Exam 36: Macro Policy in a Global Setting

Which of the following is not one of the ways in which the United States finances a trade deficit?

If the United States is experiencing inflation, then it will be most willing to engage in international policy coordination that requires:

In the late 1990s, Brazil decided to reduce the value of its currency, the real, in order to boost exports and help the economy to move out of a recession. Argentina, the main trade competitor of Brazil in various products, was immediately affected by Brazil's decision, since it would:

The United States can reduce its trade deficit by:

If a country cannot internationalize its debt, then it will have to:

Some economists believe that the high U.S. trade deficit should not be a concern because the:

Over the last 30 years, the value of the dollar has:

Crowding out can be avoided temporarily if the government's debt is internationalized.

Albania wants to maintain its exchange rate of $0.20 per lek. However, the market for lek per U.S. dollar has determined an exchange rate of $0.14 per lek (depreciation of the lek against the U.S. dollar). The Albanian central bank decides to increase the domestic interest rates through a contractionary monetary policy. This would shift the:

If a country's trade deficit declines, but it does not go into surplus, then:

If Japan is experiencing inflation and the United States is experiencing a recession, international policy coordination would be most likely to occur if it required:

How will restoring U.S.competitiveness affect U.S.macro policy in the future?

The U.S. trade deficit is most likely to be harmful in the future if:

Considering only their direct effect on income, which of the following policies is least likely to reduce a country's trade deficit?

Why do governments try to coordinate with each other before adopting their monetary and fiscal policies? Give an example in terms of Canada and the United States.

Contractionary fiscal policy in the United States reduces domestic income, prices, and interest rates, so the exchange rate will decrease.

What does internationalizing the debt mean?

If Japan adopts an expansionary monetary policy, U.S. exports are likely to increase.

In the early 2000s, the dollar depreciated relative to other currencies. Foreign policy makers claimed that the U.S. government must curtail its spending and encourage its citizens to save more. What does the U.S. saving rate have to do with the value of the dollar?

If foreigners become unwilling to hold U.S. assets, the U.S. trade balance will: