Exam 32: A Macroeconomic Theory of the Open Economy

In the open-economy macroeconomic model,the purchase of a capital asset by domestic residents adds to the demand for loanable funds

If a government of a country with a zero trade balance increases its budget deficit,then the real exchange rate

When a country suffers from capital flight,the exchange rate

When a country experiences capital flight its

Other things the same,a higher real exchange rate reduces net exports.

Suppose that the United States imposes an import quota on televisions.In the open-economy macroeconomic model this quota shifts the

A firm produces manufacturing equipment,some of which it exports.Which of the following effects of capital flight in the country it produces in would likely reduce the quantity of equipment it sells?

If a country's budget deficit decreases,then the exchange rate

During the financial crisis it was proposed that firms be provided with a tax credit for investment projects.Such a tax credit would

When Mexico suffered from capital flight in 1994,Mexico's net capital outflow

When a country experiences capital flight,its net capital outflow,

Over the past two decades the U.S.has persistently had trade deficits.

If the government of Colombia made policy changes that increased national saving,the real exchange rate of the peso would

In the open-economy macroeconomic model,other things the same,which of the following both make the exchange rate fall?

A decrease in the budget deficit causes domestic interest rates

An increase in the government budget deficit shifts the supply of loanable funds to the left.

If the demand for loanable funds shifts left,then

The imposition of an import quota shifts

From 2001 to 2004 the U.S.budget went from surplus to deficit.According to the open economy macroeconomic model,this change should have

If the exchange rate falls,U.S.residents pay