Question 1

Assuming that the value effect dominates,the current account will increase if

Accepted Answer

A) the real exchange rate decreases. 
B) the real exchange rate increases. 
C) disposable income increases. 
D) exports fall. 
E) domestic prices fall. 
A) the real exchange rate decreases. 
B) the real exchange rate increases. 
C) disposable income increases. 
D) exports fall. 
E) domestic prices fall.

Question 2

Find the real exchange rate for the following case: Assume that the representative basket of European goods costs 100 euros and the representative U.S.basket costs $125,and the dollar/euro exchange rate is $0.75 per euro,then the price of the European basket in terms of U.S.basket is:

Accepted Answer

[(0.75 $/euro)(100 euro per a

Question 3

Explain what are the factors that shift the AA Schedule?

Accepted Answer

Changes in the domestic money supply;cha

Question 4

Which of the following does NOT affect the position of the DD curve?

Accepted Answer

A) monetary policy 
B) government spending 
C) taxes 
D) export demand 
E) price levels 
A) monetary policy 
B) government spending 
C) taxes 
D) export demand 
E) price levels

Question 5

Explain and give some examples of governmental policy problems.

Accepted Answer

Steady nominal prices give government th

Question 6

Explain how the AA schedule is derived.

Accepted Answer

For a fixed real money supply,an increas

Question 7

Which one of the following statements is the MOST accurate?

Accepted Answer

A) An increase in disposable income improves the current account. 
B) An increase in disposable income does not affect the current account. 
C) An increase in disposable income worsens the current account. 
D) An increase in income worsens the current account. 
E) An increase in income improves the current account. 
A) An increase in disposable income improves the current account. 
B) An increase in disposable income does not affect the current account. 
C) An increase in disposable income worsens the current account. 
D) An increase in income worsens the current account. 
E) An increase in income improves the current account.

Question 8

Disposable income is defined as

Accepted Answer

A) Y - C. 
B) Y - T. 
C) C - T. 
D) I - C. 
E) Y - I. 
A) Y - C. 
B) Y - T. 
C) C - T. 
D) I - C. 
E) Y - I.

Question 9

A permanent fiscal expansion

Accepted Answer

A) shifts the DD and the AA schedules to the right,increasing output. 
B) shifts the DD and the AA schedules to the right,decreasing output. 
C) shifts the DD to the right and the AA schedule to the left,leaving output the same. 
D) shifts the DD to the left and the AA schedule to the left,decreasing output. 
E) shifts the DD and the AA schedules to the left,leaving output the same. 
A) shifts the DD and the AA schedules to the right,increasing output. 
B) shifts the DD and the AA schedules to the right,decreasing output. 
C) shifts the DD to the right and the AA schedule to the left,leaving output the same. 
D) shifts the DD to the left and the AA schedule to the left,decreasing output. 
E) shifts the DD and the AA schedules to the left,leaving output the same.

Question 10

The aggregate demand for home input can be written as a function of: I.Real exchange rate.
II)Government spending.
III)Disposable income.

Accepted Answer

A) I only 
B) III only 
C) I and III 
D) II and III 
E) I,II,and III 
A) I only 
B) III only 
C) I and III 
D) II and III 
E) I,II,and III

Question 11

How is the AA schedule derived?

Accepted Answer

A) It is derived by the schedule of interest rate and output combinations that are consistent with equilibrium in the domestic money market and the foreign exchange market. 
B) It is derived by the schedule of exchange rate and output combinations that are consistent with equilibrium in the foreign money market and the domestic exchange market. 
C) It is derived by the schedule of exchange rate and output combinations that are consistent with equilibrium in the domestic money market and the foreign exchange market. 
D) It is derived by the schedule of exchange rate and output combinations that are consistent with equilibrium in the domestic bond market and the foreign asset market. 
E) It is derived by the schedule of exchange rate and output combinations that are greater than equilibrium in the foreign money market and the domestic exchange market. 
A) It is derived by the schedule of interest rate and output combinations that are consistent with equilibrium in the domestic money market and the foreign exchange market. 
B) It is derived by the schedule of exchange rate and output combinations that are consistent with equilibrium in the foreign money market and the domestic exchange market. 
C) It is derived by the schedule of exchange rate and output combinations that are consistent with equilibrium in the domestic money market and the foreign exchange market. 
D) It is derived by the schedule of exchange rate and output combinations that are consistent with equilibrium in the domestic bond market and the foreign asset market. 
E) It is derived by the schedule of exchange rate and output combinations that are greater than equilibrium in the foreign money market and the domestic exchange market.

