Exam 16: Macroeconomic Policy in an Open-economy

Expenditure-changing policies modify the direction of aggregate demand,shifting it between domestic output and imports.

Fiscal and monetary policies are generally used to combat domestic recession and inflation and have secondary effects on the balance of payments.

A nation experiences overall balance if it achieves:

All of the following are obstacles to international economic policy coordination except:

Suppose the United States faces domestic recession and a current account deficit.Should the United States devalue the dollar,one would expect the:

Suppose that Brazil faces domestic inflation and a current account deficit.Should Brazil devalue its currency,one would expect the:

The appropriate expenditure-switching policy to correct a current account surplus is:

Which policy is an expenditure-switching policy?

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

Currency devaluation and revaluation are considered to be expenditure-changing policies since they alter a country's aggregate demand for goods and services.

Suppose a central bank prevents an appreciation of its currency by intervening in the foreign exchange market and selling its currency for foreign currency.This causes the

A nation experiences external balance if it achieves: