Exam 20: Exchange Rates and the Macroeconomy

Assume that Country X and Country Y are trading partners and the exchange rates are fixed.If prices in Country Y fall,which of the following is expected to happen?

Between 1981 and 1986,as the federal budget deficit increased,

Table 20-2 -In Table 20-2,what is equilibrium GDP?

What are the results of a contractionary monetary policy in an open economy with floating exchange rates and internationally mobile capital?

The government budget deficit must be equal to the surplus

The appreciation of the dollar in the late 1990s shifted the U.S.aggregate supply curve outward.

International trade tends to lower the value of the multiplier because

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

What are the economic effects of a currency depreciation?

International capital flows are purchases and sales of ____ across national borders.

How do the fluctuations in the exchange rate influence the domestic price level?

Since the U.S.economy expanded rapidly from 1992 to 2000,it must be t that

Why is fiscal policy less effective in an open economy than in a closed economy?

International capital flows in an open economy have the effect of

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

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

Figure 20-2 -Which of the following explains the movements in Figure 20-2?

Figure 20-8 -Which of the graphs in Figure 20-8 illustrates the AD-AS shifts induced by the foreign sector following an increase in the U.S.federal deficit?

The different effects of fiscal and monetary policy in an open economy with mobile capital hinges on their different effect on

The expected effects of a tighter monetary policy are