Exam 32: A Macroeconomic Theory of the Open Economy

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

U.S.net capital outflow

Figure 19-4 -Refer to Figure 19-5.Starting from r₂ and E₃,an increase in the budget deficit can be illustrated as a move to

An increase in the U.S.government budget deficit shifts the

If the demand for dollars in the market for foreign-currency exchange shifts left,then the exchange rate

A trade policy is a government policy

At the equilibrium real interest rate in the open-economy macroeconomic model,the amount that people want to save equals the desired quantity of

If the British government raised its budget deficit,then the pound (Britain's currency)would

Which of the following make(s)demand for U.S.dollars in the market for foreign-currency exchange higher than otherwise?

In an open economy,national saving equals

In the open-economy macroeconomic model,the source of the supply of loanable funds is

A higher U.S.interest rate discourages Americans from buying foreign assets and encourages foreigners to buy U.S.assets.

Refer to Figure 19-3.The curve in panel b shows that as the interest rate rises,

Capital flight raises a country's interest rate.

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

If the budget deficit increases,then

If C+I+G>Y,then net exports and net capital outflow are both less than zero.

Which of the following would do the most to reduce a trade deficit?

When a country experiences capital flight its currency

Other things the same,if the expected return on U.S.assets increased,the