Question 1

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

Accepted Answer

A)  an increase in U.S. imports 
B)  an increase in U.S. exports 
C)  a decrease in U.S. imports 
D)  an increase in U.S. net exports 
A)  an increase in U.S. imports 
B)  an increase in U.S. exports 
C)  a decrease in U.S. imports 
D)  an increase in U.S. net exports

Question 2

The expected effects of monetary expansion are

Accepted Answer

A)  lower real interest rates. 
B)  exchange rate depreciation. 
C)  higher inflation. 
D)  All of the above are correct. 
A)  lower real interest rates. 
B)  exchange rate depreciation. 
C)  higher inflation. 
D)  All of the above are correct.

Question 3

The expected effect of the Bush tax cuts would be a(n)

Accepted Answer

A)  lower real interest rate. 
B)  exchange rate depreciation. 
C)  increased current account deficit. 
D)  All of the above are correct. 
A)  lower real interest rate. 
B)  exchange rate depreciation. 
C)  increased current account deficit. 
D)  All of the above are correct.

Question 4

Figure 20-3
  
-Which of the situations illustrated in Figure 20-3 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 5

An increase in the price level in the economies of U.S.trading partners will cause the aggregate expenditures function in the United States to

Accepted Answer

A)  shift up. 
B)  shift down. 
C)  get flatter. 
D)  get steeper. 
A)  shift up. 
B)  shift down. 
C)  get flatter. 
D)  get steeper.

Question 6

If (X − IM)< 0,then capital inflows

Accepted Answer

A)  will be zero. 
B)  will be greater than zero. 
C)  will be less than zero. 
D)  can be zero, positive, or negative. 
A)  will be zero. 
B)  will be greater than zero. 
C)  will be less than zero. 
D)  can be zero, positive, or negative.

Question 7

The trade deficits of the 1980s and 1990s reflects American desire for foreign

Accepted Answer

A)  assets and foreign desire for American goods and services. 
B)  goods and services and foreign assets. 
C)  goods and services and foreign desire for American assets. 
D)  assets now and foreign goods and services in the future. 
A)  assets and foreign desire for American goods and services. 
B)  goods and services and foreign assets. 
C)  goods and services and foreign desire for American assets. 
D)  assets now and foreign goods and services in the future.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

If European economies experience a strong economic recovery,U.S.net exports will

Accepted Answer

A)  increase and AD will shift outward. 
B)  increase and AD will shift inward. 
C)  decrease and AD will shift inward. 
D)  decrease and AD will shift outward. 
A)  increase and AD will shift outward. 
B)  increase and AD will shift inward. 
C)  decrease and AD will shift inward. 
D)  decrease and AD will shift outward.

Question 10

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 11

A closed economy is one that

Accepted Answer

A)  uses tariffs. 
B)  uses quotas to restrict trade. 
C)  uses exchange controls. 
D)  does not trade with other nations. 
A)  uses tariffs. 
B)  uses quotas to restrict trade. 
C)  uses exchange controls. 
D)  does not trade with other nations.

Question 12

Figure 20-1
  
-Which of the following is correct?

Accepted Answer

A)  IM + X = G − T 
B)  I + G + T = S + X − M 
C)  I + G + X = S + T + IM 
D)  I + T + G = S − X − IM 
A)  IM + X = G − T 
B)  I + G + T = S + X − M 
C)  I + G + X = S + T + IM 
D)  I + T + G = S − X − IM

Question 13

What are some of the suggested remedies for the U.S.trade deficits? What remedies have been attempted? What remedies are left to try?

Accepted Answer

At certain points in the business cycle,

Question 14

If U.S.interest rates rise while foreign interest rates remain unchanged,

Accepted Answer

A)  GDP will not change since the shift in aggregate supply cancels the positive effects on aggregate demand. 
B)  the dollar will depreciate and thus reduce prices and output. 
C)  foreign capital will be attracted to the United States and the dollar will appreciate. 
D)  net exports will increase and the economy will expand. 
A)  GDP will not change since the shift in aggregate supply cancels the positive effects on aggregate demand. 
B)  the dollar will depreciate and thus reduce prices and output. 
C)  foreign capital will be attracted to the United States and the dollar will appreciate. 
D)  net exports will increase and the economy will expand.

Question 15

The sequence of events following an increase in the federal deficit would be higher interest rates,a(n)

Accepted Answer

A)  depreciating dollar, and a larger current account deficit. 
B)  depreciating dollar, and a smaller current account deficit. 
C)  appreciating dollar, and a larger current account deficit. 
D)  appreciating dollar, and a smaller current account deficit. 
A)  depreciating dollar, and a larger current account deficit. 
B)  depreciating dollar, and a smaller current account deficit. 
C)  appreciating dollar, and a larger current account deficit. 
D)  appreciating dollar, and a smaller current account deficit.

Question 16

International capital flows in an open economy have the effect of

Accepted Answer

A)  reducing the power of monetary policy. 
B)  increasing the power of monetary policy. 
C)  increasing the power of monetary policy in an expansion and reducing it in a contraction. 
D)  reducing the power of monetary policy in an expansion and increasing it in a contraction. 
A)  reducing the power of monetary policy. 
B)  increasing the power of monetary policy. 
C)  increasing the power of monetary policy in an expansion and reducing it in a contraction. 
D)  reducing the power of monetary policy in an expansion and increasing it in a contraction.

Question 17

The expected effects of fiscal contraction are

Accepted Answer

A)  higher real interest rates. 
B)  exchange rate depreciation. 
C)  increased trade deficit. 
D)  All of the above are correct. 
A)  higher real interest rates. 
B)  exchange rate depreciation. 
C)  increased trade deficit. 
D)  All of the above are correct.

Question 18

Increases in stock market wealth have caused Americans to increase their saving rate.

Accepted Answer

A) True 
 B)False

Question 19

The saving rate in the United States fell to nearly zero in the early 2000s.One of the contributing factors to this development was the

Accepted Answer

A)  decrease in consumer confidence in the late 1990s. 
B)  declining real incomes of most American households. 
C)  increased housing wealth. 
D)  rising real interest rates in the United States. 
A)  decrease in consumer confidence in the late 1990s. 
B)  declining real incomes of most American households. 
C)  increased housing wealth. 
D)  rising real interest rates in the United States.

Question 20

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 C to B?

Accepted Answer

A)  a European economic expansion 
B)  an appreciation of the dollar 
C)  a depreciation of the dollar 
D)  an increase in the money supply 
A)  a European economic expansion 
B)  an appreciation of the dollar 
C)  a depreciation of the dollar 
D)  an increase in the money supply

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

The expected effects of monetary expansion are

The expected effect of the Bush tax cuts would be a(n)

Figure 20-3 -Which of the situations illustrated in Figure 20-3 shows the effects of a currency appreciation leading to a recession?

An increase in the price level in the economies of U.S.trading partners will cause the aggregate expenditures function in the United States to

If (X − IM)< 0,then capital inflows

The trade deficits of the 1980s and 1990s reflects American desire for foreign

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

If European economies experience a strong economic recovery,U.S.net exports will

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

A closed economy is one that

Figure 20-1 -Which of the following is correct?

What are some of the suggested remedies for the U.S.trade deficits? What remedies have been attempted? What remedies are left to try?

If U.S.interest rates rise while foreign interest rates remain unchanged,

The sequence of events following an increase in the federal deficit would be higher interest rates,a(n)

International capital flows in an open economy have the effect of

The expected effects of fiscal contraction are

Increases in stock market wealth have caused Americans to increase their saving rate.

The saving rate in the United States fell to nearly zero in the early 2000s.One of the contributing factors to this development was 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 C to B?

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?

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Exam 20: Exchange Rates and the Macroeconomy

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

The expected effects of monetary expansion are

The expected effect of the Bush tax cuts would be a(n)

Figure 20-3 -Which of the situations illustrated in Figure 20-3 shows the effects of a currency appreciation leading to a recession?

An increase in the price level in the economies of U.S.trading partners will cause the aggregate expenditures function in the United States to

If (X − IM)< 0,then capital inflows

The trade deficits of the 1980s and 1990s reflects American desire for foreign

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

If European economies experience a strong economic recovery,U.S.net exports will

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

A closed economy is one that

Figure 20-1 -Which of the following is correct?

What are some of the suggested remedies for the U.S.trade deficits? What remedies have been attempted? What remedies are left to try?

If U.S.interest rates rise while foreign interest rates remain unchanged,

The sequence of events following an increase in the federal deficit would be higher interest rates,a(n)

International capital flows in an open economy have the effect of

The expected effects of fiscal contraction are

Increases in stock market wealth have caused Americans to increase their saving rate.

The saving rate in the United States fell to nearly zero in the early 2000s.One of the contributing factors to this development was 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 C to B?

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?

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