Question 1

The open-economy macroeconomic model includes

Accepted Answer

A)  only the market for loanable funds. 
B)  only the market for foreign-currency exchange. 
C)  both the market for loanable funds and the market for foreign-currency exchange. 
D)  neither the market for loanable funds or the market for foreign-currency exchange. 
A)  only the market for loanable funds. 
B)  only the market for foreign-currency exchange. 
C)  both the market for loanable funds and the market for foreign-currency exchange. 
D)  neither the market for loanable funds or the market for foreign-currency exchange.

Question 2

Which of the following is the most accurate statement?

Accepted Answer

A)  Trade policy has neither microeconomic nor macroeconomic effects. 
B)  Trade policy has similar microeconomic and macroeconomic effects. 
C)  The effects of trade policy are more macroeconomic than microeconomic. 
D)  The effects of trade policy are more microeconomic than macroeconomic. 
A)  Trade policy has neither microeconomic nor macroeconomic effects. 
B)  Trade policy has similar microeconomic and macroeconomic effects. 
C)  The effects of trade policy are more macroeconomic than microeconomic. 
D)  The effects of trade policy are more microeconomic than macroeconomic.

Question 3

What is the source of the demand for dollars in the market for foreign-currency exchange?

Accepted Answer

The answer of What is the source of the demand...

Question 4

Which of the following would make the equilibrium real interest rate increase and the equilibrium quantity of funds decrease?

Accepted Answer

A)  The demand for loanable funds shifts right. 
B)  The demand for loanable funds shifts left. 
C)  The supply of loanable funds shifts right. 
D)  The supply of loanable funds shifts left. 
A)  The demand for loanable funds shifts right. 
B)  The demand for loanable funds shifts left. 
C)  The supply of loanable funds shifts right. 
D)  The supply of loanable funds shifts left.

Question 5

When a country imposes an import quota,its

Accepted Answer

A)  imports fall and its net exports rise. 
B)  imports fall and its net exports are unchanged. 
C)  imports rise and its net exports are unchanged. 
D)  imports and exports are unchanged. 
A)  imports fall and its net exports rise. 
B)  imports fall and its net exports are unchanged. 
C)  imports rise and its net exports are unchanged. 
D)  imports and exports are unchanged.

Question 6

Suppose the U.S.imposes an import quota on steel.U.S.exports

Accepted Answer

A)  increase,the real exchange rate of the U.S.dollar appreciates,and U.S.net capital outflow increases. 
B)  increase,the real exchange rate of the U.S.dollar depreciates,and U.S.net capital outflow is unchanged. 
C)  decrease,the real exchange rate of the U.S.dollar appreciates,and U.S.net capital outflow is unchanged. 
D)  decrease,the real exchange rate of the U.S.dollar depreciates,and U.S.net capital outflow decreases. 
A)  increase,the real exchange rate of the U.S.dollar appreciates,and U.S.net capital outflow increases. 
B)  increase,the real exchange rate of the U.S.dollar depreciates,and U.S.net capital outflow is unchanged. 
C)  decrease,the real exchange rate of the U.S.dollar appreciates,and U.S.net capital outflow is unchanged. 
D)  decrease,the real exchange rate of the U.S.dollar depreciates,and U.S.net capital outflow decreases.

Question 7

If at a given exchange rate foreign citizens wanted to buy fewer U.S bonds,then the

Accepted Answer

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

Question 8

Other things the same,an increase in the U.S.interest rate causes the quantity of loanable funds supplied to

Accepted Answer

A)  rise because net capital outflow and domestic investment rise. 
B)  rise because national saving rises. 
C)  fall because net capital outflow and domestic investment rise. 
D)  fall because national saving falls. 
A)  rise because net capital outflow and domestic investment rise. 
B)  rise because national saving rises. 
C)  fall because net capital outflow and domestic investment rise. 
D)  fall because national saving falls.

Question 9

If a country experiences capital flight,which of the following curves shift right?

Accepted Answer

A)  only the demand for loanable funds. 
B)  only the supply of dollars in the market for foreign-currency exchange. 
C)  only the net capital outflow curve and the supply of dollars in the market for foreign currency exchange. 
D)  the demand for loanable funds,the net capital outflow curve,and the supply of dollars in the market for foreign currency exchange. 
A)  only the demand for loanable funds. 
B)  only the supply of dollars in the market for foreign-currency exchange. 
C)  only the net capital outflow curve and the supply of dollars in the market for foreign currency exchange. 
D)  the demand for loanable funds,the net capital outflow curve,and the supply of dollars in the market for foreign currency exchange.

Question 10

If net exports are positive,then

Accepted Answer

A)  exports are greater than imports. 
B)  net capital outflow is negative. 
C)  Both of the above are correct. 
D)  Neither of the above is correct. 
A)  exports are greater than imports. 
B)  net capital outflow is negative. 
C)  Both of the above are correct. 
D)  Neither of the above is correct.

Question 11

If a government increases its budget deficit,then the real exchange rate

Accepted Answer

A)  and domestic investment rise. 
B)  and domestic investment fall. 
C)  rises and domestic investment falls. 
D)  falls and domestic investment rises. 
A)  and domestic investment rise. 
B)  and domestic investment fall. 
C)  rises and domestic investment falls. 
D)  falls and domestic investment rises.

