Question 1

In equilibrium which of the following happens if the U.S.imposes tariffs on leather boots?

Accepted Answer

A)  U.S.production of leather boots rise 
B)  U.S.net exports rise 
C)  the exchange rate falls 
D)  All of the above are correct. 
A)  U.S.production of leather boots rise 
B)  U.S.net exports rise 
C)  the exchange rate falls 
D)  All of the above are correct.

Question 2

If the risk of buying U.S.assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds,then

Accepted Answer

A)  net capital outflow and the real exchange rate will rise. 
B)  net capital outflow will rise and the real exchange rate will fall. 
C)  net capital outflow will fall and the real exchange rate will rise. 
D)  net capital outflow and the exchange rate will fall. 
A)  net capital outflow and the real exchange rate will rise. 
B)  net capital outflow will rise and the real exchange rate will fall. 
C)  net capital outflow will fall and the real exchange rate will rise. 
D)  net capital outflow and the exchange rate will fall.

Question 3

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

Accepted Answer

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

Question 4

When the U.S.real interest rate falls,owning U.S.assets becomes

Accepted Answer

A)  more attractive to both U.S.and foreign residents. 
B)  more attractive to U.S.residents and less attractive to foreign residents. 
C)  less attractive to U.S.residents and more attractive to foreign residents. 
D)  less attractive to both U.S.residents and foreign residents. 
A)  more attractive to both U.S.and foreign residents. 
B)  more attractive to U.S.residents and less attractive to foreign residents. 
C)  less attractive to U.S.residents and more attractive to foreign residents. 
D)  less attractive to both U.S.residents and foreign residents.

Question 5

If people decide that some country is now a more risky place to keep their saving,then at the original interest rate in that country there is a

Accepted Answer

A)  surplus of loanable funds,so the interest rate increases. 
B)  surplus of loanable funds,so the interest rate decreases. 
C)  shortage of loanable funds,so the interest rate increases. 
D)  shortage of loanable funds,so the interest rate decreases. 
A)  surplus of loanable funds,so the interest rate increases. 
B)  surplus of loanable funds,so the interest rate decreases. 
C)  shortage of loanable funds,so the interest rate increases. 
D)  shortage of loanable funds,so the interest rate decreases.

Question 6

If a government started with a budget deficit and moved to a surplus,domestic investment

Accepted Answer

A)  and the real exchange rate would rise. 
B)  and the real exchange rate would fall. 
C)  would rise and the real exchange rate would fall. 
D)  would fall and the real exchange rate would rise. 
A)  and the real exchange rate would rise. 
B)  and the real exchange rate would fall. 
C)  would rise and the real exchange rate would fall. 
D)  would fall and the real exchange rate would rise.

Question 7

Figure 19-7  
-Refer to Figure 19-7.Which of the following is consistent with capital flight from Mexico?

Accepted Answer

A)  The real exchange rate of the peso appreciates from E0 to E1. 
B)  The real exchange rate of the peso depreciates from E0 to E1. 
C)  The real exchange rate of the peso appreciates from E1 to E0. 
D)  The real exchange rate of the peso depreciates from E1 to E0. 
A)  The real exchange rate of the peso appreciates from E0 to E1. 
B)  The real exchange rate of the peso depreciates from E0 to E1. 
C)  The real exchange rate of the peso appreciates from E1 to E0. 
D)  The real exchange rate of the peso depreciates from E1 to E0.

Question 8

In 2002 it looked like the Argentinean government might default on its debt (which eventually it did).The open-economy macroeconomic model predicts that this should have

Accepted Answer

A)  raised Argentinean interest rates and caused the Argentinean currency to appreciate. 
B)  raised Argentinean interest rates and caused the Argentinean currency to depreciate. 
C)  lowered Argentinean interest rates and caused the Argentinean currency to appreciate. 
D)  lowered Argentinean interest rates and caused the Argentinean currency to depreciate. 
A)  raised Argentinean interest rates and caused the Argentinean currency to appreciate. 
B)  raised Argentinean interest rates and caused the Argentinean currency to depreciate. 
C)  lowered Argentinean interest rates and caused the Argentinean currency to appreciate. 
D)  lowered Argentinean interest rates and caused the Argentinean currency to depreciate.

Question 9

If the real exchange rate for the dollar is above the equilibrium level,the quantity of dollars supplied in the market for foreign-currency exchange is

Accepted Answer

A)  greater than the quantity demanded and the dollar will appreciate. 
B)  greater than the quantity demanded and the dollar will depreciate. 
C)  less than the quantity demanded and the dollar will appreciate. 
D)  less than the quantity demanded and the dollar will depreciate. 
A)  greater than the quantity demanded and the dollar will appreciate. 
B)  greater than the quantity demanded and the dollar will depreciate. 
C)  less than the quantity demanded and the dollar will appreciate. 
D)  less than the quantity demanded and the dollar will depreciate.

Question 10

In the open-economy macroeconomic model,if a country's supply of loanable funds shifts right,then

Accepted Answer

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

Question 11

If U.S.residents want to buy more foreign bonds,then in the market for foreign-currency exchange the exchange rate

Accepted Answer

A)  and the quantity of dollars traded rises. 
B)  rises and the quantity of dollars traded falls. 
C)  falls and the quantity of dollars traded rises. 
D)  and the quantity of dollars traded falls. 
A)  and the quantity of dollars traded rises. 
B)  rises and the quantity of dollars traded falls. 
C)  falls and the quantity of dollars traded rises. 
D)  and the quantity of dollars traded falls.

Question 12

In the open-economy macroeconomic model,if the real exchange rate of the U.S.dollar were above its equilibrium level,the real exchange rate of the U.S.dollar would appreciate.

Accepted Answer

A) True 
 B)False

Question 13

In the open-economy macroeconomic model,the real exchange rate does not affect net capital outflow.

Accepted Answer

A) True 
 B)False

Question 14

If the demand for loanable funds shifts right,then

Accepted Answer

A)  the real interest rate and the equilibrium quantity of loanable funds both fall. 
B)  the real interest rate falls and the equilibrium quantity of loanable funds rises. 
C)  the real interest rate and the equilibrium quantity of loanable funds both rise. 
D)  the real interest rate rises and the equilibrium quantify of loanable funds falls. 
A)  the real interest rate and the equilibrium quantity of loanable funds both fall. 
B)  the real interest rate falls and the equilibrium quantity of loanable funds rises. 
C)  the real interest rate and the equilibrium quantity of loanable funds both rise. 
D)  the real interest rate rises and the equilibrium quantify of loanable funds falls.

Question 15

An increase in the budget surplus

Accepted Answer

A)  raises net exports and domestic investment. 
B)  raises net exports and reduces domestic investment. 
C)  reduces net exports and raises domestic investment. 
D)  reduces net exports and domestic investment. 
A)  raises net exports and domestic investment. 
B)  raises net exports and reduces domestic investment. 
C)  reduces net exports and raises domestic investment. 
D)  reduces net exports and domestic investment.

Question 16

Which of the following is considered part of the supply of U.S.dollars in the market for foreign-currency exchange in the open-economy macroeconomic model?

Accepted Answer

A)  both a U.S.retail chain wanting to build a store in France and a U.S.retail chain wanting to buy dresses produced in Italy 
B)  a U.S.retail chain wanting to build a store in France but not a U.S.retail chain wanting to buy dresses produced in Italy 
C)  a U.S.retail chain wanting to buy dresses produced in Italy,but not a U.S.retail chain wanting to build a store in France 
D)  neither a U.S.retail chain wanting to build a store in France nor a U.S.retail chain wanting to buy dresses produced in Italy 
A)  both a U.S.retail chain wanting to build a store in France and a U.S.retail chain wanting to buy dresses produced in Italy 
B)  a U.S.retail chain wanting to build a store in France but not a U.S.retail chain wanting to buy dresses produced in Italy 
C)  a U.S.retail chain wanting to buy dresses produced in Italy,but not a U.S.retail chain wanting to build a store in France 
D)  neither a U.S.retail chain wanting to build a store in France nor a U.S.retail chain wanting to buy dresses produced in Italy

Question 17

Which of the following would tend to shift the supply of dollars in the market for foreign-currency exchange in the open-economy macroeconomic model to the right?

Accepted Answer

A)  The exchange rate rises. 
B)  The exchange rate falls. 
C)  The expected rate of return on U.S.assets rises. 
D)  The expected rate of return on U.S.assets falls. 
A)  The exchange rate rises. 
B)  The exchange rate falls. 
C)  The expected rate of return on U.S.assets rises. 
D)  The expected rate of return on U.S.assets falls.

Question 18

If the exchange rate rises,foreign residents want to purchase ______ domestic goods and domestic residents want to purchase _____ foreign goods.In the market for foreign-currency exchange,these changes are shown as a _______ in the quantity of dollars ______.

Accepted Answer

fewer,more

Question 19

A U.S.-imposed quota on appliances would shift

Accepted Answer

A)  both the demand and supply curves in the market for foreign-currency exchange right. 
B)  both the demand and supply curves in the market for foreign-currency exchange right 
C)  only the demand curve in the market for foreign-currency exchange right . 
D)  only the supply curve in the market for foreign-currency exchange right 
A)  both the demand and supply curves in the market for foreign-currency exchange right. 
B)  both the demand and supply curves in the market for foreign-currency exchange right 
C)  only the demand curve in the market for foreign-currency exchange right . 
D)  only the supply curve in the market for foreign-currency exchange right

Question 20

In 1998 the Russian government defaulted on its bonds.According to the open-economy macroeconomic model,this should have

Accepted Answer

A)  increased Russian interest rates and net exports. 
B)  reduced Russian interest rates and net exports. 
C)  increased Russian interest rates and reduced Russian net exports. 
D)  reduced Russian interest rates and increased Russian net exports. 
A)  increased Russian interest rates and net exports. 
B)  reduced Russian interest rates and net exports. 
C)  increased Russian interest rates and reduced Russian net exports. 
D)  reduced Russian interest rates and increased Russian net exports.

Exam 32: A Macroeconomic Theory of the Open Economy

In equilibrium which of the following happens if the U.S.imposes tariffs on leather boots?

If the risk of buying U.S.assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds,then

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

When the U.S.real interest rate falls,owning U.S.assets becomes

If people decide that some country is now a more risky place to keep their saving,then at the original interest rate in that country there is a

If a government started with a budget deficit and moved to a surplus,domestic investment

Figure 19-7 -Refer to Figure 19-7.Which of the following is consistent with capital flight from Mexico?

In 2002 it looked like the Argentinean government might default on its debt (which eventually it did).The open-economy macroeconomic model predicts that this should have

If the real exchange rate for the dollar is above the equilibrium level,the quantity of dollars supplied in the market for foreign-currency exchange is

In the open-economy macroeconomic model,if a country's supply of loanable funds shifts right,then

If U.S.residents want to buy more foreign bonds,then in the market for foreign-currency exchange the exchange rate

In the open-economy macroeconomic model,if the real exchange rate of the U.S.dollar were above its equilibrium level,the real exchange rate of the U.S.dollar would appreciate.

In the open-economy macroeconomic model,the real exchange rate does not affect net capital outflow.

If the demand for loanable funds shifts right,then

An increase in the budget surplus

Which of the following is considered part of the supply of U.S.dollars in the market for foreign-currency exchange in the open-economy macroeconomic model?

Which of the following would tend to shift the supply of dollars in the market for foreign-currency exchange in the open-economy macroeconomic model to the right?

If the exchange rate rises,foreign residents want to purchase ______ domestic goods and domestic residents want to purchase _____ foreign goods.In the market for foreign-currency exchange,these changes are shown as a _______ in the quantity of dollars ______.

A U.S.-imposed quota on appliances would shift

In 1998 the Russian government defaulted on its bonds.According to the open-economy macroeconomic model,this should have

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 rises,foreign residents want to purchase ____ domestic goods and domestic residents want to purchase _ foreign goods.In the market for foreign-currency exchange,these changes are shown as a _ in the quantity of dollars __.