Question 1

In the open-economy macroeconomic model, if the supply of loanable funds shifts right

Accepted Answer

A)   the interest rate rises and the demand for dollars in the market for foreign currency exchange shifts right.
B)   the interest rate rises and the demand for dollars in the market for foreign currency exchange shifts left.
C)   the interest rate falls and the supply of dollars in the market for foreign-currency exchange shifts right.
D)   the interest rate falls and the supply of dollars in the market for foreign currency exchange shifts left.E) A) and B)
F) B) and D)

Question 2

In the open-economy macroeconomic model, at the equilibrium real interest rate, the amount that people (including government) want to save equals desired quantities of domestic investment and net capital outflow.

Accepted Answer

A) True 
 B)False

Question 3

Over the past two decades, the U.S. has persistently exported more goods and services than it has imported.

Accepted Answer

A) True 
 B)False

Question 4

Refer to Budget Reform. What does this policy change do to the equilibrium values of the interest rate and the quantity of loanable funds?

Accepted Answer

The interest rate fa...

Question 5

A government budget deficit

Accepted Answer

A)   increases both net capital outflow and net exports.
B)   decreases both net capital outflow and net exports.
C)   increases net capital outflow and decreases net exports.
D)   decreases net capital outflow and increases net exports.E) A) and C)
F) All of the above

Question 6

If the U.S. imposed an import quota on furniture, U.S. net exports of furniture

Accepted Answer

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

Question 7

In the open-economy macroeconomic model, the real exchange rate does not affect net capital outflow.

Accepted Answer

A) True 
 B)False

Question 8

If U.S. residents want to buy more foreign bonds, then in the market for foreign-currency exchange the exchange rate

Accepted Answer

A)   and the quantity of dollars traded rises.
B)   rises and the quantity of dollars traded falls.
C)   falls and the quantity of dollars traded rises.
D)   and the quantity of dollars traded falls.E) B) and C)
F) A) and D)

Question 9

Refer to Budget in Recession. What does this change in the budget deficit do to the equilibrium values of the interest rate and the quantity of loanable funds?

Accepted Answer

Since the supply of loanable f...

Question 10

Other things the same, if the Japanese real interest rate were to increase, Japanese net capital outflow

Accepted Answer

A)   and net capital outflow of other countries would rise.
B)   and net capital outflow of other countries would fall.
C)   would rise, while net capital outflow of other countries would fall.
D)   would fall, while net capital outflow of other countries would rise.E) All of the above
F) A) and B)

Question 11

Which of the following is the most likely response to a decrease in the U.S. real interest rate?

Accepted Answer

A)   a U.S. company decides to expand its factory
B)   a U.S. citizen decides to purchase fewer foreign bonds
C)   a German mutual fund decides to increase its deposits at a U.S. bank
D)   All of the above are consistent.E) B) and C)
F) All of the above

Question 12

At a given real exchange rate, which of the following, by itself, would increase the supply of dollars in the market for foreign-currency exchange?

Accepted Answer

A)   foreign citizens want to buy more U.S. bonds
B)   U.S. citizens want to buy more foreign bonds
C)   foreign citizens want to buy more U.S. goods
D)   U.S. citizens want to buy more foreign goodsE) B) and D)
F) C) and D) B

Question 13

In which case(s)  does(do)  a country's supply of 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) A) and D)
F) None of the above

Question 14

If U.S. net exports are positive, then net capital outflow is

Accepted Answer

A)   positive, so foreign assets bought by Americans are greater than American assets bought by foreigners.
B)   positive, so American assets bought by foreigners are greater than foreign assets bought by Americans.
C)   negative, so foreign assets bought by Americans are greater than American assets bought by foreigners.
D)   negative, so American assets bought by foreigners are greater than foreign assets bought by Americans.E) A) and B)
F) A) and C)

Question 15

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

Question 16

Other things the same, a higher real interest rate raises the quantity of

Accepted Answer

A)   domestic investment.
B)   net capital outflow.
C)   loanable funds demanded.
D)   loanable funds supplied.E) A) and B)
F) A) and C)

Question 17

If policymakers impose import restrictions on clothing, the U.S. trade deficit will shrink.

Accepted Answer

A) True 
 B)False  False

Question 18

Which of the following will decrease U.S. net capital outflow?

