Question 1

The international trade response to a contractionary monetary policy will cause aggregate demand to shift ____ and aggregate supply to shift ____.

Accepted Answer

A)  outward, outward 
B)  inward, outward 
C)  outward, inward 
D)  inward, inward 
A)  outward, outward 
B)  inward, outward 
C)  outward, inward 
D)  inward, inward

Question 2

Did the large U.S.budget deficits in the 1980s "crowd out" investment as some economists had predicted?

Accepted Answer

A)  Yes, investment dropped as predicted. 
B)  Yes, although investment did not fall nearly as much as some had feared. 
C)  No, investment was not crowded out, but net exports dropped. 
D)  No, no crowding out at all occurred. 
A)  Yes, investment dropped as predicted. 
B)  Yes, although investment did not fall nearly as much as some had feared. 
C)  No, investment was not crowded out, but net exports dropped. 
D)  No, no crowding out at all occurred.

Question 3

An exchange rate appreciation will shift the aggregate demand curve inward.

Accepted Answer

A) True 
 B)False

Question 4

Figure 20-6
  
-In Figure 20-6, which point represents equilibrium at the lowest exchange rate?

Accepted Answer

A)  E 
B)  F 
C)  G 
D)  H 
A)  E 
B)  F 
C)  G 
D)  H

Question 5

Appreciation of the Japanese Yen would lead to

Accepted Answer

A)  outward shift in the aggregate supply curve for Japan. 
B)  upward shift in the aggregate demand curve for Japan. 
C)  downward shift in the aggregate supply curve for Japan. 
D)  downward shift in the aggregate demand curve for Japan. 
A)  outward shift in the aggregate supply curve for Japan. 
B)  upward shift in the aggregate demand curve for Japan. 
C)  downward shift in the aggregate supply curve for Japan. 
D)  downward shift in the aggregate demand curve for Japan.

Question 6

The worst remedy for curing the U.S.trade deficit is to

Accepted Answer

A)  increase U.S.personal saving. 
B)  reduce the budget deficit. 
C)  encourage all nations to lower trade barriers. 
D)  limit imports by imposing tariffs, quotas, and other trade restrictions. 
A)  increase U.S.personal saving. 
B)  reduce the budget deficit. 
C)  encourage all nations to lower trade barriers. 
D)  limit imports by imposing tariffs, quotas, and other trade restrictions.

Question 7

The expected effects of fiscal contraction are

Accepted Answer

A)  higher real interest rates. 
B)  exchange rate depreciation. 
C)  increased trade deficit. 
D)  All of the above are correct. 
A)  higher real interest rates. 
B)  exchange rate depreciation. 
C)  increased trade deficit. 
D)  All of the above are correct.

Question 8

Figure 20-8
  
-Which of the graphs in Figure 20-8 represents the effects of a currency appreciation?

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  4 
A)  1 
B)  2 
C)  3 
D)  4

Question 9

If the dollar falls in value compared to other currencies, what will happen in the United States?

Accepted Answer

A)  a decrease in aggregate demand 
B)  an increase in aggregate supply 
C)  a decrease in aggregate supply 
D)  a decrease in the U.S.price level 
A)  a decrease in aggregate demand 
B)  an increase in aggregate supply 
C)  a decrease in aggregate supply 
D)  a decrease in the U.S.price level

Question 10

The depreciation of the Japanese yen in 2002 would ease their problems with regard to recession.

Accepted Answer

A) True 
 B)False

Question 11

When the dollar appreciates, the cost to Americans of foreign goods

Accepted Answer

A)  rises and the CPI falls. 
B)  rises and the CPI rises. 
C)  falls and the CPI rises. 
D)  falls and the CPI falls. 
A)  rises and the CPI falls. 
B)  rises and the CPI rises. 
C)  falls and the CPI rises. 
D)  falls and the CPI falls.

Question 12

Define the following terms and explain their importance to the study of macroeconomics:
a.open economy
b.closed economy
c.budget deficits and trade deficits
d.international capital flows

Accepted Answer

a.An open economy is one that trades wit

Question 13

Table 20-1
Suppose the economy of Macroland is described by the following:
C = 200 + .8DI (DI = disposable income)
I = 300 + .2Y - 50r (Y = GDP)
(r, the interest rate, is measured in percentage points.For example, a 9 percent interest rate is r = 9).
For this economy, assume that the Federal Reserve uses its monetary policy to peg the interest rate at
r = 5
G = 750
T = .25Y
X = 200
M = 150 + .2Y
Hint: DI = Y - T
-From Table 20-1, find the trade deficit or surplus.

