Question 1

When the real exchange rate for the dollar appreciates,U.S.goods become

Accepted Answer

A)   less expensive relative to foreign goods,which makes exports rise and imports fall.
B)   less expensive relative to foreign goods,which makes exports fall and imports rise.
C)   more expensive relative to foreign goods,which makes exports rise and imports fall.
D)   more expensive relative to foreign goods,which makes exports fall and imports rise.E) A) and B)
F) None of the above

Question 2

If the government of a country with a zero trade balance started with a budget deficit and moved to a budget surplus,domestic investment would

Accepted Answer

A)   rise and there would be a trade surplus.
B)   rise and there would be a trade deficit.
C)   fall and there would be a trade surplus.
D)   fall and there would be a trade deficit.E) None of the above
F) A) and B)

Question 3

Other things the same,in the open-economy macroeconomic model,if the exchange rate rises,

Accepted Answer

A)   the demand for dollars shifts left.
B)   the demand for dollars shifts right.
C)   the quantity of dollars demanded falls.
D)   the quantity of dollars demanded rises.E) A) and C)
F) A) and B)

Question 4

If the U.S.imposed an import quota on corn,then in the U.S.

Accepted Answer

A)   exports and imports would rise.
B)   exports and imports would fall.
C)   exports would rise and imports would fall.
D)   exports would fall and imports would rise.E) All of the above
F) C) and D)

Question 5

When a country imposes an import quota,its exchange rate

Accepted Answer

A)   rises because the supply of dollars in the market for foreign-currency exchange falls.
B)   falls because the supply of dollars in the market for foreign-currency exchange rises.
C)   rises because the demand for dollars in the market for foreign-currency exchange rises.
D)   falls because the demand for dollars in the market for foreign-currency exchange falls.E) All of the above
F) B) and C)

Question 6

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

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) None of the above

Question 7

If Kenya experienced capital flight,the supply of Kenyan schillings in the market for foreign-currency exchange would shift

Accepted Answer

A)   left,which would make the real exchange rate of the Kenyan schilling appreciate.
B)   left,which would make the real exchange rate of the Kenyan schilling depreciate.
C)   right,which would make the real exchange rate of the Kenyan schilling appreciate.
D)   right,which would make the real exchange rate of the Kenyan schilling depreciate.E) C) and D)
F) B) and D)

Question 8

In the open-economy macroeconomic model,if the U.S.interest rate rises,then its

Accepted Answer

A)   net capital outflow rises,so the supply of dollars in the market for foreign exchange shifts right.
B)   net capital outflow rises,so the demand for dollars in the market for foreign exchange shifts right.
C)   net capital outflow falls,so the supply of dollars in the market for foreign exchange shifts left.
D)   net capital outflow falls,so the demand for dollars in the market for foreign exchange shifts left.E) A) and B)
F) A) and C)

Question 9

In the open-economy macroeconomic model,which of the following increases net capital outflow?

Accepted Answer

A)   a fall in the real exchange rate,but not a fall in the real interest rate
B)   a fall in the real interest rate,but not a fall in the real exchange rate
C)   both a fall in the real exchange rate and a fall in the real interest rate
D)   neither a fall in the real exchange rate nor a fall in the real interest rateE) A) and B)
F) A) and C)

Question 10

If the world thought that many banks in a certain country were at or near the point of bankruptcy,then that country's real exchange rate

Accepted Answer

A)   and net exports would rise.
B)   would rise and net exports would fall.
C)   would fall and net exports would rise.
D)   and net exports would fall.E) B) and D)
F) B) and C)

Question 11

An increase in a country's budget deficit

Accepted Answer

A)   increases net capital outflow,so the demand for its currency in the market for foreign-currency exchange shifts right.
B)   increases net capital outflow,so the supply of its currency in the market for foreign-currency exchange shifts right.
C)   decreases net capital outflow,so the demand for its currency in the market for foreign-currency exchange shifts left.
D)   decreases net capital outflow,so the supply of its currency in the market for foreign-currency exchange shifts left.E) C) and D)
F) A) and D)

Question 12

Which of the following would not be a consequence of an increase in the U.S.government budget deficit?