Question 12

The variable that links the market for loanable funds and the market for foreign-currency exchange is

Accepted Answer

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

Question 13

Figure 19-1  
-Refer to Figure 19-1.In the Figure shown,if the real interest rate is 6 percent,the quantity of loanable funds demanded is

Accepted Answer

A)  $20 billion,and the quantity supplied is $40 billion. 
B)  $20 billion,and the quantity supplied is $60 billion. 
C)  $60 billion,and the quantity supplied is $20 billion. 
D)  $60 billion,and the quantity supplied is $40 billion. 
A)  $20 billion,and the quantity supplied is $40 billion. 
B)  $20 billion,and the quantity supplied is $60 billion. 
C)  $60 billion,and the quantity supplied is $20 billion. 
D)  $60 billion,and the quantity supplied is $40 billion.

Question 14

Figure 19-1  
-Refer to Figure 19-1.In the Figure shown,if the real interest rate is 6 percent,there will be pressure for

Accepted Answer

A)  the real interest rate to fall. 
B)  the demand for loanable funds curve to shift left. 
C)  the supply for loanable funds curve to shift right. 
D)  All of the above are correct. 
A)  the real interest rate to fall. 
B)  the demand for loanable funds curve to shift left. 
C)  the supply for loanable funds curve to shift right. 
D)  All of the above are correct.

Question 15

A country has national saving of $80 billion,government expenditures of $40 billion,domestic investment of $60 billion,and net capital outflow of $20 billion.What is its demand for loanable funds?

Accepted Answer

A)  $40 billion 
B)  $60 billion 
C)  $80 billion 
D)  $120 billion 
A)  $40 billion 
B)  $60 billion 
C)  $80 billion 
D)  $120 billion

Question 16

Which of the following is correct in an open economy?

Accepted Answer

A)  S = I 
B)  S = NX + NCO 
C)  S = NCO 
D)  S = I + NCO 
A)  S = I 
B)  S = NX + NCO 
C)  S = NCO 
D)  S = I + NCO

Question 17

In 2002,the United States imposed restrictions on the importation of steel into the United States.The open-economy macroeconomic model shows that such a policy would

Accepted Answer

A)  lower the real exchange rate and increase net exports. 
B)  lower the real exchange rate and have no effect on net exports. 
C)  raise the real exchange rate and decrease net exports. 
D)  raise the real exchange rate and have no effect on net exports. 
A)  lower the real exchange rate and increase net exports. 
B)  lower the real exchange rate and have no effect on net exports. 
C)  raise the real exchange rate and decrease net exports. 
D)  raise the real exchange rate and have no effect on net exports.

Question 18

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

Accepted Answer

A)  the sum of domestic investment and net capital outflow. 
B)  the sum of national saving and net capital outflow. 
C)  national saving. 
D)  net exports 
A)  the sum of domestic investment and net capital outflow. 
B)  the sum of national saving and net capital outflow. 
C)  national saving. 
D)  net exports

Question 19

At the equilibrium real interest rate in the open-economy macroeconomic model,the equilibrium quantity of loanable funds equals

Accepted Answer

A)  net capital outflow. 
B)  domestic investment. 
C)  foreign currency supplied. 
D)  national saving. 
A)  net capital outflow. 
B)  domestic investment. 
C)  foreign currency supplied. 
D)  national saving.

Question 20

Because a government budget deficit represents

Accepted Answer

A)  negative public saving,it increases national saving. 
B)  negative public saving,it decreases national saving. 
C)  positive public saving,it increases national saving. 
D)  positive public saving,it decreases national saving. 
A)  negative public saving,it increases national saving. 
B)  negative public saving,it decreases national saving. 
C)  positive public saving,it increases national saving. 
D)  positive public saving,it decreases national saving.

Exam 32: A Macroeconomic Theory of the Open Economy

The open-economy macroeconomic model includes

Which of the following is the most accurate statement?

What is the source of the demand for dollars in the market for foreign-currency exchange?

Which of the following would make the equilibrium real interest rate increase and the equilibrium quantity of funds decrease?

When a country imposes an import quota,its

Suppose the U.S.imposes an import quota on steel.U.S.exports

If at a given exchange rate foreign citizens wanted to buy fewer U.S bonds,then the

Other things the same,an increase in the U.S.interest rate causes the quantity of loanable funds supplied to

If a country experiences capital flight,which of the following curves shift right?

If net exports are positive,then

If a government increases its budget deficit,then the real exchange rate

The variable that links the market for loanable funds and the market for foreign-currency exchange is

Figure 19-1 -Refer to Figure 19-1.In the Figure shown,if the real interest rate is 6 percent,the quantity of loanable funds demanded is

Figure 19-1 -Refer to Figure 19-1.In the Figure shown,if the real interest rate is 6 percent,there will be pressure for

A country has national saving of $80 billion,government expenditures of $40 billion,domestic investment of $60 billion,and net capital outflow of $20 billion.What is its demand for loanable funds?

Which of the following is correct in an open economy?

In 2002,the United States imposed restrictions on the importation of steel into the United States.The open-economy macroeconomic model shows that such a policy would

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

At the equilibrium real interest rate in the open-economy macroeconomic model,the equilibrium quantity of loanable funds equals

Because a government budget deficit represents

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

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