Question 1

The variable that links the market for loanable funds and the market for foreign-currency exchange is

Accepted Answer

A)   net capital outflow.
B)   national saving.
C)   exports.
D)   domestic investment.E) A) and D)
F) A) and C)

Question 2

Figure 19-1 
-Refer to Figure 19-1.In the Figure shown,if the real interest rate is 6 percent,there will be pressure for

Accepted Answer

A)   the real interest rate to fall.
B)   the demand for loanable funds curve to shift left.
C)   the supply for loanable funds curve to shift right.
D)   All of the above are correct.E) C) and D)
F) B) and C)

Question 3

At the equilibrium real interest rate in the open-economy macroeconomic model,the equilibrium quantity of loanable funds equals

Accepted Answer

A)   net capital outflow.
B)   domestic investment.
C)   foreign currency supplied.
D)   national saving.E) C) and D)
F) B) and D)

Question 4

Because a government budget deficit represents

Accepted Answer

A)   negative public saving,it increases national saving.
B)   negative public saving,it decreases national saving.
C)   positive public saving,it increases national saving.
D)   positive public saving,it decreases national saving.E) A) and D)
F) A) and C)

Question 5

The open-economy macroeconomic model includes

Accepted Answer

A)   only the market for loanable funds.
B)   only the market for foreign-currency exchange.
C)   both the market for loanable funds and the market for foreign-currency exchange.
D)   neither the market for loanable funds or the market for foreign-currency exchange.E) A) and B)
F) B) and C)

Question 6

When a country imposes an import quota,its

Accepted Answer

A)   imports fall and its net exports rise.
B)   imports fall and its net exports are unchanged.
C)   imports rise and its net exports are unchanged.
D)   imports and exports are unchanged.E) B) and C)
F) A) and D)

Question 7

Which of the following would make the equilibrium real interest rate increase and the equilibrium quantity of funds decrease?

Accepted Answer

A)   The demand for loanable funds shifts right.
B)   The demand for loanable funds shifts left.
C)   The supply of loanable funds shifts right.
D)   The supply of loanable funds shifts left.E) B) and C)
F) A) and B)

Question 8

A country has national saving of $80 billion,government expenditures of $40 billion,domestic investment of $60 billion,and net capital outflow of $20 billion.What is its demand for loanable funds?

Accepted Answer

A)   $40 billion
B)   $60 billion
C)   $80 billion
D)   $120 billionE) A) and D)
F) All of the above

Question 9

Which of the following is the most accurate statement?

Accepted Answer

A)   Trade policy has neither microeconomic nor macroeconomic effects.
B)   Trade policy has similar microeconomic and macroeconomic effects.
C)   The effects of trade policy are more macroeconomic than microeconomic.
D)   The effects of trade policy are more microeconomic than macroeconomic.E) B) and C)
F) None of the above

Question 10

Suppose the U.S.imposes an import quota on steel.U.S.exports

Accepted Answer

A)   increase,the real exchange rate of the U.S.dollar appreciates,and U.S.net capital outflow increases.
B)   increase,the real exchange rate of the U.S.dollar depreciates,and U.S.net capital outflow is unchanged.
C)   decrease,the real exchange rate of the U.S.dollar appreciates,and U.S.net capital outflow is unchanged.
D)   decrease,the real exchange rate of the U.S.dollar depreciates,and U.S.net capital outflow decreases.E) B) and C)
F) A) and D)

Question 11

If net exports are positive,then

Accepted Answer

A)   exports are greater than imports.
B)   net capital outflow is negative.
C)   Both of the above are correct.
D)   Neither of the above is correct.E) All of the above
F) A) and D)

Question 12

If at a given exchange rate foreign citizens wanted to buy fewer U.S bonds,then the

Accepted Answer

A)   supply of dollars in the market for foreign-currency exchange shfits right.
B)   supply of dollars in the market for foreign-currency exchange shfits left.
C)   demand for dollars in the market for foreign-currency exchange shfits right.
D)   demand for dollars in the market for foreign-currency exchange shfits left.E) B) and C)
F) All of the above

