Question 1

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

Accepted Answer

A) demand for loanable funds right and decreases investment spending. 
B) supply of loanable funds right and increases investment spending. 
C) supply of loanable funds left and decreases investment spending. 
D) None of the above is correct. 
A) demand for loanable funds right and decreases investment spending. 
B) supply of loanable funds right and increases investment spending. 
C) supply of loanable funds left and decreases investment spending. 
D) None of the above is correct.

Question 2

In the open-economy macroeconomic model, the market for loanable funds equates national saving with

Accepted Answer

A) domestic investment. 
B) net capital outflow. 
C) national consumption minus domestic investment. 
D) None of the above is correct. 
A) domestic investment. 
B) net capital outflow. 
C) national consumption minus domestic investment. 
D) None of the above is correct.

Question 3

In 2002, the United States placed higher tariffs on imports of steel. According to the open-economy macroeconomic model this policy should have

Accepted Answer

A) reduced imports into the United States and made U.S. net exports rise. 
B) reduced imports into the United States and made the net supply of dollars in the foreign exchange market shift right. 
C) reduced imports of steel into the United States, but reduced U.S. exports of other goods by an equal amount. 
D) reduced imports of steel into the United States and increased U.S. exports of other goods by an equal amount. 
A) reduced imports into the United States and made U.S. net exports rise. 
B) reduced imports into the United States and made the net supply of dollars in the foreign exchange market shift right. 
C) reduced imports of steel into the United States, but reduced U.S. exports of other goods by an equal amount. 
D) reduced imports of steel into the United States and increased U.S. exports of other goods by an equal amount.

Question 4

When a country experiences capital flight, its net capital outflow,

Accepted Answer

A) which is part of the demand for loanable funds, increases. 
B) which is part of the supply of loanable funds, increases. 
C) which is part of the demand for loanable funds, decreases. 
D) which is part of the supply of loanable funds, decreases. 
A) which is part of the demand for loanable funds, increases. 
B) which is part of the supply of loanable funds, increases. 
C) which is part of the demand for loanable funds, decreases. 
D) which is part of the supply of loanable funds, decreases.

Question 5

When a country's government budget deficit increases,

Accepted Answer

A) the real exchange rate of its currency and its net exports increase. 
B) the real exchange rate of its currency and its net exports decrease. 
C) the real exchange rate of its currency increases and its net exports decrease. 
D) the real exchange rate of its currency decreases and its net exports increase. 
A) the real exchange rate of its currency and its net exports increase. 
B) the real exchange rate of its currency and its net exports decrease. 
C) the real exchange rate of its currency increases and its net exports decrease. 
D) the real exchange rate of its currency decreases and its net exports increase.

Question 6

In the open-economy macroeconomic model, other things the same, an increase in the exchange rate raises the quantity of dollars supplied in the market for foreign-currency exchange.

Accepted Answer

A) True 
 B)False

Question 7

Refer to Budget in Recession. In the market for loanable funds which curve(s) does this change in the deficit shift? Which direction does it shift?

Accepted Answer

Since the budget def

Question 8

Although trade policies do not affect a country's overall trade balance, they do affect specific firms and industries.

Accepted Answer

A) True 
 B)False

Question 9

Other things the same, which of the following would shift the supply of dollars in the market for foreign exchange to the right?

Accepted Answer

A) foreigners want to buy more U.S. bonds 
B) foreigners want to buy fewer U.S. bonds 
C) foreigners want to buy more U.S. goods and services. 
D) foreigners want to buy fewer U.S. goods and services. 
A) foreigners want to buy more U.S. bonds 
B) foreigners want to buy fewer U.S. bonds 
C) foreigners want to buy more U.S. goods and services. 
D) foreigners want to buy fewer U.S. goods and services.

Question 10

In the open-economy macroeconomic model, the supply of dollars in the market for foreign-currency exchange is upward sloping.

Accepted Answer

A) True 
 B)False

Question 11

If the U.S. government imposes a quota on leather shoes, then net exports of U.S. shoes would

Accepted Answer

A) rise. 
B) not change. 
C) fall. 
D) rise, not change, or fall depending on what happened to the exchange rate. 
A) rise. 
B) not change. 
C) fall. 
D) rise, not change, or fall depending on what happened to the exchange rate.

Question 12

If the demand for net exports rises, which of the following happens in the open-economy macroeconomic model?

Accepted Answer

A) the exchange rate rises 
B) the interest rate falls 
C) net capital outflow rises 
D) All of the above are correct. 
A) the exchange rate rises 
B) the interest rate falls 
C) net capital outflow rises 
D) All of the above are correct.

