Exam 20: Exchange Rates and The Macroeconomy

Assume that Country X and Country Y are trading partners and the exchange rates are fixed.If prices in Country Y rise,all of the following are expected to happen except

Figure 20-6 -In Figure 20-6,which point represents equilibrium at the lowest exchange rate?

What effect did the decrease in the value of the dollar have on the U.S.trade deficit in the period from 2006 to 2009?

Protectionism may reduce imports,and it will also

Figure 20-8 -Which of the graphs in Figure 20-8 illustrates the AD-AS shifts associated with a currency depreciation?

A fall in the domestic interest rate leads to capital

The anticipated effect of contractionary monetary policy is

One unpleasant cure for the U.S.trade deficit of the 1990s would be for foreigners who hold U.S.financial assets to demand

In the spring of 2002,the United States imposed tariffs on imported steel to protect the jobs of American steel workers and protect the production of the American steel industry.Why might this policy not work to increase overall employment in the United States?

Figure 20-7 -In Figure 20-7,there are three aggregate expenditure functions (C + I + G + X − IM)for an open economy.Which of the following would cause a movement from A to B?

A sizable appreciation of the U.S.dollar in the mid-1980s

Figure 20-1 -Which of the graphs in Figure 20-1 best illustrates the behavior of exports and imports in relation to U.S.real GDP?

Because the United States is highly integrated with the international capital market,international capital flows tend to

A decrease in the price level in Japan will shift the U.S.aggregate demand curve outward.

The combined effects of a fiscal contraction and a monetary expansion are

A recession abroad would

Suppose that the Fed decides to increase the growth rate of the money supply in the United States.What is most likely to happen to the U.S.trade deficit and to GDP?

The expected effects of fiscal contraction are

The elimination of the federal budget deficit in the 1990s put downward pressure on real interest rates.

Suppose the dollar depreciates from 89 Japanese yen to 79 Japanese yen.One would expect