Exam 32: A Macroeconomic Theory of the Open Economy

If the budget deficit increases, then

If the U.S. government imposes a quota on imports of jet planes, then

Other things the same, a decrease in the real interest rate raises the quantity of

U.S. net capital outflow

From 1980 to 1987, U.S. net capital outflows decreased. According to the open-economy macroeconomic model, which of the following could have caused this?

In the open-economy macroeconomic model, the key determinant of net capital outflow is the

Which of the following is consistent with moving from a shortage to equilibrium in the market for foreign currency exchange?

An import quota imposed by the U.S. would reduce U.S. imports, but have no impact on U.S. exports.

When a country experiences capital flight its interest rate

If a country makes political reforms so that people now believe this country's assets are less risky, what happens to its interest rate, its exchange rate, and its net exports?

What effect do protectionist policies have on the trade deficit?

If the demand for loanable funds shifts left, then

If interest rates rose more in the U.S. than in France, then other things the same

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

If the quantity of loanable funds supplied is less than the quantity demanded, then there is a

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

If at a given exchange rate U.S. citizens wanted to buy more foreign bonds

Refer to Shoe Quota. As a result of the quota, is there initially a surplus or a shortage in the market for foreign-currency exchange? Carefully explain how people's response to this surplus or shortage and the resulting changes in their behavior leads to a new equilibrium exchange rate.

Because a government budget deficit represents

Refer to Budget Reform. What does this policy change do to net capital outflows? Defend your answer.