Question 1

If the demand for loanable funds shifts left,then

Accepted Answer

A)   the real interest rate and the equilibrium quantity of loanable funds both fall.
B)   the real interest rate falls and the equilibrium quantity of loanable funds rises.
C)   the real interest rate and the equilibrium quantity of loanable funds both rise.
D)   the real interest rate rises and the equilibrium quantity of loanable funds falls.E) A) and B)
F) None of the above

Question 2

In the open-economy macroeconomic model,the market for loanable funds identity can be written as

Accepted Answer

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

Question 3

What do trade policies do to the standard of living?

Accepted Answer

Trade policies reduce both imports and e...

Question 4

Suppose that the U.S.imposed an import quota on beef.Sales of U.S.beef producers would

Accepted Answer

A)   rise and exports of other industries would increase.
B)   rise and exports of other industries would decline.
C)   not change,exports of other industries would increase.
D)   not change,exports of other industries would decline.E) B) and C)
F) A) and D)

Question 5

The theory of purchasing-power parity implies that the demand curve for foreign-currency exchange is

Accepted Answer

A)   downward sloping.
B)   upward sloping.
C)   horizontal.
D)   vertical.E) All of the above
F) None of the above

Question 6

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 B)
F) B) and C)

Question 7

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

Question 8

If the U.S.government imposed a quota on toy imports,then

Accepted Answer

A)   imports and exports would both fall.
B)   imports would fall and exports would rise.
C)   imports would rise and exports would fall.
D)   None of the above is correct.E) A) and C)
F) B) and C)

Question 9

When a government increases its budget deficit,then that country's

Accepted Answer

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

Question 10

Other things the same,as the real interest rate rises

Accepted Answer

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

Question 11

How are the identities S = NCO + I and NCO = NX related to the foreign currency exchange market and the loanable funds market?

Accepted Answer

S is national saving,which is the source...

Question 12

If the supply of loanable funds shifts right,then

Accepted Answer

A)   the real interest rate and the equilibrium quantity of loanable funds both fall.
B)   the real interest rate falls and the equilibrium quantity of loanable funds rises.
C)   the real interest rate and the equilibrium quantity of loanable funds both rise.
D)   the real interest rate rises and the equilibrium quantity of loanable funds falls.E) None of the above
F) B) and C)

Question 13

When a country experiences capital flight,the interest rate

Accepted Answer

A)   falls because the demand for loanable funds shifts left.
B)   falls because the supply for loanable funds shifts right.
C)   rises because the demand for loanable funds shifts right.
D)   rises because the supply for loanable funds shifts left.E) B) and C)
F) All of the above

Question 14

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) None of the above
F) All of the above

Question 15

An increase in the budget deficit

Accepted Answer

A)   reduces net capital outflow and domestic investment.
B)   reduces net capital outflow and raises domestic investment.
C)   raises net capital outflow and domestic investment
D)   raises net capital outflow and reduces domestic investment.E) B) and C)
F) A) and D)

Question 16

If the real exchange rate for the dollar is below the equilibrium level,the quantity of dollars supplied in the market for foreign-currency exchange is

Accepted Answer

A)   less than the quantity demanded and the dollar will appreciate.
B)   less than the quantity demanded and the dollar will depreciate.
C)   greater than the quantity demanded and the dollar will appreciate.
D)   greater than the quantity demanded and the dollar will depreciate.E) B) and C)
F) All of the above

Question 17

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) B) and C)
F) A) and B)

Question 18

If the U.S.government imposes a quota on toy imports,then

Accepted Answer

A)   net capital outflow rises.
B)   net exports rise.
C)   the exchange rate rises.
D)   All of the above are correct.E) None of the above
F) A) and D)

Question 19

A trade policy is a government policy

Accepted Answer

A)   directed toward the goal of improving the tradeoff between equity and efficiency.
B)   that directly influences the quantity of goods and services that a country imports or exports.
C)   intended to exploit the tradeoff between inflation and unemployment by altering the budget deficit.
D)   concerning employment laws..E) B) and C)
F) A) and D)

Question 20

In the long run import quotas do not affect the size of net exports.

Accepted Answer

A) True 
 B)False

Exam 32: A Macroeconomic Theory of the Open Economy

If the real exchange rate for the dollar is below the equilibrium level,the quantity of dollars supplied in the market for foreign-currency exchange is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The theory of purchasing-power parity implies that the demand curve for foreign-currency exchange is

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

If the supply of loanable funds shifts right,then

Correct AnswerverifiedShow Answer

When a country experiences capital flight,the interest rate

Correct AnswerverifiedShow Answer

How are the identities S = NCO + I and NCO = NX related to the foreign currency exchange market and the loanable funds market?

Correct AnswerverifiedS is national saving,which is the source...View AnswerShow Answer

A trade policy is a government policy

Correct AnswerverifiedShow Answer

If the U.S.government imposed a quota on toy imports,then

Correct AnswerverifiedShow Answer

If the demand for loanable funds shifts left,then

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,the market for loanable funds identity can be written as

Correct AnswerverifiedShow Answer

When a government increases its budget deficit,then that country's

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

Correct AnswerverifiedShow Answer

Suppose that the U.S.imposed an import quota on beef.Sales of U.S.beef producers would

Correct AnswerverifiedShow Answer

In the long run import quotas do not affect the size of net exports.

Correct AnswerverifiedShow Answer

If the U.S.government imposes a quota on toy imports,then

Correct AnswerverifiedShow Answer

An increase in the budget deficit

Correct AnswerverifiedShow Answer

Other things the same,as the real interest rate rises

Correct AnswerverifiedShow Answer

An increase in real interest rates in the United States

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
S is national saving,which is the source...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified