Question 1

If at a given exchange rate U.S. citizens wanted to buy more foreign bonds

Accepted Answer

A)  the demand for dollars in the market for foreign-currency exchange would shift right. 
B)  the demand for dollars in the market for foreign-currency exchange would shift 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 would shift right. 
B)  the demand for dollars in the market for foreign-currency exchange would shift 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

From 2001 to 2004, the U.S. government went from a budget surplus to a budget deficit. According to the open- economy macroeconomic model, this should have decreased

Accepted Answer

A)  both the supply of loanable funds and the supply of dollars in the market for foreign-currency exchange. 
B)  neither the supply of loanable funds nor the supply of dollars in the market for foreign-currency exchange. 
C)  the supply of loanable funds but not the supply of dollars in the market for foreign-currency exchange. 
D)  the supply of dollars in the market for foreign-currency exchange, but not the supply of loanable funds. 
A)  both the supply of loanable funds and the supply of dollars in the market for foreign-currency exchange. 
B)  neither the supply of loanable funds nor the supply of dollars in the market for foreign-currency exchange. 
C)  the supply of loanable funds but not the supply of dollars in the market for foreign-currency exchange. 
D)  the supply of dollars in the market for foreign-currency exchange, but not the supply of loanable funds.

Question 3

Other things the same an increase in the interest rate

Accepted Answer

A)  increases national saving, this is shown by moving along the demand for loanable funds curve. 
B)  increases national saving, this is shown by moving along the supply of loanable funds curve. 
C)  decreases national saving, this is shown by moving along the demand for loanable funds curve. 
D)  decreases national saving, this is shown by moving along the supply of loanable funds curve. 
A)  increases national saving, this is shown by moving along the demand for loanable funds curve. 
B)  increases national saving, this is shown by moving along the supply of loanable funds curve. 
C)  decreases national saving, this is shown by moving along the demand for loanable funds curve. 
D)  decreases national saving, this is shown by moving along the supply of loanable funds curve.

Question 4

Refer to Budget in Recession. This change in the deficit causes the exchange rate to change. What does the change in the exchange rate do to net exports?

Accepted Answer

Because the exchange

Question 5

When the U.S. real interest rate falls, purchasing U.S. assets becomes

Accepted Answer

A)  less attractive and so U.S. net capital outflow rises. 
B)  less attractive and so U.S. net capital outflow falls. 
C)  more attractive and so U.S. net capital outflow rises. 
D)  more attractive and so U.S. net capital outflow falls. 
A)  less attractive and so U.S. net capital outflow rises. 
B)  less attractive and so U.S. net capital outflow falls. 
C)  more attractive and so U.S. net capital outflow rises. 
D)  more attractive and so U.S. net capital outflow falls.

Question 6

Other things the same, if the U.S. interest rate rises, U.S. assets become ____ attractive. So, desired net capital outflow _____. This change in net capital outflow shifts the __________ curve in the market for foreign-currency exchange to the ______.

Accepted Answer

more, fall

Question 7

A tax on imported goods is called a(n)

Accepted Answer

A)  excise tax. 
B)  tariff. 
C)  import quota. 
D)  None of the above is correct. 
A)  excise tax. 
B)  tariff. 
C)  import quota. 
D)  None of the above is correct.

Question 8

In the open-economy macroeconomic model, the market for loanable funds identity can be written as

Accepted Answer

A)  S = I 
B)  S = NCO 
C)  S = I + NCO 
D)  S + I = NCO 
A)  S = I 
B)  S = NCO 
C)  S = I + NCO 
D)  S + I = NCO

Question 9

Other things the same, an increase in the U.S. interest rate causes the quantity of loanable funds supplied to

Accepted Answer

A)  rise because national saving rises. 
B)  rise because domestic investment rises. 
C)  fall because national saving falls. 
D)  fall because domestic investment falls. 
A)  rise because national saving rises. 
B)  rise because domestic investment rises. 
C)  fall because national saving falls. 
D)  fall because domestic investment falls.

Question 10

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 appreciates making domestic goods relatively more expensive. 
B)  the exchange rate appreciates making domestic goods relatively less expensive. 
C)  the exchange rate depreciates making domestic goods relatively more expensive. 
D)  the exchange rate depreciates making domestic goods relatively less expensive. 
A)  the exchange rate appreciates making domestic goods relatively more expensive. 
B)  the exchange rate appreciates making domestic goods relatively less expensive. 
C)  the exchange rate depreciates making domestic goods relatively more expensive. 
D)  the exchange rate depreciates making domestic goods relatively less expensive.

Question 11

What happens to net capital outflow as the real interest rate falls? Explain your answer.

Accepted Answer

As the real interest rate falls, domesti

Question 12

Trade policies

Accepted Answer

A)  affect a country's overall trade balance, but affect all firms and industries the same. 
B)  affect a country's overall trade balance, but affect some firms or industries differently than others. 
C)  do not affect a country's overall trade balance, but affect some firms or industries differently than others. 
D)  do not affect either a country's overall trade balance or specific firms or industries. 
A)  affect a country's overall trade balance, but affect all firms and industries the same. 
B)  affect a country's overall trade balance, but affect some firms or industries differently than others. 
C)  do not affect a country's overall trade balance, but affect some firms or industries differently than others. 
D)  do not affect either a country's overall trade balance or specific firms or industries.

Question 13

If a tariff on beef were implemented, which of the following would rise?

Accepted Answer

A)  exports and net exports 
B)  exports but not net exports 
C)  net exports but not exports 
D)  neither exports nor net exports 
A)  exports and net exports 
B)  exports but not net exports 
C)  net exports but not exports 
D)  neither exports nor net exports

Question 14

If the risk of holding assets in foreign countries rises relative to the risk of holding U.S assets, then

Accepted Answer

A)  U.S. net capital outflow rises which increases the U.S. exchange rate. 
B)  U.S. net capital outflow rises which decreases the U.S. exchange rate. 
C)  U.S. net capital outflow falls which increases the U.S. exchange rate. 
D)  U.S. net capital outflow falls which decreases the U.S. exchange rate. 
A)  U.S. net capital outflow rises which increases the U.S. exchange rate. 
B)  U.S. net capital outflow rises which decreases the U.S. exchange rate. 
C)  U.S. net capital outflow falls which increases the U.S. exchange rate. 
D)  U.S. net capital outflow falls which decreases the U.S. exchange rate.

Question 15

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

Accepted Answer

A)  personal saving 
B)  public saving 
C)  public saving + personal saving 
D)  public saving + personal saving + net capital outflows 
A)  personal saving 
B)  public saving 
C)  public saving + personal saving 
D)  public saving + personal saving + net capital outflows

Question 16

The slope of the supply of loanable funds is based on an increase in

Accepted Answer

A)  only national saving when the interest rate rises. 
B)  both national saving and net capital outflow when the interest rate rises. 
C)  only national saving when the interest rate falls. 
D)  both national saving and net capital outflow when the interest rate falls. 
A)  only national saving when the interest rate rises. 
B)  both national saving and net capital outflow when the interest rate rises. 
C)  only national saving when the interest rate falls. 
D)  both national saving and net capital outflow when the interest rate falls.

Question 17

An economy recently had 800 billion euros of saving and 600 billion euros of net capital outflow. What was its investment? What was its quantity of loanable funds supplied?

Accepted Answer

200 billio

Question 18

If the Canadian government raises it budget deficit, then Canada's net capital outflows will

Accepted Answer

A)  increase, so its exchange rate will rise. 
B)  increase, so its exchange rate will fall. 
C)  decrease, so its exchange rate will rise. 
D)  decrease, so its exchange rate will fall. 
A)  increase, so its exchange rate will rise. 
B)  increase, so its exchange rate will fall. 
C)  decrease, so its exchange rate will rise. 
D)  decrease, so its exchange rate will fall.

Question 19

If the government of Venezuela made policy changes that increased national saving, the real exchange rate of the peso would

Accepted Answer

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

Question 20

Which of the following would shift the supply of dollars in the market for foreign-currency exchange of the open- economy macroeconomic model to the left?

Accepted Answer

A)  the exchange rate rises 
B)  the exchange rate falls 
C)  the expected rate of return on U.S. assets rises 
D)  the expected rate of return on U.S. assets falls 
A)  the exchange rate rises 
B)  the exchange rate falls 
C)  the expected rate of return on U.S. assets rises 
D)  the expected rate of return on U.S. assets falls

Exam 32: A Macroeconomic Theory of the Open Economy

If at a given exchange rate U.S. citizens wanted to buy more foreign bonds

From 2001 to 2004, the U.S. government went from a budget surplus to a budget deficit. According to the open- economy macroeconomic model, this should have decreased

Other things the same an increase in the interest rate

Refer to Budget in Recession. This change in the deficit causes the exchange rate to change. What does the change in the exchange rate do to net exports?

When the U.S. real interest rate falls, purchasing U.S. assets becomes

Other things the same, if the U.S. interest rate rises, U.S. assets become ____ attractive. So, desired net capital outflow _____. This change in net capital outflow shifts the __________ curve in the market for foreign-currency exchange to the ______.

A tax on imported goods is called a(n)

In the open-economy macroeconomic model, the market for loanable funds identity can be written as

Other things the same, an increase in the U.S. interest rate causes the quantity of loanable funds supplied to

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

What happens to net capital outflow as the real interest rate falls? Explain your answer.

Trade policies

If a tariff on beef were implemented, which of the following would rise?

If the risk of holding assets in foreign countries rises relative to the risk of holding U.S assets, then

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

The slope of the supply of loanable funds is based on an increase in

An economy recently had 800 billion euros of saving and 600 billion euros of net capital outflow. What was its investment? What was its quantity of loanable funds supplied?

If the Canadian government raises it budget deficit, then Canada's net capital outflows will

If the government of Venezuela made policy changes that increased national saving, the real exchange rate of the peso would

Which of the following would shift the supply of dollars in the market for foreign-currency exchange of the open- economy macroeconomic model to the left?

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

Other things the same, if the U.S. interest rate rises, U.S. assets become __ attractive. So, desired net capital outflow _. This change in net capital outflow shifts the __ curve in the market for foreign-currency exchange to the .