Accepted Answer

A)   capital flight from the United States
B)   the government budget deficit increases
C)   the U.S. imposes import quotas
D)   None of the above is correct.E) None of the above
F) C) and D)

Question 19

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

Question 20

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

Exam 32: A Macroeconomic Theory of the Open Economy

In the open-economy macroeconomic model, if the supply of loanable funds shifts right

Correct Answer
verified

In the open-economy macroeconomic model, at the equilibrium real interest rate, the amount that people (including government) want to save equals desired quantities of domestic investment and net capital outflow.

Correct Answer
verified

Over the past two decades, the U.S. has persistently exported more goods and services than it has imported.

Correct Answer
verified

Refer to Budget Reform. What does this policy change do to the equilibrium values of the interest rate and the quantity of loanable funds?

Correct Answer
verified
The interest rate fa...
View Answer

A government budget deficit

Correct Answer
verified

If the U.S. imposed an import quota on furniture, U.S. net exports of furniture

Correct Answer
verified
B

In the open-economy macroeconomic model, the real exchange rate does not affect net capital outflow.

Correct Answer
verified

If U.S. residents want to buy more foreign bonds, then in the market for foreign-currency exchange the exchange rate

Correct Answer
verified

Refer to Budget in Recession. What does this change in the budget deficit do to the equilibrium values of the interest rate and the quantity of loanable funds?

Correct Answer
verified
Since the supply of loanable f...
View Answer

Other things the same, if the Japanese real interest rate were to increase, Japanese net capital outflow

Correct Answer
verified

Which of the following is the most likely response to a decrease in the U.S. real interest rate?

Correct Answer
verified

At a given real exchange rate, which of the following, by itself, would increase the supply of dollars in the market for foreign-currency exchange?

Correct Answer
verified
B

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

Correct Answer
verified

If U.S. net exports are positive, then net capital outflow is

Correct Answer
verified

Correct Answer
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Other things the same, a higher real interest rate raises the quantity of

Correct Answer
verified

If policymakers impose import restrictions on clothing, the U.S. trade deficit will shrink.

Correct Answer
verified
False

Which of the following will decrease U.S. net capital outflow?

Correct Answer
verified

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

Correct Answer
verified

If the supply of loanable funds shifts right, then

Correct Answer
verified

Exam 32: A Macroeconomic Theory of the Open Economy

In the open-economy macroeconomic model, if the supply of loanable funds shifts right

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model, at the equilibrium real interest rate, the amount that people (including government) want to save equals desired quantities of domestic investment and net capital outflow.

Correct AnswerverifiedShow Answer

Over the past two decades, the U.S. has persistently exported more goods and services than it has imported.

Correct AnswerverifiedShow Answer

Refer to Budget Reform. What does this policy change do to the equilibrium values of the interest rate and the quantity of loanable funds?

Correct AnswerverifiedThe interest rate fa...View AnswerShow Answer

A government budget deficit

Correct AnswerverifiedShow Answer

If the U.S. imposed an import quota on furniture, U.S. net exports of furniture

Correct AnswerverifiedB

In the open-economy macroeconomic model, the real exchange rate does not affect net capital outflow.

Correct AnswerverifiedShow Answer

If U.S. residents want to buy more foreign bonds, then in the market for foreign-currency exchange the exchange rate

Correct AnswerverifiedShow Answer

Refer to Budget in Recession. What does this change in the budget deficit do to the equilibrium values of the interest rate and the quantity of loanable funds?

Correct AnswerverifiedSince the supply of loanable f...View AnswerShow Answer

Other things the same, if the Japanese real interest rate were to increase, Japanese net capital outflow

Correct AnswerverifiedShow Answer

Which of the following is the most likely response to a decrease in the U.S. real interest rate?

Correct AnswerverifiedShow Answer

At a given real exchange rate, which of the following, by itself, would increase the supply of dollars in the market for foreign-currency exchange?

Correct AnswerverifiedB

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

Correct AnswerverifiedShow Answer

If U.S. net exports are positive, then net capital outflow is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Other things the same, a higher real interest rate raises the quantity of

Correct AnswerverifiedShow Answer

If policymakers impose import restrictions on clothing, the U.S. trade deficit will shrink.

Correct AnswerverifiedFalse

Which of the following will decrease U.S. net capital outflow?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the supply of loanable funds shifts right, then

Correct AnswerverifiedShow Answer

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 interest rate fa...
View Answer

Correct Answer
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B

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Correct Answer
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Since the supply of loanable f...
View Answer

Correct Answer
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Correct Answer
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B

Correct Answer
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Correct Answer
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Correct Answer
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False

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Correct Answer
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Correct Answer
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