Exam 32: A Macroeconomic Theory of the Open Economy

If the demand for loanable funds shifts right, then

In the open-economy macroeconomic model, other things the same, when a U.S. resident imports a foreign good, the demand for dollars in the foreign-currency exchange market decreases.

In an open economy, national saving equals

Other things the same, if the U.S. interest rate rises, what happens to the net capital outflow of other countries?

In 2009 Greece's budget deficit rose and people became worried about the ability of the Greek government to make payments on its debt. Which of the these events reduces a country's real exchange rate?

Refer to Shoe Quota. What is a quota? What is a tariff?

Other things the same, a decrease in the real interest rate

An increase in the budget deficit

If government policy encouraged households to save more at each interest rate, then

In the open-economy macroeconomic model, other things the same, an increase in the exchange rate raises the quantity of dollars supplied in the market for foreign-currency exchange.

Which of the following contains a list only of things that decrease when the budget deficit of the U.S. increases?

In an open economy, the supply of loanable funds comes from national saving.

Other things the same, which curve in the market for foreign-currency exchange shifts and which direction does it shift if net capital outflow rises?

In the open economy macroeconomic model, the price that balances supply and demand in the market for foreign- currency exchange model is the

If the United States imposes an import quota on clothing, then U.S. exports

If the risk of buying U.S. assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds, then

If the exchange rate falls, domestic goods become relatively expensive. This change in the affordability of domestic goods makes domestic goods attractive to domestic residents. So, _______ ______.

In the open-economy macroeconomic model, at the equilibrium real interest rate, the amount that people (including government) want to save exactly balances desired domestic investment.

State what, if anything, each of the following does to the supply or demand of loanable funds. a. net capital outflow increases at each interest rate b. domestic investment increases at each interest rate c. the government deficit increases d. private saving increases

If the budget deficit increases, then