Question 1

If there is a surplus of loanable funds,the quantity demanded is

Accepted Answer

A)  greater than the quantity supplied and the interest rate will rise. 
B)  greater than the quantity supplied and the interest rate will fall. 
C)  less than the quantity supplied and the interest rate will rise. 
D)  less than the quantity supplied and the interest rate will fall. 
A)  greater than the quantity supplied and the interest rate will rise. 
B)  greater than the quantity supplied and the interest rate will fall. 
C)  less than the quantity supplied and the interest rate will rise. 
D)  less than the quantity supplied and the interest rate will fall.

Question 2

If the world thought that many banks in a certain country were at or near the point of bankruptcy,then that country's real exchange rate

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

If the U.S.imposed an import quota on corn,then in the U.S.

Accepted Answer

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

Question 4

If people thought that many banks in a certain country were at or near the point of bankruptcy,then that country's real exchange rate

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 5

Capital flight increases a country's interest rate.This increase in the interest rate makes net capital outflow lower than it would be had the interest rate stayed the same.

Accepted Answer

A) True 
 B)False

Question 6

Other things the same,in the open-economy macroeconomic model,if the exchange rate rises,

Accepted Answer

A)  the demand for dollars shifts left. 
B)  the demand for dollars shifts right. 
C)  the quantity of dollars demanded falls. 
D)  the quantity of dollars demanded rises. 
A)  the demand for dollars shifts left. 
B)  the demand for dollars shifts right. 
C)  the quantity of dollars demanded falls. 
D)  the quantity of dollars demanded rises.

Question 7

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

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

Question 8

When a country imposes an import quota,its exchange rate

Accepted Answer

A)  rises because the supply of dollars in the market for foreign-currency exchange falls. 
B)  falls because the supply of dollars in the market for foreign-currency exchange rises. 
C)  rises because the demand for dollars in the market for foreign-currency exchange rises. 
D)  falls because the demand for dollars in the market for foreign-currency exchange falls. 
A)  rises because the supply of dollars in the market for foreign-currency exchange falls. 
B)  falls because the supply of dollars in the market for foreign-currency exchange rises. 
C)  rises because the demand for dollars in the market for foreign-currency exchange rises. 
D)  falls because the demand for dollars in the market for foreign-currency exchange falls.

Question 9

In the open-economy macroeconomic model,if the U.S.interest rate rises,then its

Accepted Answer

A)  net capital outflow rises,so the supply of dollars in the market for foreign exchange shifts right. 
B)  net capital outflow rises,so the demand for dollars in the market for foreign exchange shifts right. 
C)  net capital outflow falls,so the supply of dollars in the market for foreign exchange shifts left. 
D)  net capital outflow falls,so the demand for dollars in the market for foreign exchange shifts left. 
A)  net capital outflow rises,so the supply of dollars in the market for foreign exchange shifts right. 
B)  net capital outflow rises,so the demand for dollars in the market for foreign exchange shifts right. 
C)  net capital outflow falls,so the supply of dollars in the market for foreign exchange shifts left. 
D)  net capital outflow falls,so the demand for dollars in the market for foreign exchange shifts left.

Question 10

If the demand for net exports rises,which of the following happens in the open-economy macroeconomic model?

Accepted Answer

A)  the exchange rate rises 
B)  the interest rate falls 
C)  net capital outflow rises 
D)  All of the above are correct. 
A)  the exchange rate rises 
B)  the interest rate falls 
C)  net capital outflow rises 
D)  All of the above are correct.

Question 11

If the government of a country with a zero trade balance started with a budget deficit and moved to a budget surplus,domestic investment would

Accepted Answer

A)  rise and there would be a trade surplus. 
B)  rise and there would be a trade deficit. 
C)  fall and there would be a trade surplus. 
D)  fall and there would be a trade deficit. 
A)  rise and there would be a trade surplus. 
B)  rise and there would be a trade deficit. 
C)  fall and there would be a trade surplus. 
D)  fall and there would be a trade deficit.

Question 12

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

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 13

According to the open-economy macroeconomic model,a decrease in the U.S.government budget deficit increases U.S.net capital outflow,causes the real exchange rate of the dollar to depreciate,and increases U.S.net exports.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following would not be a consequence of an increase in the U.S.government budget deficit?

Accepted Answer

A)  U.S.interest rates rise. 
B)  U.S.net capital outflow falls. 
C)  The real exchange rate of the U.S.dollar depreciates. 
D)  The U.S.supply of loanable funds shifts left. 
A)  U.S.interest rates rise. 
B)  U.S.net capital outflow falls. 
C)  The real exchange rate of the U.S.dollar depreciates. 
D)  The U.S.supply of loanable funds shifts left.

Question 15

When the real exchange rate for the dollar appreciates,U.S.goods become

Accepted Answer

A)  less expensive relative to foreign goods,which makes exports rise and imports fall. 
B)  less expensive relative to foreign goods,which makes exports fall and imports rise. 
C)  more expensive relative to foreign goods,which makes exports rise and imports fall. 
D)  more expensive relative to foreign goods,which makes exports fall and imports rise. 
A)  less expensive relative to foreign goods,which makes exports rise and imports fall. 
B)  less expensive relative to foreign goods,which makes exports fall and imports rise. 
C)  more expensive relative to foreign goods,which makes exports rise and imports fall. 
D)  more expensive relative to foreign goods,which makes exports fall and imports rise.

Question 16

A country has national saving of $90 billion,government expenditures of $30 billion,domestic investment of $50 billion,and net capital outflow of $40 billion.What is its demand for loanable funds?

Accepted Answer

A)  $40 billion 
B)  $60 billion 
C)  $90 billion 
D)  $130 billion 
A)  $40 billion 
B)  $60 billion 
C)  $90 billion 
D)  $130 billion

Question 17

In the open-economy macroeconomic model,which of the following increases net capital outflow?

Accepted Answer

A)  a fall in the real exchange rate,but not a fall in the real interest rate 
B)  a fall in the real interest rate,but not a fall in the real exchange rate 
C)  both a fall in the real exchange rate and a fall in the real interest rate 
D)  neither a fall in the real exchange rate nor a fall in the real interest rate 
A)  a fall in the real exchange rate,but not a fall in the real interest rate 
B)  a fall in the real interest rate,but not a fall in the real exchange rate 
C)  both a fall in the real exchange rate and a fall in the real interest rate 
D)  neither a fall in the real exchange rate nor a fall in the real interest rate

Question 18

If Kenya experienced capital flight,the supply of Kenyan schillings in the market for foreign-currency exchange would shift

Accepted Answer

A)  left,which would make the real exchange rate of the Kenyan schilling appreciate. 
B)  left,which would make the real exchange rate of the Kenyan schilling depreciate. 
C)  right,which would make the real exchange rate of the Kenyan schilling appreciate. 
D)  right,which would make the real exchange rate of the Kenyan schilling depreciate. 
A)  left,which would make the real exchange rate of the Kenyan schilling appreciate. 
B)  left,which would make the real exchange rate of the Kenyan schilling depreciate. 
C)  right,which would make the real exchange rate of the Kenyan schilling appreciate. 
D)  right,which would make the real exchange rate of the Kenyan schilling depreciate.

Question 19

In the open-economy macroeconomic model,the supply of dollars in the market for foreign-currency exchange is upward sloping.

Accepted Answer

A) True 
 B)False

Question 20

An increase in a country's budget deficit

Accepted Answer

A)  increases net capital outflow,so the demand for its currency in the market for foreign-currency exchange shifts right. 
B)  increases net capital outflow,so the supply of its currency in the market for foreign-currency exchange shifts right. 
C)  decreases net capital outflow,so the demand for its currency in the market for foreign-currency exchange shifts left. 
D)  decreases net capital outflow,so the supply of its currency in the market for foreign-currency exchange shifts left. 
A)  increases net capital outflow,so the demand for its currency in the market for foreign-currency exchange shifts right. 
B)  increases net capital outflow,so the supply of its currency in the market for foreign-currency exchange shifts right. 
C)  decreases net capital outflow,so the demand for its currency in the market for foreign-currency exchange shifts left. 
D)  decreases net capital outflow,so the supply of its currency in the market for foreign-currency exchange shifts left.

Exam 32: A Macroeconomic Theory of the Open Economy

If there is a surplus of loanable funds,the quantity demanded is

If the world thought that many banks in a certain country were at or near the point of bankruptcy,then that country's real exchange rate

If the U.S.imposed an import quota on corn,then in the U.S.

If people thought that many banks in a certain country were at or near the point of bankruptcy,then that country's real exchange rate

Capital flight increases a country's interest rate.This increase in the interest rate makes net capital outflow lower than it would be had the interest rate stayed the same.

Other things the same,in the open-economy macroeconomic model,if the exchange rate rises,

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

When a country imposes an import quota,its exchange rate

In the open-economy macroeconomic model,if the U.S.interest rate rises,then its

If the demand for net exports rises,which of the following happens in the open-economy macroeconomic model?

If the government of a country with a zero trade balance started with a budget deficit and moved to a budget surplus,domestic investment would

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

According to the open-economy macroeconomic model,a decrease in the U.S.government budget deficit increases U.S.net capital outflow,causes the real exchange rate of the dollar to depreciate,and increases U.S.net exports.

Which of the following would not be a consequence of an increase in the U.S.government budget deficit?

When the real exchange rate for the dollar appreciates,U.S.goods become

A country has national saving of $90 billion,government expenditures of $30 billion,domestic investment of $50 billion,and net capital outflow of $40 billion.What is its demand for loanable funds?

In the open-economy macroeconomic model,which of the following increases net capital outflow?

If Kenya experienced capital flight,the supply of Kenyan schillings in the market for foreign-currency exchange would shift

In the open-economy macroeconomic model,the supply of dollars in the market for foreign-currency exchange is upward sloping.

An increase in a country's budget deficit

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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