Accepted Answer

A)   U.S.interest rates rise.
B)   U.S.net capital outflow falls.
C)   The real exchange rate of the U.S.dollar depreciates.
D)   The U.S.supply of loanable funds shifts left.E) A) and D)
F) B) and D)

Question 13

If there is a surplus of loanable funds,the quantity demanded is

Accepted Answer

A)   greater than the quantity supplied and the interest rate will rise.
B)   greater than the quantity supplied and the interest rate will fall.
C)   less than the quantity supplied and the interest rate will rise.
D)   less than the quantity supplied and the interest rate will fall.E) A) and B)
F) A) and C)

Question 14

In which case(s) does(do) a country's supply of loanable funds shift left?

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) B) and C)
F) All of the above

Question 15

Capital flight increases a country's interest rate.This increase in the interest rate makes net capital outflow lower than it would be had the interest rate stayed the same.

Accepted Answer

A) True 
 B)False

Question 16

If the demand for net exports rises,which of the following happens in the open-economy macroeconomic model?

Accepted Answer

A)   the exchange rate rises
B)   the interest rate falls
C)   net capital outflow rises
D)   All of the above are correct.E) B) and D)
F) A) and B)

Question 17

If people thought that many banks in a certain country were at or near the point of bankruptcy,then that country's real exchange rate

Accepted Answer

A)   and net exports would rise.
B)   would rise and net exports would fall.
C)   would fall and net exports would rise.
D)   and net exports would fall.E) A) and B)
F) B) and C)

Question 18

A country has national saving of $90 billion,government expenditures of $30 billion,domestic investment of $50 billion,and net capital outflow of $40 billion.What is its demand for loanable funds?

Accepted Answer

A)   $40 billion
B)   $60 billion
C)   $90 billion
D)   $130 billionE) A) and B)
F) B) and C)

Question 19

In the open-economy macroeconomic model,the supply of dollars in the market for foreign-currency exchange is upward sloping.

Accepted Answer

A) True 
 B)False

Question 20

According to the open-economy macroeconomic model,a decrease in the U.S.government budget deficit increases U.S.net capital outflow,causes the real exchange rate of the dollar to depreciate,and increases U.S.net exports.

Accepted Answer

A) True 
 B)False

Exam 32: A Macroeconomic Theory of the Open Economy

If people thought that many banks in a certain country were at or near the point of bankruptcy,then that country's real exchange rate

Correct AnswerverifiedShow Answer

If the demand for net exports rises,which of the following happens in the open-economy macroeconomic model?

Correct AnswerverifiedShow Answer

In which case(s) does(do) a country's supply of loanable funds shift left?

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,which of the following increases net capital outflow?

Correct AnswerverifiedShow Answer

If the U.S.imposed an import quota on corn,then in the U.S.

Correct AnswerverifiedShow Answer

If Kenya experienced capital flight,the supply of Kenyan schillings in the market for foreign-currency exchange would shift

Correct AnswerverifiedShow Answer

When the real exchange rate for the dollar appreciates,U.S.goods become

Correct AnswerverifiedShow Answer

Capital flight increases a country's interest rate.This increase in the interest rate makes net capital outflow lower than it would be had the interest rate stayed the same.

Correct AnswerverifiedShow Answer

When a country imposes an import quota,its exchange rate

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following would not be a consequence of an increase in the U.S.government budget deficit?

Correct AnswerverifiedShow Answer

Other things the same,in the open-economy macroeconomic model,if the exchange rate rises,

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,the supply of dollars in the market for foreign-currency exchange is upward sloping.

Correct AnswerverifiedShow Answer

According to the open-economy macroeconomic model,a decrease in the U.S.government budget deficit increases U.S.net capital outflow,causes the real exchange rate of the dollar to depreciate,and increases U.S.net exports.

Correct AnswerverifiedShow Answer

A country has national saving of $90 billion,government expenditures of $30 billion,domestic investment of $50 billion,and net capital outflow of $40 billion.What is its demand for loanable funds?

Correct AnswerverifiedShow Answer

An increase in a country's budget deficit

Correct AnswerverifiedShow Answer

If the world thought that many banks in a certain country were at or near the point of bankruptcy,then that country's real exchange rate

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,if the U.S.interest rate rises,then its

Correct AnswerverifiedShow Answer

If the government of a country with a zero trade balance started with a budget deficit and moved to a budget surplus,domestic investment would

Correct AnswerverifiedShow Answer

If there is a surplus of loanable funds,the quantity demanded is

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified