Question 1

One of the principal factors behind the U.S. trade deficits of the 1990s has been

Accepted Answer

A)  slow growth and recession in many important trading partners. 
B)  rapid growth and inflation in many important trading partners. 
C)  significant depreciation of the dollar. 
D)  rising real interest rates in the United States. 
A)  slow growth and recession in many important trading partners. 
B)  rapid growth and inflation in many important trading partners. 
C)  significant depreciation of the dollar. 
D)  rising real interest rates in the United States.

Question 2

Despite the elimination of the federal budget deficit in the late 1990s, the trade deficit increased due to

Accepted Answer

A)  increased household saving. 
B)  decreased household saving. 
C)  a depreciation of the dollar. 
D)  an increase in inflation rates. 
A)  increased household saving. 
B)  decreased household saving. 
C)  a depreciation of the dollar. 
D)  an increase in inflation rates.

Question 3

Table 36-1 Suppose the economy of Macroland is described by the following: C = 200 + 0.8 DI (DI = disposable income)
I = 300 + 0.2 Y − 50 r ( 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 = 0.25 Y
X = 200
M = 150 + 0.2 Y
Hint: DI = Y − T
From Table 36-1, compute equilibrium GDP for Macroland.

Accepted Answer

A)  3,000 
B)  2,950 
C)  2,625 
D)  2,525 
A)  3,000 
B)  2,950 
C)  2,625 
D)  2,525

Question 4

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 5

Which of the following usually leads to currency appreciation?

Accepted Answer

A)  Galloping inflation 
B)  Relatively low interest rates 
C)  Declining real GDP 
D)  Fixed exchange rates 
A)  Galloping inflation 
B)  Relatively low interest rates 
C)  Declining real GDP 
D)  Fixed exchange rates

Question 6

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

Accepted Answer

A)  U.S. trade surplus. 
B)  U.S. trade deficit. 
C)  growing U.S. net exports. 
D)  trade deficit for U.S. trading partners. 
A)  U.S. trade surplus. 
B)  U.S. trade deficit. 
C)  growing U.S. net exports. 
D)  trade deficit for U.S. trading partners.

Question 7

The exchange rate states the price, in terms of one currency, at which another currency can be bought.

Accepted Answer

A) True 
 B)False

Question 8

Discuss the opposing points of view on U.S. trade deficit.

Accepted Answer

Those who worry about trade deficits poi

Question 9

If Mexico experiences a period of stable prices while the United States experiences rapid inflation, what will happen in Mexico?

Accepted Answer

A)  An increase in aggregate supply 
B)  A decrease in aggregate supply 
C)  A decrease in aggregate demand 
D)  An increase in aggregate demand 
A)  An increase in aggregate supply 
B)  A decrease in aggregate supply 
C)  A decrease in aggregate demand 
D)  An increase in aggregate demand

Question 10

A fall in the relative prices of a country's exports tends to ________________ that country's net exports, and thereby, to ____ its real GDP.

Accepted Answer

A)  increase; raise 
B)  decrease; raise 
C)  decrease; decrease 
D)  None of the above is correct. 
A)  increase; raise 
B)  decrease; raise 
C)  decrease; decrease 
D)  None of the above is correct.

Question 11

Figure 36-3
 
Which of the situations illustrated in Figure 36-3 shows the effects of a currency appreciation leading to a recession?

Accepted Answer

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

Question 12

An increase in the U.S. price level will increase U.S. net exports.

Accepted Answer

A) True 
 B)False

Question 13

A Japanese recession will be counteracted by an appreciation of the Japanese yen.

Accepted Answer

A) True 
 B)False

Question 14

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 15

A currency appreciation reduces aggregate demand and raises aggregate supply.

Accepted Answer

A) True 
 B)False

Question 16

What are the economic effects of a currency appreciation?

Accepted Answer

A)  It will decrease aggregate demand and aggregate supply, so that output will certainly fall, and prices may fall as well. 
B)  It will increase aggregate demand and aggregate supply, so that output will certainly rise, and prices may rise as well. 
C)  It will increase aggregate demand and decrease aggregate supply, so that prices will certainly rise, and output may rise as well. 
D)  It will decrease aggregate demand and increase aggregate supply, so that prices will certainly fall, and output may fall as well. 
A)  It will decrease aggregate demand and aggregate supply, so that output will certainly fall, and prices may fall as well. 
B)  It will increase aggregate demand and aggregate supply, so that output will certainly rise, and prices may rise as well. 
C)  It will increase aggregate demand and decrease aggregate supply, so that prices will certainly rise, and output may rise as well. 
D)  It will decrease aggregate demand and increase aggregate supply, so that prices will certainly fall, and output may fall as well.

Question 17

The sequence of events following a contractionary monetary policy would be higher interest rates followed by dollar

Accepted Answer

A)  depreciation, higher exports, and lower imports. 
B)  depreciation, lower exports, and higher imports. 
C)  appreciation, lower exports, and higher imports. 
D)  appreciation, higher exports, and lower imports. 
A)  depreciation, higher exports, and lower imports. 
B)  depreciation, lower exports, and higher imports. 
C)  appreciation, lower exports, and higher imports. 
D)  appreciation, higher exports, and lower imports.

Question 18

When the U.S. dollar appreciates,

Accepted Answer

A)  U.S. exports rise. 
B)  U.S. imports decline. 
C)  aggregate demand shifts inward. 
D)  aggregate demand shifts outward. 
A)  U.S. exports rise. 
B)  U.S. imports decline. 
C)  aggregate demand shifts inward. 
D)  aggregate demand shifts outward.

Question 19

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 20

Figure 36-3
 
Which of the situations illustrated in Figure 36-3 shows the effects of a currency appreciation leading to real GDP growth?

Accepted Answer

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

One of the principal factors behind the U.S. trade deficits of the 1990s has been

Despite the elimination of the federal budget deficit in the late 1990s, the trade deficit increased due to

The anticipated effect of contractionary monetary policy is

Which of the following usually leads to currency appreciation?

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

The exchange rate states the price, in terms of one currency, at which another currency can be bought.

Discuss the opposing points of view on U.S. trade deficit.

If Mexico experiences a period of stable prices while the United States experiences rapid inflation, what will happen in Mexico?

A fall in the relative prices of a country's exports tends to ____________ that country's net exports, and thereby, to its real GDP.

Figure 36-3 Which of the situations illustrated in Figure 36-3 shows the effects of a currency appreciation leading to a recession?

An increase in the U.S. price level will increase U.S. net exports.

A Japanese recession will be counteracted by an appreciation of the Japanese yen.

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

A currency appreciation reduces aggregate demand and raises aggregate supply.

What are the economic effects of a currency appreciation?

The sequence of events following a contractionary monetary policy would be higher interest rates followed by dollar

When the U.S. dollar appreciates,

Which of the following would lead to a depreciating dollar?

Figure 36-3 Which of the situations illustrated in Figure 36-3 shows the effects of a currency appreciation leading to real GDP growth?

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

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

Contemporary Issues in the Us Economy

Filters

Exam 36: Exchange Rates and the Macroeconomy

One of the principal factors behind the U.S. trade deficits of the 1990s has been

Despite the elimination of the federal budget deficit in the late 1990s, the trade deficit increased due to

The anticipated effect of contractionary monetary policy is

Which of the following usually leads to currency appreciation?

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

The exchange rate states the price, in terms of one currency, at which another currency can be bought.

Discuss the opposing points of view on U.S. trade deficit.

If Mexico experiences a period of stable prices while the United States experiences rapid inflation, what will happen in Mexico?

A fall in the relative prices of a country's exports tends to ________________ that country's net exports, and thereby, to ____ its real GDP.

Figure 36-3 Which of the situations illustrated in Figure 36-3 shows the effects of a currency appreciation leading to a recession?

An increase in the U.S. price level will increase U.S. net exports.

A Japanese recession will be counteracted by an appreciation of the Japanese yen.

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

A currency appreciation reduces aggregate demand and raises aggregate supply.

What are the economic effects of a currency appreciation?

The sequence of events following a contractionary monetary policy would be higher interest rates followed by dollar

When the U.S. dollar appreciates,

Which of the following would lead to a depreciating dollar?

Figure 36-3 Which of the situations illustrated in Figure 36-3 shows the effects of a currency appreciation leading to real GDP growth?

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

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

Contemporary Issues in the Us Economy

Filters

A fall in the relative prices of a country's exports tends to ____________ that country's net exports, and thereby, to its real GDP.