Exam 13: A Macroeconomic Theory of the Small Open Economy

Suppose that Canadian investors decide that investment opportunities in African countries have improved.What happens to Canadian net capital outflow? What happens to the Canadian real interest rate?

In an open economy,the supply of loanable funds comes from national saving.

The People's Republic of China has had a large trade surplus in recent years.Which of the following is the most likely explanation of this surplus?

Which of the following is most likely to result if foreigners decide to withdraw the funds that they have loaned to Canada over the past two decades?

What is the real exchange rate equal to?

In the open-economy macroeconomic model,which of the following is the key determinant of net capital outflow?

Which of the following would make the equilibrium interest rate increase and the equilibrium quantity of funds decrease?

What are the effects of an increase in the supply of loanable funds?

The country of Aquilonia is politically very stable and has a long tradition of respecting property rights.If several other countries suddenly became politically unstable,which of the following would happen?

Suppose that Canada imposes restrictions on the importation of steel into Canada.According to the open-economy macroeconomic model,which of the following would be the most likely result?

Which of the following would tend to shift the supply of dollars in the foreign-currency exchange market model to the left?

If a government increases its budget deficit,which of the following best predicts the effects?

Which of the following best explains the effect of trade policies on the trade balance?

In the open-economy macroeconomic model,what is net capital outflow equal to?

Figure 13-2 -Refer to the FigurE₁3-2.Which of the following shifts shows the effects of an import quota?

Suppose that the government of Jordan raises its budget deficit.Which of the following best predicts the effects of this action?

Which of the following is the effect of an increase in the Canadian real interest rate above the world interest rate?

Which of the following will NOT change Canadian net exports?

According to the open-economy macroeconomic model,if the Canadian government decreased the government budget deficit,both Canadian domestic investment and Canadian net capital outflow would fall.

If Canadian citizens decide to purchase more foreign assets at each interest rate,which of the following best describes the effects?