Exam 16: Macroeconomic Policy in an Open-economy

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

International policy coordination is plagued by differing national economic objectives,institutions,political climates,and phases in the business cycle.

Under a fixed exchange-rate system and high capital mobility,an expansion in the domestic money supply leads to:

Assume a system of floating exchange rates.In response to relatively high interest rates abroad,suppose domestic investors place their funds in foreign capital markets.The result would be

Nations have typically placed greater importance to the goal of internal balance than to the goal of external balance.

Under a fixed exchange-rate system and high capital mobility,a contractionary fiscal policy leads to a:

The Bonn Summit of 1978 and Plaza Accord of 1985 are examples of international policy coordination.

Under a system of managed-floating exchange rates with heavy exchange rate intervention:

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

Under a fixed exchange-rate system and high capital mobility,an expansionary fiscal policy leads to a:

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

Suppose the United States faces domestic inflation and a current account surplus.Should the United States revalue the dollar,one would expect the:

An expenditure-reducing policy would consist of a decrease in:

Given an open economy with high capital mobility and floating exchange rates,suppose an expansionary monetary policy is implemented to combat recession.The initial and secondary effects of the policy have conflicting effects on aggregate demand,thus weakening the policy's expansionary effect.

The goals of the Plaza Agreement of 1985 were to combat protectionism in the U.S.Congress,promote world economic expansion by stimulating demand in Germany and Japan,and to ease the burden of the U.S.debt service.

What policy instrument should be used when demand-pull inflation exists?

An expenditure-increasing policy would consist of an increase in:

In a closed economy,which of the following will cause the economy's aggregate demand curve to shift to the right?

The Group of five (G-5) nations include Japan,Germany,China,and Australia.

A nation realizes internal balance if economy achieves full employment and price stability.