Exam 20: Exchange Rates and The Macroeconomy

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?

Figure 20-8 -Which of the graphs in Figure 20-8 illustrates the AD-AS shifts associated with an expansionary monetary policy?

Since the U.S.economy expanded rapidly from 1992 to 2000,it must be true that

An exchange rate depreciation acts to reduce inflation.

The monetary expansion of the mid-1990s was expected to lead to a currency appreciation.

When the dollar appreciates,the cost to Americans of foreign goods

In an open economy,aggregate supply consists of domestic production plus imports.

Figure 20-6 -In Figure 20-6,an expansive fiscal policy in a closed economy results in an equilibrium at point E.In an open economy,allowing for the effects of the induced change in the currency value,the final equilibrium would be point

Define the following terms and explain their importance to the study of macroeconomics: a. open economy b. closed economy c. budget deficits and trade deficits d. international capital flows

From Table 20-1,find the budget deficit or surplus for Macroland.

A currency depreciation

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 B to A?

International capital flows in an open economy have the effect of

If Mexico experiences a period of stable prices while the United States experiences rapid inflation,what will happen in Mexico?

The reason that higher interest rates reduce aggregate demand in an open economy with capital flows is that investment

If the demand effect dominates during a currency depreciation,then

Figure 20-2 -Which of the following explains the movements in Figure 20-2?

A favorable supply shock abroad would

An exchange rate depreciation appears to consumers as a markdown on foreign products.

One of the principal factors behind the U.S.trade deficits of the 1990s has been