Question 1

Which of the following would lead to a depreciating dollar?

Accepted Answer

A)  a higher federal deficit 
B)  lower interest rates 
C)  higher interest rates 
D)  contractionary monetary policy 
A)  a higher federal deficit 
B)  lower interest rates 
C)  higher interest rates 
D)  contractionary monetary policy

Question 2

A depreciation of the U.S.dollar has the same effect on aggregate supply as an increase in foreign prices.

Accepted Answer

A) True 
 B)False

Question 3

The principal reason why Thailand,Indonesia,and South Korea feared the effects of appreciation of the U.S.dollar in 1995-1997 was that

Accepted Answer

A)  it would increase exports from these countries and worsen Japanese. 
B)  it would increase exports from these countries and worsen unemployment. 
C)  it would decrease exports from these countries since their currencies were tied to the dollar. 
D)  it would decrease imports to these countries since their currencies were tied to the dollar. 
A)  it would increase exports from these countries and worsen Japanese. 
B)  it would increase exports from these countries and worsen unemployment. 
C)  it would decrease exports from these countries since their currencies were tied to the dollar. 
D)  it would decrease imports to these countries since their currencies were tied to the dollar.

Question 4

What does macroeconomic theory predict as the main economic effect of a reduction in the budget deficit?

Accepted Answer

A)  lower real interest rates 
B)  a drop in the exchange rate 
C)  an increase in net exports 
D)  All of the above are correct. 
A)  lower real interest rates 
B)  a drop in the exchange rate 
C)  an increase in net exports 
D)  All of the above are correct.

Question 5

An appreciation of the Japanese yen would shift the Japanese aggregate demand curve inward.

Accepted Answer

A) True 
 B)False

Question 6

Appreciation of the dollar will make imported goods more expensive and shift the aggregate demand curve outward.

Accepted Answer

A) True 
 B)False

Question 7

In Table 20-2,what are net exports when GDP = 3,500?

Accepted Answer

A)  400 
B)  300 
C)  200 
D)  100 
A)  400 
B)  300 
C)  200 
D)  100

Question 8

If the dollar rises in value compared to other currencies,what will happen in the United States?

Accepted Answer

A)  an increase in aggregate demand 
B)  an increase in aggregate supply 
C)  a decrease in aggregate supply 
D)  an increase in the U.S.price level 
A)  an increase in aggregate demand 
B)  an increase in aggregate supply 
C)  a decrease in aggregate supply 
D)  an increase in the U.S.price level

Question 9

If Japan experiences a period of deflation and the United States does not,what will happen in the United States?

Accepted Answer

A)  an increase in aggregate supply 
B)  a decrease in aggregate supply 
C)  a decrease in aggregate demand 
D)  an increase in aggregate demand 
A)  an increase in aggregate supply 
B)  a decrease in aggregate supply 
C)  a decrease in aggregate demand 
D)  an increase in aggregate demand

Question 10

The expected effects of an increased budget deficit are

Accepted Answer

A)  higher real interest rates. 
B)  exchange rate depreciation. 
C)  lower inflation. 
D)  All of the above are correct. 
A)  higher real interest rates. 
B)  exchange rate depreciation. 
C)  lower inflation. 
D)  All of the above are correct.

Question 11

A closed economy is one that

Accepted Answer

A)  uses tariffs. 
B)  uses quotas to restrict trade. 
C)  uses exchange controls. 
D)  does not trade with other nations. 
A)  uses tariffs. 
B)  uses quotas to restrict trade. 
C)  uses exchange controls. 
D)  does not trade with other nations.

Question 12

Figure 20-3  
-Which of the situations illustrated in Figure 20-3 shows the effects of a currency appreciation leading to a recession?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 13

The major difference between a closed economy and an open economy is that a(n)

Accepted Answer

A)  closed economy balances budget,while an open economy does not. 
B)  open economy is a market economy,while a closed economy relies on planning. 
C)  open economy interacts with the rest of the world,while a closed economy does not. 
D)  closed economy keeps political affairs secret,while an open economy does not. 
A)  closed economy balances budget,while an open economy does not. 
B)  open economy is a market economy,while a closed economy relies on planning. 
C)  open economy interacts with the rest of the world,while a closed economy does not. 
D)  closed economy keeps political affairs secret,while an open economy does not.

Question 14

The accounting relationship between the budget deficit and the trade deficit may be expressed as ____.

Accepted Answer

A)  G + T = (S + I)+ (X − IM) 
B)  G − T = (S + I)+ (X + IM) 
C)  (X - IM)= (S - I)− (G - T) 
D)  (X - IM)= (S + I)− (G - T) 
A)  G + T = (S + I)+ (X − IM) 
B)  G − T = (S + I)+ (X + IM) 
C)  (X - IM)= (S - I)− (G - T) 
D)  (X - IM)= (S + I)− (G - T)

Question 15

If the dollar depreciates,both the aggregate demand curve and the aggregate supply curve shift inward.