Question 13

An increase in the government budget deficit shifts the supply of domestic currency in the market for foreign exchange to the right.

Accepted Answer

A) True 
 B)False

Question 14

Fill in the table below with the direction of the variables that change in response to the events in the first column.

Accepted Answer

The answer of Fill in the table below with the...

Question 15

Refer to Shoe Quota. Overall as a result of this change in policy, what happens to exports, imports, and net exports?

Accepted Answer

Exports and imports

Question 16

Other things the same, if U.S. residents choose to buy more Chinese goods and services

Accepted Answer

A) the demand for dollars in the market for foreign-currency exchange shifts right. 
B) the demand for dollars in the market for foreign-currency exchange shifts left. 
C) the supply of dollars in the market for foreign-currency exchange shifts right. 
D) the supply of dollars in the market for foreign-currency exchange shifts left. 
A) the demand for dollars in the market for foreign-currency exchange shifts right. 
B) the demand for dollars in the market for foreign-currency exchange shifts left. 
C) the supply of dollars in the market for foreign-currency exchange shifts right. 
D) the supply of dollars in the market for foreign-currency exchange shifts left.

Question 17

When Mexico suffered from capital flight in 1994, the U.S. real interest rate

Accepted Answer

A) rose and the real exchange rate of the dollar appreciated. 
B) rose and the real exchange rate of the dollar depreciated. 
C) fell and the real exchange rate of the dollar appreciated. 
D) fell and the real exchange rate of the dollar depreciated. 
A) rose and the real exchange rate of the dollar appreciated. 
B) rose and the real exchange rate of the dollar depreciated. 
C) fell and the real exchange rate of the dollar appreciated. 
D) fell and the real exchange rate of the dollar depreciated.

Question 18

If the U.S. imposed an import quota on furniture, U.S. net exports of furniture

Accepted Answer

A) and net exports of other U.S. goods and services would rise. 
B) would rise but net exports of other goods and services would fall. 
C) would fall but net exports of other goods and services would rise. 
D) and net exports of other U.S. goods and services would fall. 
A) and net exports of other U.S. goods and services would rise. 
B) would rise but net exports of other goods and services would fall. 
C) would fall but net exports of other goods and services would rise. 
D) and net exports of other U.S. goods and services would fall.

Question 19

If a country raises its budget deficit, then its

Accepted Answer

A) net capital outflow and net exports rise. 
B) net capital outflow rises and net exports fall. 
C) net capital outflow falls and net exports rise. 
D) net capital outflow and net exports fall. 
A) net capital outflow and net exports rise. 
B) net capital outflow rises and net exports fall. 
C) net capital outflow falls and net exports rise. 
D) net capital outflow and net exports fall.

Question 20

If a tariff on beef were implemented, which of the following would rise?

Accepted Answer

A) exports and net exports 
B) exports but not net exports 
C) net exports but not exports 
D) neither exports nor net exports 
A) exports and net exports 
B) exports but not net exports 
C) net exports but not exports 
D) neither exports nor net exports

Exam 32: A Macroeconomic Theory of the Open Economy

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

In the open-economy macroeconomic model, the market for loanable funds equates national saving with

In 2002, the United States placed higher tariffs on imports of steel. According to the open-economy macroeconomic model this policy should have

When a country experiences capital flight, its net capital outflow,

When a country's government budget deficit increases,

In the open-economy macroeconomic model, other things the same, an increase in the exchange rate raises the quantity of dollars supplied in the market for foreign-currency exchange.

Refer to Budget in Recession. In the market for loanable funds which curve(s) does this change in the deficit shift? Which direction does it shift?

Although trade policies do not affect a country's overall trade balance, they do affect specific firms and industries.

Other things the same, which of the following would shift the supply of dollars in the market for foreign exchange to the right?

In the open-economy macroeconomic model, the supply of dollars in the market for foreign-currency exchange is upward sloping.

If the U.S. government imposes a quota on leather shoes, then net exports of U.S. shoes would

If the demand for net exports rises, which of the following happens in the open-economy macroeconomic model?

An increase in the government budget deficit shifts the supply of domestic currency in the market for foreign exchange to the right.

Fill in the table below with the direction of the variables that change in response to the events in the first column.

Refer to Shoe Quota. Overall as a result of this change in policy, what happens to exports, imports, and net exports?

Other things the same, if U.S. residents choose to buy more Chinese goods and services

When Mexico suffered from capital flight in 1994, the U.S. real interest rate

If the U.S. imposed an import quota on furniture, U.S. net exports of furniture

If a country raises its budget deficit, then its

If a tariff on beef were implemented, which of the following would rise?

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

Applications: 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 Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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