Exam 16: Macroeconomic Policy in an Open-economy

Given fixed exchange rates,assume Mexico initiates expansionary monetary and fiscal policies to combat recession.These policies will also:

Given an open economy with high capital mobility and floating exchange rates,suppose an expansionary fiscal policy is implemented to combat recession.The initial and secondary effects of the policy

A problem that economic policy makers confront when attempting to promote both internal and external balance for the nation is that monetary or fiscal policies aimed at the domestic sector also have impacts on:

A nation experiences internal balance if it achieves:

Given an open economy with high capital mobility,fiscal policy is strengthened under fixed exchange rates.

Expenditure-switching policies include currency revaluation,currency devaluation,and direct controls such as tariffs,quotas,and subsidies.

Under floating exchange rates and high capital mobility,an expansionary monetary policy would help a country resolve a recession and a current account deficit.

Most industrial countries generally considered ____ as the most important economic goal.

Changes in a country's net exports,investment spending,or government spending will cause its aggregate demand curve to shift.

What happens to the balance of payments under a fixed exchange rate system,when expansionary or contractionary monetary policy is used?

Was the Plaza Agreement of 1985 a success?

When a nation realizes external balance

Direct controls may take the form of

The Plaza Agreement of 1985 and Louvre Accord of 1987 are examples of:

Suppose a central bank prevents a depreciation of its currency by intervening in the foreign exchange market and buying its currency with foreign currency.This causes the

Given an open economy with high capital mobility,all of the following statements are true except:

Given an open economy with high capital mobility and fixed exchange rates,suppose an expansionary fiscal policy is implemented to combat recession.The initial and secondary effects of the policy cause aggregate demand to increase,thus strengthening the policy's expansionary effect.

Expenditure-switching policies alter the level of total spending (aggregate demand) for goods and services produced domestically and those imported.

A nation realizes external balance when its current account is in equilibrium.

Given a system of floating exchange rates,a contractionary monetary policy by the Federal Reserve will cause