Question 1

A depreciation of the U.S.dollar has the same effect on aggregate supply as an increase in foreign prices.

Accepted Answer

A) True 
 B)False

Question 2

Do you agree that currency depreciation will lead to an increase in the debt burden of the companies that borrow in foreign currency? Explain with an example.

Accepted Answer

Companies that borrow in foreign currenc

Question 3

A currency appreciation should

Accepted Answer

A)  reduce net exports and therefore increase aggregate demand. 
B)  raise net exports and therefore decrease aggregate demand. 
C)  reduce net exports and therefore decrease aggregate demand. 
D)  raise net exports and therefore increase aggregate demand. 
A)  reduce net exports and therefore increase aggregate demand. 
B)  raise net exports and therefore decrease aggregate demand. 
C)  reduce net exports and therefore decrease aggregate demand. 
D)  raise net exports and therefore increase aggregate demand.

Question 4

Booms and recessions are transmitted to other countries.

Accepted Answer

A) True 
 B)False

Question 5

A rise in interest rates tends to contract the economy by appreciating the currency and reducing net exports.Provide the reasoning behind this conclusion.

Accepted Answer

Interest rate differentials and capital

Question 6

If (T - G) = (X - IM), then (S - I)

Accepted Answer

A)  is greater than zero. 
B)  is zero. 
C)  is less than zero. 
D)  cannot be calculated. 
A)  is greater than zero. 
B)  is zero. 
C)  is less than zero. 
D)  cannot be calculated.

Question 7

The anticipated effect of contractionary monetary policy is

Accepted Answer

A)  increase in aggregate demand. 
B)  fall in interest rates. 
C)  increased capital outflow. 
D)  appreciation of the currency. 
A)  increase in aggregate demand. 
B)  fall in interest rates. 
C)  increased capital outflow. 
D)  appreciation of the currency.

Question 8

Which of the following is correct?

Accepted Answer

A)  IM + X = G - T 
B)  I + G + T = S + X - M 
C)  I + G + X = S + T + IM 
D)  I + T + G = S - X - IM 
A)  IM + X = G - T 
B)  I + G + T = S + X - M 
C)  I + G + X = S + T + IM 
D)  I + T + G = S - X - IM

Question 9

Which of the following would lead to a depreciating dollar?

Accepted Answer

A)  a higher federal deficit 
B)  lower interest rates 
C)  higher interest rates 
D)  contractionary monetary policy 
A)  a higher federal deficit 
B)  lower interest rates 
C)  higher interest rates 
D)  contractionary monetary policy

Question 10

Figure 20-6
  
-In Figure 20-6, which of the following will cause a movement from equilibrium at point A to equilibrium at point C?

Accepted Answer

A)  an appreciation of the dollar 
B)  a depreciation of the dollar 
C)  an appreciation of the Japanese yen 
D)  an increase in the U.S.price level 
A)  an appreciation of the dollar 
B)  a depreciation of the dollar 
C)  an appreciation of the Japanese yen 
D)  an increase in the U.S.price level

Question 11

Expansionary fiscal policy in an open economy has a

Accepted Answer

A)  greater effect than in a closed economy. 
B)  similar effect in a closed economy. 
C)  smaller effect than in a closed economy. 
D)  greater effect than monetary policy. 
A)  greater effect than in a closed economy. 
B)  similar effect in a closed economy. 
C)  smaller effect than in a closed economy. 
D)  greater effect than monetary policy.

Question 12

In an open economy, the government deficit is 600 and saving exceeds investment by 500, so in equilibrium the trade deficit (IM - X) must be

Accepted Answer

A)  100. 
B)  200. 
C)  300. 
D)  700. 
A)  100. 
B)  200. 
C)  300. 
D)  700.

Question 13

If the dollar appreciates, American consumers will buy more foreign goods and services.

Accepted Answer

A) True 
 B)False

Question 14

If the demand effect dominates during a currency depreciation, then

Accepted Answer

A)  real GDP should fall. 
B)  real GDP should increase. 
C)  the price level should fall. 
D)  net exports should decrease. 
A)  real GDP should fall. 
B)  real GDP should increase. 
C)  the price level should fall. 
D)  net exports should decrease.

Exam 37: Exchange Rates and the Macroeconomy

A depreciation of the U.S.dollar has the same effect on aggregate supply as an increase in foreign prices.

Do you agree that currency depreciation will lead to an increase in the debt burden of the companies that borrow in foreign currency? Explain with an example.

A currency appreciation should

Booms and recessions are transmitted to other countries.

A rise in interest rates tends to contract the economy by appreciating the currency and reducing net exports.Provide the reasoning behind this conclusion.

If (T - G) = (X - IM), then (S - I)

The anticipated effect of contractionary monetary policy is

Which of the following is correct?

Which of the following would lead to a depreciating dollar?

Figure 20-6 -In Figure 20-6, which of the following will cause a movement from equilibrium at point A to equilibrium at point C?

Expansionary fiscal policy in an open economy has a

In an open economy, the government deficit is 600 and saving exceeds investment by 500, so in equilibrium the trade deficit (IM - X) must be

If the dollar appreciates, American consumers will buy more foreign goods and services.

If the demand effect dominates during a currency depreciation, then

What Is Economics?

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: The Importance of Marginal Analysis

Securities: Business Finance, and the Economy: The Tail that Wags the Dog?

The Firm and the Industry under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: The Price System

The Shortcomings of Free Markets

The Market's Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation?

Bringing in the Supply Side: Unemployment and Inflation?

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder?

Filters