Question 1

If a country's government increases its budget deficit, then the

Accepted Answer

A) supply of loanable funds will increase. 
B) supply of loanable funds will decrease. 
C) real interest rate will fall. 
D) real exchange rate will fall. 
A) supply of loanable funds will increase. 
B) supply of loanable funds will decrease. 
C) real interest rate will fall. 
D) real exchange rate will fall.

Question 2

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 SA net exports?

Accepted Answer

A) Net exports will rise. 
B) None of these answers. 
C) Net exports will fall. 
D) Net exports will remain unchanged. 
A) Net exports will rise. 
B) None of these answers. 
C) Net exports will fall. 
D) Net exports will remain unchanged.

Question 3

Consider this diagram of the market for foreign currency exchange.If the US government decides to increase import tariffs on imported steel, we could expect the

Accepted Answer

A) demand for dollars to shift from D1 to D2. 
B) demand for dollars to shift from D2 to D1. 
C) supply of dollars to increase. 
D) supply of dollars to decrease. 
A) demand for dollars to shift from D1 to D2. 
B) demand for dollars to shift from D2 to D1. 
C) supply of dollars to increase. 
D) supply of dollars to decrease.

Question 4

Which of the following statements regarding the market for foreign currency exchange is true?

Accepted Answer

A) An increase in SA net capital outflow increases the supply of rands and the rand depreciates. 
B) An increase in SA net capital outflow increases the demand for rands and the rand appreciates. 
C) An increase in SA net capital outflow increases the demand for rands and the rand depreciates. 
D) An increase in SA net capital outflow increases the supply of rands and the rand appreciates. 
A) An increase in SA net capital outflow increases the supply of rands and the rand depreciates. 
B) An increase in SA net capital outflow increases the demand for rands and the rand appreciates. 
C) An increase in SA net capital outflow increases the demand for rands and the rand depreciates. 
D) An increase in SA net capital outflow increases the supply of rands and the rand appreciates.

Question 5

A country's net capital outflow is always equal to its net exports.

Accepted Answer

A) True 
 B)False

Question 6

A country experiencing capital flight will experience a reduction in its net capital outflow and its net exports.

Accepted Answer

A) True 
 B)False

Question 7

A large and sudden movement of capital out of a country is called

Accepted Answer

A) capital inflow. 
B) capital flight. 
C) trade deficit. 
D) trade surplus. 
A) capital inflow. 
B) capital flight. 
C) trade deficit. 
D) trade surplus.

Question 8

If SA raises its tariff on imported sugar, domestic sugar growers will benefit, but the rand will appreciate and domestic producers of export goods will be harmed.

Accepted Answer

A) True 
 B)False

Question 9

Explain how an increase in the demand for capital goods in South Africa can lead to a change in the value of the rand against other currencies.

Accepted Answer

An increase in demand for capital goods

Question 10

Net capital outflow is the purchase of domestic assets by foreigners minus the purchase of foreign assets by domestic residents.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following statement regarding the loanable funds market is true?

Accepted Answer

A) A decrease in the government budget deficit increases the real interest rate. 
B) An increase in the government budget deficit shifts the supply of loanable funds to the right. 
C) An increase in private saving shifts the supply of loanable funds to the left. 
D) An increase in the government budget deficit shifts the supply of loanable funds to the left. 
A) A decrease in the government budget deficit increases the real interest rate. 
B) An increase in the government budget deficit shifts the supply of loanable funds to the right. 
C) An increase in private saving shifts the supply of loanable funds to the left. 
D) An increase in the government budget deficit shifts the supply of loanable funds to the left.

Question 12

If a country's government wants to eliminate a trade deficit, its most effective policy would be to

Accepted Answer

A) reduce tariffs. 
B) encourage imports. 
C) impose quotas on imports. 
D) reduce its budget deficit. 
A) reduce tariffs. 
B) encourage imports. 
C) impose quotas on imports. 
D) reduce its budget deficit.

Question 13

If SA raises its tariff on imported sugar, it will reduce imports and improve its trade balance.

Accepted Answer

A) True 
 B)False

Question 14

Why do higher real interest rates lead to lower net capital outflow?

Accepted Answer

Higher SA interest rates make SA assets

Question 15

The link between the loanable funds market and the foreign exchange market is

Accepted Answer

A) the governments of the countries involved. 
B) the International Monetary Fund. 
C) net capital outflow. 
D) purchasing power parity. 
A) the governments of the countries involved. 
B) the International Monetary Fund. 
C) net capital outflow. 
D) purchasing power parity.

Question 16

Suppose that SA citizens start saving more.What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate?

Accepted Answer

The supply of loanable funds increases,

Question 17

Crowding out caused by government budget deficits will lead to

Accepted Answer

A) an increase in the real exchange rate. 
B) a decrease in the real exchange rate. 
C) no change in the real exchange rate. 
D) a devaluation in a nation's currency. 
A) an increase in the real exchange rate. 
B) a decrease in the real exchange rate. 
C) no change in the real exchange rate. 
D) a devaluation in a nation's currency.

