Exam 32: A Macroeconomic Theory of the Open Economy

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

Refer to Figure 32-3. Which curve shows the relation between the exchange rate and net exports?

When fear of default on bonds issued by U.S. corporations decline, then

If a government increases its budget deficit, then interest rates

In 2009 Greece's budget deficit rose and people became worried about the ability of the Greek government to continue to make payments on its debt. Which of these events raise a country's interest rates?

Figure 32-5 Refer to this diagram of the open-economy macroeconomic model to answer the questions below. -Refer to Figure 32-5. Starting from 3% and .75, an increase in the government budget deficit can be illustrated as a move to

Because depreciation of the real exchange rate of the dollar increases U.S. net exports, the demand curve for dollars in the foreign-currency exchange market is downward sloping.

In 2002, the United States imposed restrictions on the importation of steel into the United States. The open-economy macroeconomic model shows that such a policy would

Which of the following results if the U.S. imposes an import quota on computer components?

If a country's budget deficit increases, then in the market for foreign-currency exchange,

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

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

Other things the same, which curve in the market for foreign-currency exchange shifts and which direction does it shift if net capital outflow rises?

In the open economy macroeconomic model, the price that balances supply and demand in the market for foreign-currency exchange model is the

An increase in the U.S. interest rate discourages Americans from buying foreign assets and encourages foreigners to buy U.S. assets.

Other things the same, if the U.S. interest rate rises, U.S. assets become ____ attractive. So, desired net capital outflow _____. This change in net capital outflow, shifts the __________ curve in the market for foreign-currency exchange to the ______.

A large and sudden movement of funds out of a country is called

The real exchange rate measures the

Refer to Budget Reform. What does this policy change do to the equilibrium values of the interest rate and the quantity of loanable funds?

If a country removes an import quota, what happens to its exchange rate, its exports, and its net exports?