Accepted Answer

A) True 
 B)False

Question 16

Figure 20-8  
-Which of the graphs in Figure 20-8 represents the effects of a currency appreciation?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 17

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 C to B?

Accepted Answer

A)  a European economic expansion 
B)  an appreciation of the dollar 
C)  a depreciation of the dollar 
D)  an increase in the money supply 
A)  a European economic expansion 
B)  an appreciation of the dollar 
C)  a depreciation of the dollar 
D)  an increase in the money supply

Question 18

A large tax cut in the United States should lead to an increase in the trade deficit.

Accepted Answer

A) True 
 B)False

Question 19

Foreign trade will have no impact on real GDP when

Accepted Answer

A)  exports exceed imports. 
B)  exports equal imports. 
C)  imports exceed exports. 
D)  exports equal zero. 
A)  exports exceed imports. 
B)  exports equal imports. 
C)  imports exceed exports. 
D)  exports equal zero.

Question 20

International capital flows strengthen

Accepted Answer

A)  monetary policy and have no effect on fiscal policy. 
B)  monetary policy but weaken fiscal policy. 
C)  monetary and fiscal policy. 
D)  fiscal policy but weaken monetary policy. 
A)  monetary policy and have no effect on fiscal policy. 
B)  monetary policy but weaken fiscal policy. 
C)  monetary and fiscal policy. 
D)  fiscal policy but weaken monetary policy.

Which of the following would lead to a depreciating dollar?

A depreciation of the U.S.dollar has the same effect on aggregate supply as an increase in foreign prices.

The principal reason why Thailand,Indonesia,and South Korea feared the effects of appreciation of the U.S.dollar in 1995-1997 was that

What does macroeconomic theory predict as the main economic effect of a reduction in the budget deficit?

An appreciation of the Japanese yen would shift the Japanese aggregate demand curve inward.

Appreciation of the dollar will make imported goods more expensive and shift the aggregate demand curve outward.

In Table 20-2,what are net exports when GDP = 3,500?

If the dollar rises in value compared to other currencies,what will happen in the United States?

If Japan experiences a period of deflation and the United States does not,what will happen in the United States?

The expected effects of an increased budget deficit are

A closed economy is one that

Figure 20-3 -Which of the situations illustrated in Figure 20-3 shows the effects of a currency appreciation leading to a recession?

The major difference between a closed economy and an open economy is that a(n)

The accounting relationship between the budget deficit and the trade deficit may be expressed as ____.

If the dollar depreciates,both the aggregate demand curve and the aggregate supply curve shift inward.

Figure 20-8 -Which of the graphs in Figure 20-8 represents the effects of a currency appreciation?

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 C to B?

A large tax cut in the United States should lead to an increase in the trade deficit.

Foreign trade will have no impact on real GDP when

International capital flows strengthen

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

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Exam 20: Exchange Rates and The Macroeconomy

Which of the following would lead to a depreciating dollar?

A depreciation of the U.S.dollar has the same effect on aggregate supply as an increase in foreign prices.

The principal reason why Thailand,Indonesia,and South Korea feared the effects of appreciation of the U.S.dollar in 1995-1997 was that

What does macroeconomic theory predict as the main economic effect of a reduction in the budget deficit?

An appreciation of the Japanese yen would shift the Japanese aggregate demand curve inward.

Appreciation of the dollar will make imported goods more expensive and shift the aggregate demand curve outward.

In Table 20-2,what are net exports when GDP = 3,500?

If the dollar rises in value compared to other currencies,what will happen in the United States?

If Japan experiences a period of deflation and the United States does not,what will happen in the United States?

The expected effects of an increased budget deficit are

A closed economy is one that

Figure 20-3 -Which of the situations illustrated in Figure 20-3 shows the effects of a currency appreciation leading to a recession?

The major difference between a closed economy and an open economy is that a(n)

The accounting relationship between the budget deficit and the trade deficit may be expressed as ____.

If the dollar depreciates,both the aggregate demand curve and the aggregate supply curve shift inward.

Figure 20-8 -Which of the graphs in Figure 20-8 represents the effects of a currency appreciation?

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 C to B?

A large tax cut in the United States should lead to an increase in the trade deficit.

Foreign trade will have no impact on real GDP when

International capital flows strengthen

What Is Economics

The Economy Myth and Reality

The Fundamental Economic Problem Scarcity and Choice

Supply and Demand An Initial Look

An Introduction To Macroeconomics

The Goals Of Macroeconomic Policy

Economic Growth Theory And Policy

Aggregate Demand and The Powerful Consumer

Demand Side Equilibrium Unemployment Or Inflation

Bringing In The Supply Side Unemployment and Inflation

Managing Aggregate Demand Fiscal Policy

Money and The Banking System

Monetary Policy Conventional and Unconventional

The Financial Crisis and The Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits In The Short and Long Run

The Trade Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System Order Or Disorder

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