Question 1

The value of net exports equals the value of

Accepted Answer

A)  national saving.
B)  public saving.
C)  national saving - net capital outflow.
D)  national saving - domestic investment.E) A) and D)
F) All of the above

Question 2

Which of the following is the most likely result from an increase in a country's government budget surplus?

Accepted Answer

A)  higher interest rates
B)  lower imports
C)  lower net capital outflows
D)  lower domestic investmentE) A) and D)
F) A) and C)

Question 3

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 4

Which of the following is the correct way to show the effects of a newly imposed import quota?

Accepted Answer

A)  Shift the demand for loanable funds right, the supply of dollars in the market for foreign-currency exchange right, and the demand for dollars left.
B)  Shift the demand for loanable funds right, and the supply of dollars in the market for foreign-currency exchange left.
C)  Shift the demand for dollars in the market for foreign-currency exchange left.
D)  None of the above is correct.E) A) and B)
F) A) and C)

Question 5

In the open-economy macroeconomic model, the key determinant of net capital outflow is

Accepted Answer

A)  the real exchange rate. When the real exchange rate rises, net capital outflow rises.
B)  the real exchange rate. When the real exchange rate rises, net capital outflow falls.
C)  the real interest rate. When the real interest rate rises, net capital outflow rises.
D)  the real interest rate. When the real interest rate rises, net capital outflow falls.E) A) and D)
F) None of the above

Question 6

If the budget deficit increases, then

Accepted Answer

A)  an increase in the interest rate increases net capital outflow.
B)  an increase in the interest rate decreases net capital outflow.
C)  a decrease in the interest rate increases net capital outflow.
D)  a decrease in the interest rate decreases net capital outflow.E) C) and D)
F) B) and C)

Question 7

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 D)
F) A) and B)

Question 8

What do trade policies do to the standard of living?

Accepted Answer

Trade policies reduce both imports and e...

Question 9

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

Accepted Answer

A)  both a U.S. retail chain wanting to build a store in France and a U.S. retail chain wanting to buy dresses produced in Italy
B)  a U.S. retail chain wanting to build a store in France but not a U.S. retail chain wanting to buy dresses produced in Italy
C)  a U.S. retail chain wanting to buy dresses produced in Italy, but not a U.S. retail chain wanting to build a store in France
D)  neither a U.S. retail chain wanting to build a store in France nor a U.S. retail chain wanting to buy dresses produced in ItalyE) None of the above
F) A) and D)

Question 10

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.E) B) and D)
F) A) and D)

Question 11

The diagram below represents the market for loanable funds and the market for foreign-currency exchange in Mexico. Use the diagram to answer the following questions.Figure 19-7 0 and E1. Which of the following is consistent with the effects of capital flight? A) the shift from D0 to D1 in Panel A B) the shift from NCO0 to NCO1 in Panel B C) the shift from S0 to S1 in Panel C D) All of the above shifts are consistent with the effects of capital flight." class="answers-bank-image d-inline" rel="preload" >
-Refer to Figure 19-7. Supposing that the Mexican economy starts at r0 and E1. Which of the following is consistent with the effects of capital flight?

Accepted Answer

A)  the shift from D0 to D1 in Panel A
B)  the shift from NCO0 to NCO1 in Panel B
C)  the shift from S0 to S1 in Panel C
D)  All of the above shifts are consistent with the effects of capital flight.E) A) and D)
F) C) and D)

Question 12

In the open-economy macroeconomic model, if a country's interest rate rises, then its

Accepted Answer

A)  net capital outflow and net exports rise.
B)  net capital outflow rises and its net exports fall.
C)  net capital outflow falls and its net exports rise.
D)  net capital outflow and net exports fall.E) A) and C)
F) A) and D)

Question 13

In the open-economy macroeconomic model, if the supply of loanable funds increases, net capital outflow

Accepted Answer

A)  and the real exchange rate increase.
B)  and the real exchange rate decrease.
C)  increases and the real exchange rate decreases.
D)  decreases and the real exchange rate increases.E) B) and D)
F) B) and C)

Question 14

In 1998 the Russian government defaulted on its bonds. According to the open-economy macroeconomic model, this should have

Accepted Answer

A)  increased Russian interest rates and net exports.
B)  reduced Russian interest rates and net exports.
C)  increased Russian interest rates and reduced Russian net exports.
D)  reduced Russian interest rates and increased Russian net exports.E) All of the above
F) A) and C)

Question 15

If the real interest rate were above the equilibrium rate, there would be a shortage of loanable funds.

Accepted Answer

A) True 
 B)False

Question 16

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

Question 17

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 18

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

Question 19

When a country imposes an import quota, its

Accepted Answer

A)  net exports rise and its real exchange rate appreciates.
B)  net exports rise and its real exchange rate depreciates.
C)  net exports fall and its real exchange rate depreciates
D)  None of the above is correct.E) A) and C)
F) A) and D)

Question 20

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.E) B) and D)
F) B) and C)

Exam 19: A Macroeconomic Theory of the Open Economy

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

Correct Answer
verified

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

Correct Answer
verified

If the budget deficit increases, then

Correct Answer
verified

In the open-economy macroeconomic model, if the supply of loanable funds increases, net capital outflow

Correct Answer
verified

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

Correct Answer
verified

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.

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

The value of net exports equals the value of

Correct Answer
verified

When a country imposes an import quota, its

Correct Answer
verified

In 1998 the Russian government defaulted on its bonds. According to the open-economy macroeconomic model, this should have

Correct Answer
verified

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

Correct Answer
verified

In the open-economy macroeconomic model, the key determinant of net capital outflow is

Correct Answer
verified

Which of the following is correct in an open economy?

Correct Answer
verified

What do trade policies do to the standard of living?

Correct Answer
verified
Trade policies reduce both imports and e...
View Answer

If the real interest rate were above the equilibrium rate, there would be a shortage of loanable funds.

Correct Answer
verified

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

Correct Answer
verified

Which of the following is the correct way to show the effects of a newly imposed import quota?

Correct Answer
verified

Which of the following is the most likely result from an increase in a country's government budget surplus?

Correct Answer
verified

In the open-economy macroeconomic model, if a country's interest rate rises, then its

Correct Answer
verified

Exam 19: A Macroeconomic Theory of the Open Economy

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the budget deficit increases, then

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model, if the supply of loanable funds increases, net capital outflow

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The value of net exports equals the value of

Correct AnswerverifiedShow Answer

When a country imposes an import quota, its

Correct AnswerverifiedShow Answer

In 1998 the Russian government defaulted on its bonds. According to the open-economy macroeconomic model, this should have

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model, the key determinant of net capital outflow is

Correct AnswerverifiedShow Answer

Which of the following is correct in an open economy?

Correct AnswerverifiedShow Answer

What do trade policies do to the standard of living?

Correct AnswerverifiedTrade policies reduce both imports and e...View AnswerShow Answer

If the real interest rate were above the equilibrium rate, there would be a shortage of loanable funds.

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 is the correct way to show the effects of a newly imposed import quota?

Correct AnswerverifiedShow Answer

Which of the following is the most likely result from an increase in a country's government budget surplus?

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model, if a country's interest rate rises, then its

Correct AnswerverifiedShow Answer

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Trade policies reduce both imports and e...
View Answer

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