Question 1

If the demand for dollars in the market for foreign-currency exchange shifts left, then the exchange rate

Accepted Answer

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

Question 2

What is the source of the supply of dollars in the market for foreign-currency exchange?

Accepted Answer

The answer of What is the source of the supply...

Question 3

Suppose that India has a government budget surplus, and then goes into deficit. This change would

Accepted Answer

A)  increase India's national saving and shift its supply of loanable funds left. 
B)  increase India's national saving and shift its demand for loanable funds right. 
C)  decrease India's national saving and shift its supply of loanable funds left. 
D)  decrease India's national saving and shift its demand for loanable funds right. 
A)  increase India's national saving and shift its supply of loanable funds left. 
B)  increase India's national saving and shift its demand for loanable funds right. 
C)  decrease India's national saving and shift its supply of loanable funds left. 
D)  decrease India's national saving and shift its demand for loanable funds right.

Question 4

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

Accepted Answer

A)  more attractive to both U.S. and foreign residents. 
B)  more attractive to U.S. residents and less attractive to foreign residents. 
C)  less attractive to U.S. residents and more attractive to foreign residents. 
D)  less attractive to both U.S. residents and foreign residents. 
A)  more attractive to both U.S. and foreign residents. 
B)  more attractive to U.S. residents and less attractive to foreign residents. 
C)  less attractive to U.S. residents and more attractive to foreign residents. 
D)  less attractive to both U.S. residents and foreign residents.

Question 5

What do trade policies do to the standard of living?

Accepted Answer

Trade policies reduce both imports and e

Question 6

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

Accepted Answer

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

Question 7

In the open-economy macroeconomic model, the supply curve of currency is vertical because the quantity of currency supplied does not depend on the real exchange rate.

Accepted Answer

A) True 
 B)False

Question 8

In an open economy, the demand for loanable funds comes from

Accepted Answer

A)  only those who want to buy domestic capital goods. 
B)  only those who want to buy foreign assets. 
C)  those who want to buy either domestic capital goods or foreign assets. 
D)  None of the above is correct. 
A)  only those who want to buy domestic capital goods. 
B)  only those who want to buy foreign assets. 
C)  those who want to buy either domestic capital goods or foreign assets. 
D)  None of the above is correct.

Question 9

Other things the same, if the interest rate falls, then

Accepted Answer

A)  firms will want to borrow more, which increases the quantity of loanable funds demanded. 
B)  firms will want to borrow less, which decreases the quantity of loanable funds demanded. 
C)  firms will want to borrow more, which increase the quantity of loanable funds supplied. 
D)  firms will want to borrow less, which decreases the quantity of loanable funds supplied. 
A)  firms will want to borrow more, which increases the quantity of loanable funds demanded. 
B)  firms will want to borrow less, which decreases the quantity of loanable funds demanded. 
C)  firms will want to borrow more, which increase the quantity of loanable funds supplied. 
D)  firms will want to borrow less, which decreases the quantity of loanable funds supplied.

Question 10

Refer to Depositors Move Funds Out of Greek Banks. What happened to domestic investment? Why?

Accepted Answer

Domestic investment

Question 11

A country has I = $200 billion, S = $400 billion, and purchased $600 billion of foreign assets, how many of its assets did foreigners purchase?

Accepted Answer

A)  $0 
B)  $200 billion 
C)  $400 billion 
D)  $800 billion 
A)  $0 
B)  $200 billion 
C)  $400 billion 
D)  $800 billion

Question 12

According to the open-economy macroeconomic model, if the U.S. government budget deficit increases, then both U.S. domestic investment and U.S. net capital outflow decrease.

Accepted Answer

A) True 
 B)False

Question 13

A country has domestic investment of $200 billion. Its citizens purchase $600 of foreign assets and foreign citizens purchase $300 of its assets. What is national saving?

Accepted Answer

A)  $400 billion 
B)  $500 billion 
C)  $600 billion 
D)  $800 billion 
A)  $400 billion 
B)  $500 billion 
C)  $600 billion 
D)  $800 billion

Question 14

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

Accepted Answer

A)  U.S. supply of loanable funds, U.S. net capital outflow, U.S. domestic investment 
B)  U.S. supply of loanable funds, U.S. exports, the real exchange rate of the dollar 
C)  U.S. interest rates, the real exchange rate of the dollar, U.S. domestic investment 
D)  the real exchange rate of the dollar, U.S. net capital outflow, U.S. net exports 
A)  U.S. supply of loanable funds, U.S. net capital outflow, U.S. domestic investment 
B)  U.S. supply of loanable funds, U.S. exports, the real exchange rate of the dollar 
C)  U.S. interest rates, the real exchange rate of the dollar, U.S. domestic investment 
D)  the real exchange rate of the dollar, U.S. net capital outflow, U.S. net exports

Question 15

When Mexico suffered from capital flight in 1994, Mexico's net capital outflow

Accepted Answer

A)  and net exports decreased. 
B)  and net exports increased. 
C)  increased while net exports decreased. 
D)  decreased while net exports increased. 
A)  and net exports decreased. 
B)  and net exports increased. 
C)  increased while net exports decreased. 
D)  decreased while net exports increased.

Question 16

If imports = 500 billion euros, exports = 700 billion euros, purchases of domestic assets by foreign residents = 600 billion euros, and purchases of foreign assets by domestic residents = 800 billion euros, what is the quantity of euros demanded in the market for foreign-currency exchange?

Accepted Answer

A)  1,100 billion euros 
B)  600 billion euros 
C)  500 billion euros 
D)  200 billion euros 
A)  1,100 billion euros 
B)  600 billion euros 
C)  500 billion euros 
D)  200 billion euros

Question 17

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

Accepted Answer

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

Question 18

A country recently had 500 billion euros of national saving and -200 billion euros of net capital outflow. What was its domestic investment? What was its quantity of loanable funds supplied?

Accepted Answer

700 billio

Question 19

If the U.S. government went from a budget deficit to a budget surplus then

Accepted Answer

A)  the interest rate and the real exchange rate would increase. 
B)  the interest rate and the real exchange rate would decrease. 
C)  the interest rate would increase and the real exchange rate would decrease. 
D)  the interest rate would decrease and the real exchange rate would increase. 
A)  the interest rate and the real exchange rate would increase. 
B)  the interest rate and the real exchange rate would decrease. 
C)  the interest rate would increase and the real exchange rate would decrease. 
D)  the interest rate would decrease and the real exchange rate would increase.

Question 20

A tax credit for purchases of capital goods causes the interest rate to increase and the exchange rate to appreciate.

Accepted Answer

A) True 
 B)False

Exam 32: A Macroeconomic Theory of the Open Economy

If the demand for dollars in the market for foreign-currency exchange shifts left, then the exchange rate

What is the source of the supply of dollars in the market for foreign-currency exchange?

Suppose that India has a government budget surplus, and then goes into deficit. This change would

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

What do trade policies do to the standard of living?

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

In the open-economy macroeconomic model, the supply curve of currency is vertical because the quantity of currency supplied does not depend on the real exchange rate.

In an open economy, the demand for loanable funds comes from

Other things the same, if the interest rate falls, then

Refer to Depositors Move Funds Out of Greek Banks. What happened to domestic investment? Why?

A country has I = $200 billion, S = $400 billion, and purchased $600 billion of foreign assets, how many of its assets did foreigners purchase?

According to the open-economy macroeconomic model, if the U.S. government budget deficit increases, then both U.S. domestic investment and U.S. net capital outflow decrease.

A country has domestic investment of $200 billion. Its citizens purchase $600 of foreign assets and foreign citizens purchase $300 of its assets. What is national saving?

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

When Mexico suffered from capital flight in 1994, Mexico's net capital outflow

If imports = 500 billion euros, exports = 700 billion euros, purchases of domestic assets by foreign residents = 600 billion euros, and purchases of foreign assets by domestic residents = 800 billion euros, what is the quantity of euros demanded in the market for foreign-currency exchange?

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

A country recently had 500 billion euros of national saving and -200 billion euros of net capital outflow. What was its domestic investment? What was its quantity of loanable funds supplied?

If the U.S. government went from a budget deficit to a budget surplus then

A tax credit for purchases of capital goods causes the interest rate to increase and the exchange rate to appreciate.

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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