Question 1

If interest rates rose more in the U.S.than in Canada,then other things the same

Accepted Answer

A)  U.S.citizens would buy more Canadian bonds and Canadian citizens would buy more U.S.bonds. 
B)  U.S.citizens would buy more Canadian bonds and Canadian citizens would buy fewer U.S.bonds. 
C)  U.S.citizens would buy fewer Canadian bonds and Canadian citizens would buy more U.S.bonds. 
D)  U.S.citizens would buy fewer Canadian bonds and Canadian citizens would buy fewer U.S.bonds. 
A)  U.S.citizens would buy more Canadian bonds and Canadian citizens would buy more U.S.bonds. 
B)  U.S.citizens would buy more Canadian bonds and Canadian citizens would buy fewer U.S.bonds. 
C)  U.S.citizens would buy fewer Canadian bonds and Canadian citizens would buy more U.S.bonds. 
D)  U.S.citizens would buy fewer Canadian bonds and Canadian citizens would buy fewer U.S.bonds.

Question 2

If the government of Peru increased its budget deficit,then domestic investment

Accepted Answer

A)  and net exports would rise. 
B)  would rise and net exports would fall. 
C)  would fall and net exports would rise. 
D)  and net exports would fall. 
A)  and net exports would rise. 
B)  would rise and net exports would fall. 
C)  would fall and net exports would rise. 
D)  and net exports would fall.

Question 3

In the open economy model,the supply of loanable funds comes from national saving and net capital outflow.

Accepted Answer

A) True 
 B)False

Question 4

If the U.S.government went from a budget deficit to a budget surplus then

Accepted Answer

A)  the interest rate and the real exchange rate would increase. 
B)  the interest rate and the real exchange rate would decrease. 
C)  the interest rate would increase and the real exchange rate would decrease. 
D)  the interest rate would decrease and the real exchange rate would increase. 
A)  the interest rate and the real exchange rate would increase. 
B)  the interest rate and the real exchange rate would decrease. 
C)  the interest rate would increase and the real exchange rate would decrease. 
D)  the interest rate would decrease and the real exchange rate would increase.

Question 5

From 1980 to 1987,U.S.net capital outflows decreased.According to the open-economy macroeconomic model,which of the following could have caused this?

Accepted Answer

A)  an increase in the demand for U.S.currency in the market for foreign-currency exchange 
B)  a decrease in the demand for U.S.currency in the market for foreign-currency exchange 
C)  an increase in the supply of loanable funds 
D)  a decrease in the supply of loanable funds 
A)  an increase in the demand for U.S.currency in the market for foreign-currency exchange 
B)  a decrease in the demand for U.S.currency in the market for foreign-currency exchange 
C)  an increase in the supply of loanable funds 
D)  a decrease in the supply of loanable funds

Question 6

An increase in the budget deficit causes domestic interest rates

Accepted Answer

A)  and net capital outflow to rise. 
B)  to rise and net capital outflow to fall. 
C)  to fall and net capital outflow to rise. 
D)  and net capital outflow to fall. 
A)  and net capital outflow to rise. 
B)  to rise and net capital outflow to fall. 
C)  to fall and net capital outflow to rise. 
D)  and net capital outflow to fall.

Question 7

The value of net exports equals the value of

Accepted Answer

A)  national saving. 
B)  public saving. 
C)  national saving - net capital outflow. 
D)  national saving - domestic investment. 
A)  national saving. 
B)  public saving. 
C)  national saving - net capital outflow. 
D)  national saving - domestic investment.

Question 8

In the open-economy macroeconomic model,the supply of loanable funds comes from

Accepted Answer

A)  national saving.Demand comes from only domestic investment. 
B)  national saving.Demand comes from domestic investment and net capital outflow. 
C)  Only net capital outflow.Demand for loanable funds comes from national saving. 
D)  domestic investment and net capital outflow.Demand for loanable funds comes from national saving. 
A)  national saving.Demand comes from only domestic investment. 
B)  national saving.Demand comes from domestic investment and net capital outflow. 
C)  Only net capital outflow.Demand for loanable funds comes from national saving. 
D)  domestic investment and net capital outflow.Demand for loanable funds comes from national saving.

Question 9

Capital flight reduces a country's real exchange rate.

Accepted Answer

A) True 
 B)False

Question 10

If a tariff on lumber were implemented,for the country as a whole which of the following would rise?

Accepted Answer

A)  exports and net exports 
B)  exports but not net exports 
C)  net exports but not exports 
D)  neither exports nor net exports 
A)  exports and net exports 
B)  exports but not net exports 
C)  net exports but not exports 
D)  neither exports nor net exports

Question 11

According to the open-economy macroeconomic model,if the United States moved from a government budget deficit to a government budget surplus,U.S.real interest rates would increase and the real exchange rate of the U.S.dollar would appreciate.

Accepted Answer

A) True 
 B)False

Question 12

If the U.S.government imposed a quota on toy imports,then

Accepted Answer

A)  imports and exports would both fall. 
B)  imports would fall and exports would rise. 
C)  imports would rise and exports would fall. 
D)  None of the above is correct. 
A)  imports and exports would both fall. 
B)  imports would fall and exports would rise. 
C)  imports would rise and exports would fall. 
D)  None of the above is correct.

Question 13

If the exchange rate rises,which of the following falls in the open-economy macroeconomic model?