Accepted Answer

A)  475 deficit 
B)  75 deficit 
C)  75 surplus 
D)  475 surplus 
A)  475 deficit 
B)  75 deficit 
C)  75 surplus 
D)  475 surplus

Question 14

Protectionism may reduce imports, and it will also

Accepted Answer

A)  appreciate the dollar, reducing exports. 
B)  appreciate the dollar, increasing exports. 
C)  depreciate the dollar, increasing exports. 
D)  depreciate the dollar, reducing exports. 
A)  appreciate the dollar, reducing exports. 
B)  appreciate the dollar, increasing exports. 
C)  depreciate the dollar, increasing exports. 
D)  depreciate the dollar, reducing exports.

Question 15

An increase in the value of the U.S.dollar relative to the Japanese yen will

Accepted Answer

A)  increase aggregate demand in the United States. 
B)  decrease aggregate supply in the United States. 
C)  increase aggregate demand in Japan. 
D)  increase aggregate supply in Japan. 
A)  increase aggregate demand in the United States. 
B)  decrease aggregate supply in the United States. 
C)  increase aggregate demand in Japan. 
D)  increase aggregate supply in Japan.

Question 16

Foreign trade will have no impact on real GDP when

Accepted Answer

A)  exports exceed imports. 
B)  exports equal imports. 
C)  imports exceed exports. 
D)  exports equal zero. 
A)  exports exceed imports. 
B)  exports equal imports. 
C)  imports exceed exports. 
D)  exports equal zero.

Question 17

Figure 20-6
  
-In Figure 20-6, an expansive fiscal policy in a closed economy results in an equilibrium at point E.In an open economy, allowing for the effects of the induced change in the currency value, the final equilibrium would be point

Accepted Answer

A)  B. 
B)  F. 
C)  J. 
D)  H. 
A)  B. 
B)  F. 
C)  J. 
D)  H.

Question 18

What are some of the suggested remedies for the U.S.trade deficits? What remedies have been attempted? What remedies are left to try?

Accepted Answer

At certain points in the business cycle,

Question 19

Figure 20-9
  
-Figure 20-9 shows aggregate expenditures when net exports are fixed and aggregate expenditures are variable.The autonomous spending multiplier is

Accepted Answer

A)  smaller when net exports are fixed. 
B)  smaller when net exports are variable. 
C)  larger when net exports are variable. 
D)  the same whether net exports are fixed or variable. 
A)  smaller when net exports are fixed. 
B)  smaller when net exports are variable. 
C)  larger when net exports are variable. 
D)  the same whether net exports are fixed or variable.

Question 20

A currency depreciation will put upward pressure on the price level.

Accepted Answer

A) True 
 B)False

Exam 37: Exchange Rates and the Macroeconomy

The international trade response to a contractionary monetary policy will cause aggregate demand to shift ____ and aggregate supply to shift ____.

Did the large U.S.budget deficits in the 1980s "crowd out" investment as some economists had predicted?

An exchange rate appreciation will shift the aggregate demand curve inward.

Figure 20-6 -In Figure 20-6, which point represents equilibrium at the lowest exchange rate?

Appreciation of the Japanese Yen would lead to

The worst remedy for curing the U.S.trade deficit is to

The expected effects of fiscal contraction are

Figure 20-8 -Which of the graphs in Figure 20-8 represents the effects of a currency appreciation?

If the dollar falls in value compared to other currencies, what will happen in the United States?

The depreciation of the Japanese yen in 2002 would ease their problems with regard to recession.

When the dollar appreciates, the cost to Americans of foreign goods

Define the following terms and explain their importance to the study of macroeconomics: a.open economy b.closed economy c.budget deficits and trade deficits d.international capital flows

Protectionism may reduce imports, and it will also

An increase in the value of the U.S.dollar relative to the Japanese yen will

Foreign trade will have no impact on real GDP when

Figure 20-6 -In Figure 20-6, an expansive fiscal policy in a closed economy results in an equilibrium at point E.In an open economy, allowing for the effects of the induced change in the currency value, the final equilibrium would be point

What are some of the suggested remedies for the U.S.trade deficits? What remedies have been attempted? What remedies are left to try?

Figure 20-9 -Figure 20-9 shows aggregate expenditures when net exports are fixed and aggregate expenditures are variable.The autonomous spending multiplier is

A currency depreciation will put upward pressure on the price level.

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

The international trade response to a contractionary monetary policy will cause aggregate demand to shift and aggregate supply to shift .