Exam 32: A Macroeconomic Theory of the Open Economy

If for some reason U.S. residents increase their purchases of foreign assets, then all else constant which curve in the market for foreign-currency exchange shifts and which direction does it shift? What happens to the exchange rate?

If a country has a negative net capital outflow, then

In the open-economy macroeconomic model, if there were a surplus in the market for foreign-currency exchange, the real exchange rate would appreciate.

Which of the following is most likely to increase exports?

Which of the following contains a list only of things that decrease when the budget deficit of the U.S. increases?

Suppose that India has a government budget surplus, and then goes into deficit. This change would

If there is a surplus in the market for loanable funds, the resulting change in the real interest rate

A firm produces construction equipment, some of which it exports. Which of the following effects of an increase in the government budget deficit would likely reduce the quantity of equipment it sells?

Figure 32-7 Refer to this diagram of the open-economy macroeconomic model of the Mexican economy to answer the questions below. -Refer to Figure 32-7. Suppose that the Mexican economy starts at r2 and e3. Which of the following is consistent with the effects of capital flight?

If U.S. residents chose to travel overseas less due to concerns about the safety of foreign travel, then in the open-economy macroeconomic model

During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would

In an open economy, the demand for loanable funds comes from

In the open-economy macroeconomic model, if foreign interest rates rise and the U.S interest rate stays the same then, U.S.

If the exchange rate falls, domestic goods become relatively ______ expensive. This change in the affordability of domestic goods makes domestic goods _____ attractive to domestic residents. So, _______ ______.

If a government of a country with a zero trade balance increases its budget deficit, then the real exchange rate

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

Figure 32-4 Refer to this diagram of the open-economy macroeconomic model to answer the questions below. -Refer to Figure 32-4. Suppose that the government goes from a budget surplus to a budget deficit. The effects of the change could be illustrated by

If a country's exchange rate rises, what happens to its exports and what happens to its imports?

In 2009 Greece's budget deficit rose and people became worried about the ability of the Greek government to make payments on its debt. Which of the these events reduces a country's real exchange rate?

In the open-economy macroeconomic model, net exports equal the quantity of dollars demanded in the market for foreign currency exchange.