Accepted Answer

A)  desired net exports and desired net capital outflow 
B)  desired net exports but not desired net capital outflow 
C)  desired net capital outflow but not desired net exports 
D)  neither desired net exports nor desired net capital outflow 
A)  desired net exports and desired net capital outflow 
B)  desired net exports but not desired net capital outflow 
C)  desired net capital outflow but not desired net exports 
D)  neither desired net exports nor desired net capital outflow

Question 14

If the U.S.imposed an import quota on apples,then which of the following would rise?

Accepted Answer

A)  the U.S.real exchange rate and U.S.net exports 
B)  the U.S.real exchange rate but not U.S.net exports 
C)  U.S.net exports but not the U.S.real exchange rate 
D)  neither the U.S.real exchange rate nor U.S.net exports 
A)  the U.S.real exchange rate and U.S.net exports 
B)  the U.S.real exchange rate but not U.S.net exports 
C)  U.S.net exports but not the U.S.real exchange rate 
D)  neither the U.S.real exchange rate nor U.S.net exports

Question 15

Other things the same,a decrease in the real interest rate

Accepted Answer

A)  decreases the quantity of loanable funds demanded. 
B)  increases the quantity of loanable funds demand 
C)  shifts the demand for loanable funds to the right. 
D)  shifts the demand for loanable funds to the left. 
A)  decreases the quantity of loanable funds demanded. 
B)  increases the quantity of loanable funds demand 
C)  shifts the demand for loanable funds to the right. 
D)  shifts the demand for loanable funds to the left.

Question 16

According to the open-economy macroeconomic model,if the U.S.government budget deficit decreases,then both U.S.domestic investment and net capital outflow increase.

Accepted Answer

A) True 
 B)False

Question 17

If the exchange rate falls,domestic goods become relatively ______ expensive.This change in the affordability of domestic goods makes domestic goods _____ attractive to domestic residents.So,_______ ______.

Accepted Answer

less,more,

Question 18

In the open-economy macroeconomic model,if for some reason foreign citizens want to purchase more U.S.goods and services at each exchange rate,then

Accepted Answer

A)  the demand for dollars in the market for foreign-currency exchange shifts right. 
B)  the demand for dollars in the market for foreign-currency exchange shifts left. 
C)  the supply of dollars in the market for foreign-currency exchange shifts right. 
D)  the supply of dollars in the market for foreign-currency exchange shifts left. 
A)  the demand for dollars in the market for foreign-currency exchange shifts right. 
B)  the demand for dollars in the market for foreign-currency exchange shifts left. 
C)  the supply of dollars in the market for foreign-currency exchange shifts right. 
D)  the supply of dollars in the market for foreign-currency exchange shifts left.

Question 19

In the open-economy macroeconomic model,if a country's interest rate falls,then its

Accepted Answer

A)  net capital outflow and its net exports rise. 
B)  net capital outflow rises and its net exports fall. 
C)  net capital outflow falls and its net exports rise. 
D)  net capital outflow and its net exports fall. 
A)  net capital outflow and its net exports rise. 
B)  net capital outflow rises and its net exports fall. 
C)  net capital outflow falls and its net exports rise. 
D)  net capital outflow and its net exports fall.

Question 20

In which case(s)does(do)a country's supply of loanable funds shift right?

Accepted Answer

A)  both an increase in the budget deficit and capital flight 
B)  an increase in the budget deficit,but not capital flight 
C)  capital flight,but not an increase in the budget deficit 
D)  neither an increase in the budget deficit nor capital flight 
A)  both an increase in the budget deficit and capital flight 
B)  an increase in the budget deficit,but not capital flight 
C)  capital flight,but not an increase in the budget deficit 
D)  neither an increase in the budget deficit nor capital flight

Exam 32: A Macroeconomic Theory of the Open Economy

If interest rates rose more in the U.S.than in Canada,then other things the same

If the government of Peru increased its budget deficit,then domestic investment

In the open economy model,the supply of loanable funds comes from national saving and net capital outflow.

If the U.S.government went from a budget deficit to a budget surplus then

From 1980 to 1987,U.S.net capital outflows decreased.According to the open-economy macroeconomic model,which of the following could have caused this?

An increase in the budget deficit causes domestic interest rates

The value of net exports equals the value of

In the open-economy macroeconomic model,the supply of loanable funds comes from

Capital flight reduces a country's real exchange rate.

If a tariff on lumber were implemented,for the country as a whole which of the following would rise?

According to the open-economy macroeconomic model,if the United States moved from a government budget deficit to a government budget surplus,U.S.real interest rates would increase and the real exchange rate of the U.S.dollar would appreciate.

If the U.S.government imposed a quota on toy imports,then

If the exchange rate rises,which of the following falls in the open-economy macroeconomic model?

If the U.S.imposed an import quota on apples,then which of the following would rise?

Other things the same,a decrease in the real interest rate

According to the open-economy macroeconomic model,if the U.S.government budget deficit decreases,then both U.S.domestic investment and net capital outflow increase.

If the exchange rate falls,domestic goods become relatively ______ expensive.This change in the affordability of domestic goods makes domestic goods _____ attractive to domestic residents.So,_______ ______.

In the open-economy macroeconomic model,if for some reason foreign citizens want to purchase more U.S.goods and services at each exchange rate,then

In the open-economy macroeconomic model,if a country's interest rate falls,then its

In which case(s)does(do)a country's supply of loanable funds shift right?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply,demand,and Government Policies

Consumers,producers,and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Market for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving,investment,and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

If the exchange rate falls,domestic goods become relatively ____ expensive.This change in the affordability of domestic goods makes domestic goods _ attractive to domestic residents.So,_ __.