Question 18

Which of the following statements about trade policy is true?

Accepted Answer

A) A country's trade policy has no impact on the size of its trade balance. 
B) None of these answers. 
C) A restrictive import quota decreases a country's net exports. 
D) A restrictive import quota increases a country's net exports. 
A) A country's trade policy has no impact on the size of its trade balance. 
B) None of these answers. 
C) A restrictive import quota decreases a country's net exports. 
D) A restrictive import quota increases a country's net exports.

Question 19

Suppose that SA investors decide that investment opportunities in Western African countries have improved.What happens to SA net capital outflow? What happens to the SA real interest rate?

Accepted Answer

SA net capital outflow will in

Question 20

Assuming all other things unchanged, a higher SA real interest rate

Accepted Answer

A) decreases SA net capital outflow because SA residents and foreigners prefer to invest in SA. 
B) None of these answers. 
C) decreases SA net capital outflow because SA residents and foreigners prefer to invest abroad. 
D) increases SA net capital outflow because SA residents and foreigners prefer to invest in SA. 
A) decreases SA net capital outflow because SA residents and foreigners prefer to invest in SA. 
B) None of these answers. 
C) decreases SA net capital outflow because SA residents and foreigners prefer to invest abroad. 
D) increases SA net capital outflow because SA residents and foreigners prefer to invest in SA.

If a country's government increases its budget deficit, then the

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 SA net exports?

Consider this diagram of the market for foreign currency exchange.If the US government decides to increase import tariffs on imported steel, we could expect the

Which of the following statements regarding the market for foreign currency exchange is true?

A country's net capital outflow is always equal to its net exports.

A country experiencing capital flight will experience a reduction in its net capital outflow and its net exports.

A large and sudden movement of capital out of a country is called

If SA raises its tariff on imported sugar, domestic sugar growers will benefit, but the rand will appreciate and domestic producers of export goods will be harmed.

Explain how an increase in the demand for capital goods in South Africa can lead to a change in the value of the rand against other currencies.

Net capital outflow is the purchase of domestic assets by foreigners minus the purchase of foreign assets by domestic residents.

Which of the following statement regarding the loanable funds market is true?

If a country's government wants to eliminate a trade deficit, its most effective policy would be to

If SA raises its tariff on imported sugar, it will reduce imports and improve its trade balance.

Why do higher real interest rates lead to lower net capital outflow?

The link between the loanable funds market and the foreign exchange market is

Suppose that SA citizens start saving more.What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate?

Crowding out caused by government budget deficits will lead to

Which of the following statements about trade policy is true?

Suppose that SA investors decide that investment opportunities in Western African countries have improved.What happens to SA net capital outflow? What happens to the SA real interest rate?

Assuming all other things unchanged, a higher SA real interest rate

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

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Exam 12: A Macroeconomic Theory of the Open Economy

If a country's government increases its budget deficit, then the

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 SA net exports?

Consider this diagram of the market for foreign currency exchange.If the US government decides to increase import tariffs on imported steel, we could expect the

Which of the following statements regarding the market for foreign currency exchange is true?

A country's net capital outflow is always equal to its net exports.

A country experiencing capital flight will experience a reduction in its net capital outflow and its net exports.

A large and sudden movement of capital out of a country is called

If SA raises its tariff on imported sugar, domestic sugar growers will benefit, but the rand will appreciate and domestic producers of export goods will be harmed.

Explain how an increase in the demand for capital goods in South Africa can lead to a change in the value of the rand against other currencies.

Net capital outflow is the purchase of domestic assets by foreigners minus the purchase of foreign assets by domestic residents.

Which of the following statement regarding the loanable funds market is true?

If a country's government wants to eliminate a trade deficit, its most effective policy would be to

If SA raises its tariff on imported sugar, it will reduce imports and improve its trade balance.

Why do higher real interest rates lead to lower net capital outflow?

The link between the loanable funds market and the foreign exchange market is

Suppose that SA citizens start saving more.What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate?

Crowding out caused by government budget deficits will lead to

Which of the following statements about trade policy is true?

Suppose that SA investors decide that investment opportunities in Western African countries have improved.What happens to SA net capital outflow? What happens to the SA real interest rate?

Assuming all other things unchanged, a higher SA real interest rate

What Is Economics

Thinking Like an Economist

Measuring a Nations Well-Being

Measuring the Cost of Living

Production and Growth

Unemployment

Saving, Investment and the Financial System

The Basic Tools of Finance

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

Business Cycles

Keynesian Economics and the Is-Lm Analysis

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short Run Trade-Off Between Inflation and Unemployment

Supply Side Policies

The Financial Crisis and Sovereign Debt

Common Currency Areas and European Monetary Union

Filters