Exam 30: A Macroeconomic Theory of the Open Economy

A rise in Denmark's net exports will increase the demand for the Danish krone in the market for foreign currency exchange and the krone will appreciate in value.

If the EU imposes a quota on the importing of clothing produced in China, so reducing UK imports of clothing, which of the following is true regarding the market for foreign currency exchange?

Capital flight is often caused by

Crowding-out caused by government budget deficits will lead to

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

If a country has a high savings rate relative to other countries, then the

If a county becomes more likely to default on its bonds, what happens to that country's interest rate and exchange rate? Explain.

A large and sudden movement of capital out of a country is called

Suppose that the Turkish government budget deficit increases. What curves in the open-economy macroeconomic model shift? Explain why each curve shifts the direction it does.

Which of the following statements regarding the market for foreign currency exchange is true?

The supply of foreign exchange is

The open-economy macroeconomic model takes

An increase in Europe's taste for UK-produced Hondas would cause the pound to

Why do higher real interest rates lead to lower net capital outflow?

The phrase "twin deficits" refers to

An example of a trade policy is

Explain how the relation between the real exchange rate and net exports explains the downward slope of the demand for foreign-currency exchange curve. Use the UK as an example.

If the EU raises its tariff on imported sugar, it will reduce imports and improve the trade balance of EU members.

An increase in Japanese citizens' purchases of holidays in the UK would

Which of the following groups would NOT benefit from an EU import quota on Japanese cars?