Question 13

If a government increases its budget deficit,then the real exchange rate

Accepted Answer

A)   and domestic investment rise.
B)   and domestic investment fall.
C)   rises and domestic investment falls.
D)   falls and domestic investment rises.E) B) and D)
F) B) and C)

Question 14

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

Accepted Answer

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

Question 15

Figure 19-1 
-Refer to Figure 19-1.In the Figure shown,if the real interest rate is 6 percent,the quantity of loanable funds demanded is

Accepted Answer

A)   $20 billion,and the quantity supplied is $40 billion.
B)   $20 billion,and the quantity supplied is $60 billion.
C)   $60 billion,and the quantity supplied is $20 billion.
D)   $60 billion,and the quantity supplied is $40 billion.E) C) and D)
F) B) and C)

Question 16

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

Accepted Answer

A)   the sum of domestic investment and net capital outflow.
B)   the sum of national saving and net capital outflow.
C)   national saving.
D)   net exportsE) B) and D)
F) All of the above

Question 17

In 2002,the United States imposed restrictions on the importation of steel into the United States.The open-economy macroeconomic model shows that such a policy would

Accepted Answer

A)   lower the real exchange rate and increase net exports.
B)   lower the real exchange rate and have no effect on net exports.
C)   raise the real exchange rate and decrease net exports.
D)   raise the real exchange rate and have no effect on net exports.E) None of the above
F) C) and D)

Question 18

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 net capital outflow and domestic investment rise.
B)   rise because national saving rises.
C)   fall because net capital outflow and domestic investment rise.
D)   fall because national saving falls.E) None of the above
F) A) and D)

Question 19

If a country experiences capital flight,which of the following curves shift right?

Accepted Answer

A)   only the demand for loanable funds.
B)   only the supply of dollars in the market for foreign-currency exchange.
C)   only the net capital outflow curve and the supply of dollars in the market for foreign currency exchange.
D)   the demand for loanable funds,the net capital outflow curve,and the supply of dollars in the market for foreign currency exchange.E) All of the above
F) None of the above

Question 20

Which of the following is correct in an open economy?

Accepted Answer

A)   S = I
B)   S = NX + NCO
C)   S = NCO
D)   S = I + NCOE) A) and B)
F) B) and C)

Exam 32: A Macroeconomic Theory of the Open Economy

Suppose the U.S.imposes an import quota on steel.U.S.exports

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Which of the following is the most accurate statement?

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Which of the following is correct in an open economy?

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If a government increases its budget deficit,then the real exchange rate

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Which of the following would make the equilibrium real interest rate increase and the equilibrium quantity of funds decrease?

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If at a given exchange rate foreign citizens wanted to buy fewer U.S bonds,then the

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The variable that links the market for loanable funds and the market for foreign-currency exchange is

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If net exports are positive,then

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

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

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Figure 19-1 -Refer to Figure 19-1.In the Figure shown,if the real interest rate is 6 percent,the quantity of loanable funds demanded is

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At the equilibrium real interest rate in the open-economy macroeconomic model,the equilibrium quantity of loanable funds equals

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Figure 19-1 -Refer to Figure 19-1.In the Figure shown,if the real interest rate is 6 percent,there will be pressure for

Correct AnswerverifiedShow Answer

If a country experiences capital flight,which of the following curves shift right?

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In 2002,the United States imposed restrictions on the importation of steel into the United States.The open-economy macroeconomic model shows that such a policy would

Correct AnswerverifiedShow Answer

When a country imposes an import quota,its

Correct AnswerverifiedShow Answer

A country has national saving of $80 billion,government expenditures of $40 billion,domestic investment of $60 billion,and net capital outflow of $20 billion.What is its demand for loanable funds?

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The open-economy macroeconomic model includes

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

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Because a government budget deficit represents

Correct AnswerverifiedShow Answer

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