Question 1

If the U.S. government imposes a quota on leather shoes, then net exports of U.S. shoes would

Accepted Answer

A)  rise. 
B)  not change. 
C)  fall. 
D)  rise, not change, or fall depending on what happened to the exchange rate. 
A)  rise. 
B)  not change. 
C)  fall. 
D)  rise, not change, or fall depending on what happened to the exchange rate.

Question 2

Figure 32-2  
-Refer to Figure 32-2. At what real exchange rate is the quantity of dollars demanded equal to 500?

Accepted Answer

A)  1 
B)  .8 
C)  .6 
D)  None of the above are correct. 
A)  1 
B)  .8 
C)  .6 
D)  None of the above are correct.

Question 3

If the supply of dollars in the market for foreign-currency exchange shifts right, then the exchange rate

Accepted Answer

A)  rises and the quantity of dollars exchanged falls. 
B)  rises and the quantity of dollars exchanged does not change. 
C)  falls and the quantity of dollars exchanged rises. 
D)  falls and the quantity of dollars exchanged does not change. 
A)  rises and the quantity of dollars exchanged falls. 
B)  rises and the quantity of dollars exchanged does not change. 
C)  falls and the quantity of dollars exchanged rises. 
D)  falls and the quantity of dollars exchanged does not change.

Question 4

A firm produces construction equipment, some of which it sells to domestic businesses and some of which it exports. Which of the following effects of capital flight in the country where it produces would likely increase the quantity of equipment it sells?

Accepted Answer

A)  both what happens to the interest rate and what happens to the exchange rate 
B)  what happens to the interest rate but not what happens to the exchange rate 
C)  what happens to the exchange rate but not what happens to the interest rate 
D)  neither what happens to the interest rate nor what happens to the interest rate. 
A)  both what happens to the interest rate and what happens to the exchange rate 
B)  what happens to the interest rate but not what happens to the exchange rate 
C)  what happens to the exchange rate but not what happens to the interest rate 
D)  neither what happens to the interest rate nor what happens to the interest rate.

Question 5

In the open-economy macroeconomic model, the demand for dollars shifts right if at any given exchange rate

Accepted Answer

A)  foreign residents want to buy more U.S. goods and services. 
B)  U.S. residents want to buy fewer foreign goods and services. 
C)  Both A and B are correct. 
D)  None of the above is correct. 
A)  foreign residents want to buy more U.S. goods and services. 
B)  U.S. residents want to buy fewer foreign goods and services. 
C)  Both A and B are correct. 
D)  None of the above is correct.

Question 6

If the exchange rate rises, foreign residents want to purchase ______ domestic goods and domestic residents want to purchase _____ foreign goods. In the market for foreign-currency exchange, these changes are shown as a _______ in the quantity of dollars ______.

Accepted Answer

fewer, mor

Question 7

If a country raises its budget deficit, then net capital outflow

Accepted Answer

A)  rises, so the supply of its currency shifts right in the market for foreign-currency exchange. 
B)  rises, so the demand for its currency shifts right in the market for foreign-currency exchange. 
C)  falls, so the supply of its currency shifts left in the market for foreign-currency exchange. 
D)  falls, so the demand for its currency shifts right in the market for foreign-currency exchange. 
A)  rises, so the supply of its currency shifts right in the market for foreign-currency exchange. 
B)  rises, so the demand for its currency shifts right in the market for foreign-currency exchange. 
C)  falls, so the supply of its currency shifts left in the market for foreign-currency exchange. 
D)  falls, so the demand for its currency shifts right in the market for foreign-currency exchange.

Question 8

Which of the following is considered part of the supply of U.S. dollars in the market for foreign-currency exchange in the open-economy macroeconomic model?

Accepted Answer

A)  both a U.S. bank wanting to lend money to a Canadian company and a U.S. firm wanting to buy computers made in South Korea 
B)  a U.S. bank wanting to lend money to a Canadian company, but not a U.S. firm wanting to buy computers made in South Korea 
C)  a U.S. firm wanting to buy computers made in South Korea, but not a U.S.bank wanting to lend money to a Canadian company 
D)  neither a U.S. bank wanting to lend money to a Canadian company nor a U.S. firm wanting to buy computers made in South Korea 
A)  both a U.S. bank wanting to lend money to a Canadian company and a U.S. firm wanting to buy computers made in South Korea 
B)  a U.S. bank wanting to lend money to a Canadian company, but not a U.S. firm wanting to buy computers made in South Korea 
C)  a U.S. firm wanting to buy computers made in South Korea, but not a U.S.bank wanting to lend money to a Canadian company 
D)  neither a U.S. bank wanting to lend money to a Canadian company nor a U.S. firm wanting to buy computers made in South Korea

Question 9

If the U.S. government increased its deficit, then

Accepted Answer

A)  U.S. bonds would pay higher interest but a dollar would purchase fewer foreign goods. 
B)  U.S. bonds would pay higher interest and a dollar would purchase more foreign goods. 
C)  U.S. bonds would pay lower interest and a dollar would purchase fewer foreign goods. 
D)  U.S. bonds would pay lower interest but a dollar would purchase more foreign goods. 
A)  U.S. bonds would pay higher interest but a dollar would purchase fewer foreign goods. 
B)  U.S. bonds would pay higher interest and a dollar would purchase more foreign goods. 
C)  U.S. bonds would pay lower interest and a dollar would purchase fewer foreign goods. 
D)  U.S. bonds would pay lower interest but a dollar would purchase more foreign goods.