Question 12

If a country's nominal interest rate is zero,then

Accepted Answer

A) the country's economy is in a liquidity trap. 
B) exchange rates with other countries are likely to decline. 
C) exchange rates with other countries are likely to increase. 
D) monetary policy is likely to be very effective in stimulating the economy. 
E) the country's economy has achieved monetary equilibrium. 
A) the country's economy is in a liquidity trap. 
B) exchange rates with other countries are likely to decline. 
C) exchange rates with other countries are likely to increase. 
D) monetary policy is likely to be very effective in stimulating the economy. 
E) the country's economy has achieved monetary equilibrium.

Question 13

Find the real exchange rate for the following case: Assume that the representative basket of European goods costs 150 euros and the representative U.S.basket costs $200,and the dollar/euro exchange rate is $1.20 per euro,then the price of the European basket in terms of U.S.basket is:

Accepted Answer

[(1.20 $/euro)(150 euro per a

Question 14

What are two ways the government can maintain full employment in an open economy? Also give an example for each.

Accepted Answer

There are two types of governm

Assuming that the value effect dominates,the current account will increase if

Find the real exchange rate for the following case: Assume that the representative basket of European goods costs 100 euros and the representative U.S.basket costs $125,and the dollar/euro exchange rate is $0.75 per euro,then the price of the European basket in terms of U.S.basket is:

Explain what are the factors that shift the AA Schedule?

Which of the following does NOT affect the position of the DD curve?

Explain and give some examples of governmental policy problems.

Explain how the AA schedule is derived.

Which one of the following statements is the MOST accurate?

Disposable income is defined as

A permanent fiscal expansion

The aggregate demand for home input can be written as a function of: I.Real exchange rate. II)Government spending. III)Disposable income.

How is the AA schedule derived?

If a country's nominal interest rate is zero,then

Find the real exchange rate for the following case: Assume that the representative basket of European goods costs 150 euros and the representative U.S.basket costs $200,and the dollar/euro exchange rate is $1.20 per euro,then the price of the European basket in terms of U.S.basket is:

What are two ways the government can maintain full employment in an open economy? Also give an example for each.

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, crisis, and Reform

Filters

Exam 17: Output and the Exchange Rate in the Short Run

Assuming that the value effect dominates,the current account will increase if

Find the real exchange rate for the following case: Assume that the representative basket of European goods costs 100 euros and the representative U.S.basket costs $125,and the dollar/euro exchange rate is $0.75 per euro,then the price of the European basket in terms of U.S.basket is:

Explain what are the factors that shift the AA Schedule?

Which of the following does NOT affect the position of the DD curve?

Explain and give some examples of governmental policy problems.

Explain how the AA schedule is derived.

Which one of the following statements is the MOST accurate?

Disposable income is defined as

A permanent fiscal expansion

The aggregate demand for home input can be written as a function of: I.Real exchange rate. II)Government spending. III)Disposable income.

How is the AA schedule derived?

If a country's nominal interest rate is zero,then

Find the real exchange rate for the following case: Assume that the representative basket of European goods costs 150 euros and the representative U.S.basket costs $200,and the dollar/euro exchange rate is $1.20 per euro,then the price of the European basket in terms of U.S.basket is:

What are two ways the government can maintain full employment in an open economy? Also give an example for each.

Introduction

World Trade: an Overview

Labor Productivity and Comparative Advantage: the Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: the Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: an Asset Approach

Money, interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: an Historical Overview

Financial Globalization: Opportunity and Crisis

Optimum Currency Areas and the Euro

Developing Countries: Growth, crisis, and Reform

Filters