Exam 36: Exchange Rates and the Macroeconomy

Compare the effectiveness of fiscal policy in an open economy with mobile international capital to fiscal policy in a closed economy.Why is it different? Use an appropriate diagram to illustrate your answer.

A large tax cut in the United States should lead to an increase in the trade deficit.

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

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

One of the results of the strong economic growth in the United States relative to the rest of the world is a

What does macroeconomic theory predict as the main economic effect of a reduction in the budget deficit?

If currency depreciates,

Figure 36-5 ​ -Which of the graphs in Figure 36-5 are consistent with a depreciation of the U.S.dollar and an increase in net exports caused by a decrease in U.S.interest rates?

The expected effect of the Bush tax cuts would be a(n)

International capital flows in an open economy have the effect of

The expected effects of a tighter monetary policy are

An expansionary fiscal policy will lead to

Table 36-2 ​ -In Table 36-2, what is equilibrium GDP?

If the federal government has a deficit, and the current account is in balance, then

Figure 36-8 ​ -Which of the graphs in Figure 36-8 illustrates the AD-AS shifts induced by the foreign sector following an increase in the U.S.federal deficit?

International capital flows strengthen

A decline in interest rates tends to expand the economy by

When the dollar depreciates, the prices of imported inputs rise and the U.S.aggregate supply curve, therefore, shifts inward, pushing up the prices of American-made goods and services.

When the dollar appreciates, the prices of imported inputs

If European economies experience a period of sustained recession and the United States does not, what will happen in the United States?