Question 1

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

Accepted Answer

A)   increase national saving and shift Chile's supply of loanable funds left.
B)   increase national saving and shift Chile's demand for loanable funds right.
C)   decrease national saving and shift Chile's supply of loanable funds left.
D)   decrease national saving and shift Chile's demand for loanable funds right.E) C) and D)
F) All of the above

Question 2

A country produces two goods,soda and chips.It currently exports soda and imports chips.If it were to impose a tariff on chips,

Accepted Answer

A)   both imports of chips and exports of sodas would rise.
B)   imports of chips would rise,but exports of sodas would fall.
C)   imports of chips would fall,but exports of sodas would rise.
D)   both imports of chips and exports of sodas would fall.E) C) and D)
F) All of the above

Question 3

If the U.S.imposed an import quota on construction equipment,then the sales of U.S.construction equipment producers would

Accepted Answer

A)   rise and the exports of other U.S.industries would rise.
B)   rise and the exports of other U.S.industries would fall.
C)   fall and the exports of other U.S.industries would rise.
D)   fall and the exports of other U.S.industries would fall.E) A) and B)
F) All of the above

Question 4

In 1995 House Speaker Newt Gingrich threatened to send the United States into default on its debt.During the day of this announcement,U.S.interest rates rose and the real exchange rate of the U.S.dollar depreciated.Which of these changes is consistent with the results of the open-economy macroeconomic model?

Accepted Answer

A)   the increase in U.S.interest rates
B)   the depreciation of the real exchange rate of the U.S.dollar
C)   Both a and b are consistent.
D)   Neither a nor b are consistent.E) B) and C)
F) A) and B)

Question 5

In the open-economy macroeconomic model,net capital outflow links the markets for loanable funds and foreign-currency exchange.

Accepted Answer

A) True 
 B)False

Question 6

Imposing an import quota causes the domestic real exchange rate to

Accepted Answer

A)   appreciate,which increases foreign demand for domestic goods.
B)   appreciate,which decreases foreign demand for domestic goods.
C)   depreciate,which increases foreign demand for domestic goods.
D)   depreciate,which decreases foreign demand for domestic goods.E) A) and B)
F) A) and C)

Question 7

An increase in the budget deficit

Accepted Answer

A)   reduces investment because the interest rate rises.
B)   reduces investment because the interest rate falls.
C)   raises investment because the interest rate rises.
D)   raises investment because the interest rate falls.E) A) and B)
F) A) and C)

Question 8

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

Accepted Answer

A)   A retail outlet in Canada wants to buy handbags from a U.S.manufacturer.
B)   A U.S.bank loans dollars to Karen,a U.S.resident,who wants to purchase a car in the U.S.
C)   A U.S.based law firm wants to build a new office in Japan.
D)   All of the above are correct.E) C) and D)
F) None of the above

Question 9

If a government increases its budget deficit,then interest rates

Accepted Answer

A)   rise and the real exchange rate appreciates.
B)   fall and the real exchange rate depreciates.
C)   rise and the real exchange rate depreciates.
D)   fall and the real exchange rate appreciates.E) All of the above
F) B) and C)

Question 10

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,falls...

Question 11

The quantity of U.S.bonds foreigners want to buy is taken into account

Accepted Answer

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

Question 12

When the government budget deficit increases,national saving increases.

Accepted Answer

A) True 
 B)False

Question 13

An increase in real interest rates in the United States

Accepted Answer

A)   discourages both U.S.and foreign residents from buying U.S.assets.
B)   encourages both U.S.and foreign residents to buy U.S.assets.
C)   encourages U.S.residents to buy U.S.assets,but discourages foreign residents from buying U.S.assets.
D)   encourages foreign residents to buy U.S.assets,but discourages U.S.residents from buying U.S.assets.E) B) and C)
F) A) and D)

Question 14

In the long run,import quotas increase net exports.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

The supply of Turkish loanable funds cur...

Question 16

When a country suffers from capital flight,the demand for loanable funds in that country shifts

Accepted Answer

A)   right,which increases interest rates in that country.
B)   right,which decreases interest rates in that country.
C)   left,which increases interest rates in that country.
D)   left,which decreases interest rates in that country.E) All of the above
F) C) and D)

Question 17

Net capital outflow represents the quantity of dollars supplied in the foreign-currency exchange market.

Accepted Answer

A) True 
 B)False

Question 18

In which case(s) does(do) a country's demand for loanable funds shift right?

Accepted Answer

A)   both an increase in the budget deficit and capital flight
B)   an increase in the budget deficit,but not capital flight
C)   capital flight,but not an increase in the budget deficit
D)   neither an increase in the budget deficit nor capital flightE) C) and D)
F) All of the above

Question 19

When Mexico suffered from capital flight in 1994,Mexico's real interest rate

Accepted Answer

A)   fell and the peso appreciated.
B)   fell and the peso depreciated.
C)   rose and the peso appreciated.
D)   rose and the peso depreciated.E) A) and B)
F) All of the above

Question 20

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.E) All of the above
F) None of the above

Exam 32: A Macroeconomic Theory of the Open Economy

Trade policies

Correct Answer
verified

In which case(s) does(do) a country's demand for loanable funds shift right?

Correct Answer
verified

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 .

Correct Answer
verified
more,falls...
View Answer

An increase in the budget deficit

Correct Answer
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When the government budget deficit increases,national saving increases.

Correct Answer
verified

Correct Answer
verified

If the U.S.imposed an import quota on construction equipment,then the sales of U.S.construction equipment producers would

Correct Answer
verified

An increase in real interest rates in the United States

Correct Answer
verified

Net capital outflow represents the quantity of dollars supplied in the foreign-currency exchange market.

Correct Answer
verified

The quantity of U.S.bonds foreigners want to buy is taken into account

Correct Answer
verified

In the open-economy macroeconomic model,net capital outflow links the markets for loanable funds and foreign-currency exchange.

Correct Answer
verified

In the long run,import quotas increase net exports.

Correct Answer
verified

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

Correct Answer
verified
The supply of Turkish loanable funds cur...
View Answer

When Mexico suffered from capital flight in 1994,Mexico's real interest rate

Correct Answer
verified

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

Correct Answer
verified

When a country suffers from capital flight,the demand for loanable funds in that country shifts

Correct Answer
verified

Imposing an import quota causes the domestic real exchange rate to

Correct Answer
verified

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

Correct Answer
verified

If a government increases its budget deficit,then interest rates

Correct Answer
verified

A country produces two goods,soda and chips.It currently exports soda and imports chips.If it were to impose a tariff on chips,

Correct Answer
verified

Exam 32: A Macroeconomic Theory of the Open Economy

Trade policies

Correct AnswerverifiedShow Answer

In which case(s) does(do) a country's demand for loanable funds shift right?

Correct AnswerverifiedShow Answer

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 ______.

Correct Answerverifiedmore,falls...View AnswerShow Answer

An increase in the budget deficit

Correct AnswerverifiedShow Answer

When the government budget deficit increases,national saving increases.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the U.S.imposed an import quota on construction equipment,then the sales of U.S.construction equipment producers would

Correct AnswerverifiedShow Answer

An increase in real interest rates in the United States

Correct AnswerverifiedShow Answer

Net capital outflow represents the quantity of dollars supplied in the foreign-currency exchange market.

Correct AnswerverifiedShow Answer

The quantity of U.S.bonds foreigners want to buy is taken into account

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,net capital outflow links the markets for loanable funds and foreign-currency exchange.

Correct AnswerverifiedShow Answer

In the long run,import quotas increase net exports.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedThe supply of Turkish loanable funds cur...View AnswerShow Answer

When Mexico suffered from capital flight in 1994,Mexico's real interest rate

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When a country suffers from capital flight,the demand for loanable funds in that country shifts

Correct AnswerverifiedShow Answer

Imposing an import quota causes the domestic real exchange rate to

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a government increases its budget deficit,then interest rates

Correct AnswerverifiedShow Answer

A country produces two goods,soda and chips.It currently exports soda and imports chips.If it were to impose a tariff on chips,

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

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 .

Correct Answer
verified
more,falls...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The supply of Turkish loanable funds cur...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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