Exam 16: Macroeconomic Policy in an Open Economy

In a closed economy, which of the following will cause the economy's aggregate demand curve to shift to the right?

A problem that economic policy makers confront when attempting to promote both internal and external balance for the nation is that monetary or fiscal policies aimed at the domestic sector also have impacts on:

With a fixed exchange rate system, internal balance is most effectively achieved by using

An $\underline { \text { expenditure-reducing } }$ policy would consist of a decrease in:

Given fixed exchange rates, assume Mexico initiates $\underline { \text { contractionary } }$ monetary and fiscal policies to combat inflation. These policies will also:

Under a fixed exchange-rate system and high capital mobility, a $\underline { \text { contraction } }$ in the domestic money supply leads to a:

Most industrial countries generally considered ____ as the most important economic goal.

Under floating exchange rates and high capital mobility, an expansionary monetary policy would help a country resolve a recession and a current account deficit.

Given an open economy with high capital mobility and floating exchange rates, suppose an expansionary monetary policy is implemented to combat recession. The initial and secondary effects of the policy

When the economy is in deep recession or depression, it is operating on that portion of its aggregate supply curve that is horizontal.

Which policies are $\underline { \text { expenditure-changing } }$ policies?

Assume a system of floating exchange rates. In response to relatively high domestic interest rates, suppose that foreign investors place their funds in domestic capital markets. The result would be

A system of fixed exchange rates and high capital mobility strengthens which policy in combating a recession:

Exchange rate management policies require international policy coordination because a depreciation of one nation's currency implies an appreciation of its trading partner's currency.

The Group of five (G-5) nations include Japan, Germany, China, and Australia.

A nation experiences $\underline { \text { overall } }$ balance if it achieves:

International policy coordination is plagued by differing national economic objectives, institutions, political climates, and phases in the business cycle.

A nation experiences $\underline { \text { external } }$ balance if it achieves:

The Bonn Summit of 1978 and Plaza Accord of 1985 are examples of international policy coordination.

A nation realizes external balance when its current account is in equilibrium.