Question 10

Suppose that the United States imposes an import quota on televisions. In the open-economy macroeconomic model this quota shifts the

Accepted Answer

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

Question 11

If the government of India implemented a policy that decreased national saving, its real exchange rate would

Accepted Answer

A)  depreciate and Indian net exports would rise. 
B)  depreciate and Indian net exports would fall. 
C)  appreciate and Indian net exports would rise. 
D)  appreciate and Indian net exports would fall. 
A)  depreciate and Indian net exports would rise. 
B)  depreciate and Indian net exports would fall. 
C)  appreciate and Indian net exports would rise. 
D)  appreciate and Indian net exports would fall.

Question 12

In the open-economy macroeconomic model, if the supply of loanable funds increases, then the interest rate

Accepted Answer

A)  and the real exchange rate increase. 
B)  and the real exchange rate decrease. 
C)  increases and the real exchange rate decreases. 
D)  decreases and the real exchange rate increases. 
A)  and the real exchange rate increase. 
B)  and the real exchange rate decrease. 
C)  increases and the real exchange rate decreases. 
D)  decreases and the real exchange rate increases.

Question 13

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

Accepted Answer

A)  the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts right. 
B)  the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts left. 
C)  the interest rate falls and the demand for dollars in the market for foreign currency exchange shifts right. 
D)  the interest rate falls and the demand for dollars in the market for foreign currency exchange shifts left. 
A)  the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts right. 
B)  the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts left. 
C)  the interest rate falls and the demand for dollars in the market for foreign currency exchange shifts right. 
D)  the interest rate falls and the demand for dollars in the market for foreign currency exchange shifts left.

Question 14

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

Accepted Answer

A)  the demand curve right. 
B)  the demand curve left. 
C)  the supply curve right. 
D)  the supply curve left. 
A)  the demand curve right. 
B)  the demand curve left. 
C)  the supply curve right. 
D)  the supply curve left.

Question 15

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

Accepted Answer

A)  national saving. The demand for loanable funds comes from domestic investment + net capital outflow. 
B)  national saving. The demand for loanable funds comes only from domestic investment. 
C)  private saving. The demand for loanable funds comes from domestic investment + net capital outflow. 
D)  private saving. The demand for loanable funds comes only from domestic investment. 
A)  national saving. The demand for loanable funds comes from domestic investment + net capital outflow. 
B)  national saving. The demand for loanable funds comes only from domestic investment. 
C)  private saving. The demand for loanable funds comes from domestic investment + net capital outflow. 
D)  private saving. The demand for loanable funds comes only from domestic investment.

Exam 32: A Macroeconomic Theory of the Open Economy

If the U.S. government imposes a quota on leather shoes, then net exports of U.S. shoes would

Figure 32-2 -Refer to Figure 32-2. At what real exchange rate is the quantity of dollars demanded equal to 500?

If the supply of dollars in the market for foreign-currency exchange shifts right, then the exchange rate

A firm produces construction equipment, some of which it sells to domestic businesses and some of which it exports. Which of the following effects of capital flight in the country where it produces would likely increase the quantity of equipment it sells?

In the open-economy macroeconomic model, the demand for dollars shifts right if at any given exchange rate

If the exchange rate rises, foreign residents want to purchase ______ domestic goods and domestic residents want to purchase _____ foreign goods. In the market for foreign-currency exchange, these changes are shown as a _______ in the quantity of dollars ______.

If a country raises its budget deficit, then net capital outflow

Which of the following is considered part of the supply of U.S. dollars in the market for foreign-currency exchange in the open-economy macroeconomic model?

If the U.S. government increased its deficit, then

Suppose that the United States imposes an import quota on televisions. In the open-economy macroeconomic model this quota shifts the

If the government of India implemented a policy that decreased national saving, its real exchange rate would

In the open-economy macroeconomic model, if the supply of loanable funds increases, then the interest rate

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

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

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

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

Filters

If the exchange rate rises, foreign residents want to purchase ____ domestic goods and domestic residents want to purchase _ foreign goods. In the market for foreign-currency exchange, these changes are shown as a _ in the quantity of dollars __.