Exam 20: Exchange Rates and the Macroeconomy

Which of the following would be cures for the U.S.trade deficit?

A currency depreciation is usually inflationary.

An increase in the value of the U.S.dollar relative to the Japanese yen will

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.

The expected effects of an increased budget deficit are

A currency appreciation is disinflationary and contractionary if the

A rise in the domestic interest rate leads to capital

Figure 20-4 -Which of the situations illustrated in Figure 20-4 shows a currency appreciation leading to disinflation?

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

Figure 20-9 -In Figure 20-9,the C + I + G + (X − IM)₁ line is flatter than the C + I + G + (X − IM)₀ line because the

Figure 20-7 -In Figure 20-7,there are three aggregate expenditure functions (C + I + G + X − IM)for an open economy.Which of the following would cause a movement from A to B?

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

A depreciating currency makes foreign inputs cheaper and shifts the aggregate supply curve outward.

If the United States increased its budget deficit,and it is at or near full employment,the most likely effect is to crowd

Foreign trade will have no impact on real GDP when

International capital flows tend to reduce the impact of fiscal policy.

The United States can reduce its trade deficit by limiting imports through tariffs.

A reduction in net exports shifts the aggregate

Which of the following is correct?

When the dollar appreciates,the prices of imported inputs