open-economy macroeconomic model, if there is a surplus in the market for foreign-currency exchange, which of the following will move the market to equilibrium?

Which of the following is the correct way to show the effects of a newly imposed import quota?

Which of the following would both make a country's real exchange rate rise?

Suppose that the U.S. imposes an import quota on lumber. The quota makes the real exchange rate of the U.S. dollar

In an open economy, the demand for loanable funds comes from both domestic investment and net capital outflow.

U.S. corporation Wright Air Conditions borrows funds to build a factory in the U.S. and a factory in Mexico. Borrowing for factories in which location(s) is included in the U.S. demand for loanable funds?

A country has national saving of $80 billion, government expenditures of $40 billion, domestic investment of $50 billion, and net capital outflow of $30 billion. What is its supply of loanable funds?

If foreigners want to buy more U.S. bonds, then in the market for foreign-currency exchange the exchange rate

If China experienced capital flight, the supply of Chinese yuan in the market for foreign-currency exchange would shift

Refer to U.S. Investment Tax Credit. What happens to the exchange rate, U.S. net exports, and the net exports of foreign countries?

If the supply of loanable funds shifts right, then the equilibrium

At the equilibrium real interest rate in the open-economy macroeconomic model

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

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

In the open-economy macroeconomic model, the purchase of a capital asset by domestic residents adds to the demand for loanable funds

Suppose that the U.S. government budget deficit decreases. What curves in the open-economy macroeconomic model shift? Explain why each curve shifts the direction it does.

From 1980 to 1987, U.S. net capital outflows decreased. According to the open-economy macroeconomic model, which of the following could have caused this?

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

If the budget deficit increases, 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