Exam 12: A Macroeconomic Theory of the Open Economy

An increase in SA net capital outflow increases the supply of rands in the market for foreign currency exchange and decreases the real exchange rate of the rands.

An increase in the government budget deficit

How are the identities S = NCO + I and NCO = NX related to the foreign currency exchange market and the loanable funds market?

Suppose that the Turkish government budget deficit increases.What curves in the open economy macroeconomic model shift? Explain why each curve shifts the direction it does.

State what, if anything, each of the following does to the supply or demand of loanable funds. a.Net capital outflow increases at each interest rate. b.Domestic investment increases at each interest rate. c.The government deficit increases. d.Private saving increases.

Increased foreign investment in SA causes the

A rise in SA's net exports will increase the demand for the SA rands in the market for foreign currency exchange and the rand will appreciate in value.

An increase in the SA government budget deficit

If a country had capital flight, then the real exchange rate would

If SA imposes a quota on the importing of clothing produced in China, so reducing SA imports of clothing, which of the following is true regarding the market for foreign currency exchange?

The supply of foreign exchange is

If a county becomes more likely to default on its bonds, what happens to that country's interest rate and exchange rate? Explain.

What impact do trade policies, such as tariffs and quotas, have on the standard of living?

Which of the following statements regarding the market for foreign currency exchange is true? An increase in SA net exports

An increase in the government's budget deficit shifts the supply of loanable funds to the right.

Other things the same, a lower real interest rate decreases the quantity of

Which of the following groups would be most harmed by a SA government budget deficit?

Capital flight

If a country experiences a tremendous increase in the demand for loanable funds as many new infrastructure building projects are initiated, then the interest rate will

Which of the following groups would NOT benefit from an SA import quota on Japanese cars?