Question 1

What effect does a fall in the real interest rate have on the quantity of loanable funds?

Accepted Answer

A) It increases the quantity demanded and decreases the quantity supplied. 
B) It decreases both the quantity demanded and supplied. 
C) It increases both the quantity demanded and supplied. 
D) It decreases the quantity demanded and increases the quantity supplied. 
A) It increases the quantity demanded and decreases the quantity supplied. 
B) It decreases both the quantity demanded and supplied. 
C) It increases both the quantity demanded and supplied. 
D) It decreases the quantity demanded and increases the quantity supplied.

Question 2

If policymakers impose import restrictions on automobiles,the Canadian trade deficit would shrink.

Accepted Answer

A) True 
 B)False

Question 3

In the open-economy macroeconomic model,net exports represent the quantity of dollars demanded in the foreign-currency exchange market.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following best describes the effects of trade policies?

Accepted Answer

A) Trade policies affect the trade balance, plus all industries in the same ways. 
B) Trade policies affect the trade balance, plus some industries differently than others. 
C) Trade policies do not affect the trade balance, but they affect some industries differently than others. 
D) Trade policies do not affect the trade balance, but they affect all industries in the same ways. 
A) Trade policies affect the trade balance, plus all industries in the same ways. 
B) Trade policies affect the trade balance, plus some industries differently than others. 
C) Trade policies do not affect the trade balance, but they affect some industries differently than others. 
D) Trade policies do not affect the trade balance, but they affect all industries in the same ways.

Question 5

Which of the following best defines capital flight?

Accepted Answer

A) the movement of workers across international borders in response to exchange rate changes 
B) the movement of funds between financial intermediaries when interest rates change 
C) the ability of investment expenditures to lift a country out of poverty 
D) the large and sudden reduction in the demand for assets located in a country 
A) the movement of workers across international borders in response to exchange rate changes 
B) the movement of funds between financial intermediaries when interest rates change 
C) the ability of investment expenditures to lift a country out of poverty 
D) the large and sudden reduction in the demand for assets located in a country

Question 6

Suppose that from 1980 to 1987,Canadian net capital outflows decreased.According to the open-economy macroeconomic model,which of the following could have caused this?

Accepted Answer

A) an increase in the demand for Canadian currency in the foreign-currency exchange 
B) a decrease in the demand for Canadian currency in the foreign-currency exchange 
C) an increase in the supply of loanable funds 
D) a decrease in the supply of loanable funds 
A) an increase in the demand for Canadian currency in the foreign-currency exchange 
B) a decrease in the demand for Canadian currency in the foreign-currency exchange 
C) an increase in the supply of loanable funds 
D) a decrease in the supply of loanable funds

Question 7

If foreign investors believe that the Hungarian government will default on their debt,which of the following might happen?

Accepted Answer

A) a decrease in Hungarian interest rates and an increase in Hungarian net capital outflow 
B) an increase in both Hungarian interest rates and net capital outflow 
C) a decrease in both Hungarian interest rates and net capital outflow 
D) an increase in Hungarian interest rates and a decrease in Hungarian net capital outflow 
A) a decrease in Hungarian interest rates and an increase in Hungarian net capital outflow 
B) an increase in both Hungarian interest rates and net capital outflow 
C) a decrease in both Hungarian interest rates and net capital outflow 
D) an increase in Hungarian interest rates and a decrease in Hungarian net capital outflow

Question 8

Figure 13-1
  
-Refer to the FigurE₁3-1.In the figure shown,if the real interest rate is 4 percent,what is the quantity of loanable funds demanded?

Accepted Answer

A) $7000 
B) $6000 
C) $5000 
D) $4000 
A) $7000 
B) $6000 
C) $5000 
D) $4000

Question 9

Which of the following best predicts the effects of an increase in the Canadian real interest rate?

Accepted Answer

A) Canadian net capital outflow and net capital outflow of other countries would rise. 
B) Canadian net capital outflow and net capital outflow of other countries would fall. 
C) Canadian net capital outflow would rise, while net capital outflow of other countries would fall. 
D) Canadian net capital outflow would fall, while net capital outflow of other countries would rise. 
A) Canadian net capital outflow and net capital outflow of other countries would rise. 
B) Canadian net capital outflow and net capital outflow of other countries would fall. 
C) Canadian net capital outflow would rise, while net capital outflow of other countries would fall. 
D) Canadian net capital outflow would fall, while net capital outflow of other countries would rise.

Question 10

Suppose a prime ministerial candidate promises to increase the government budget surplus and claims that doing so will stop Canadian citizens from investing in foreign companies and increase the value of the dollar.Evaluate this promise.

Accepted Answer

An increase in the government budget sur

Question 11

In the open-economy macroeconomic model,how can the market for loanable funds identity be written?

Accepted Answer

A) S = I 
B) S = NCO 
C) S = I + NCO 
D) S + I = NCO 
A) S = I 
B) S = NCO 
C) S = I + NCO 
D) S + I = NCO

Question 12

What does a higher real interest rate lower the quantity of?

Accepted Answer

A) national saving 
B) net capital outflow 
C) loanable funds demanded 
D) loanable funds supplied 
A) national saving 
B) net capital outflow 
C) loanable funds demanded 
D) loanable funds supplied

Question 13

What is the term for a limit on the quantity of an imported good?

Accepted Answer

A) a tariff 
B) an excise tax 
C) an import quota 
D) net imports 
A) a tariff 
B) an excise tax 
C) an import quota 
D) net imports

Question 14

Suppose that in the 1990s,Canadian net capital outflow fell.Which of the following could explain this?

Accepted Answer

A) an increase in the demand for Canadian currency in the foreign-currency exchange 
B) a decrease in the demand for Canadian currency in the foreign-currency exchange 
C) an increase in the demand for loanable funds 
D) a decrease in the demand for loanable funds 
A) an increase in the demand for Canadian currency in the foreign-currency exchange 
B) a decrease in the demand for Canadian currency in the foreign-currency exchange 
C) an increase in the demand for loanable funds 
D) a decrease in the demand for loanable funds

Question 15

If the real interest rate were above the equilibrium rate,there would be a shortage of loanable funds.

Accepted Answer

A) True 
 B)False

Question 16

If Canadian firms decide to invest more domestically at each interest rate,which of the following best describes the results?

Accepted Answer

A) The real interest rate decreases, the real exchange rate of the dollar depreciates, and Canadian net capital outflow decreases. 
B) The real interest rate decreases, the real exchange rate of the dollar appreciates, and Canadian net capital outflow increases. 
C) The real interest rate increases, the real exchange rate of the dollar appreciates, and Canadian net capital outflow decreases. 
D) The real interest rate increases, the real exchange rate of the dollar depreciates, and Canadian net capital outflow increases. 
A) The real interest rate decreases, the real exchange rate of the dollar depreciates, and Canadian net capital outflow decreases. 
B) The real interest rate decreases, the real exchange rate of the dollar appreciates, and Canadian net capital outflow increases. 
C) The real interest rate increases, the real exchange rate of the dollar appreciates, and Canadian net capital outflow decreases. 
D) The real interest rate increases, the real exchange rate of the dollar depreciates, and Canadian net capital outflow increases.

Question 17

The key determinant of net capital outflow is the real exchange rate.

Accepted Answer

A) True 
 B)False

Question 18

In the open-economy macroeconomic model,net capital outflow links the markets for loanable funds and foreign-currency exchange.

Accepted Answer

A) True 
 B)False

Question 19

Figure 13-1
  
-Refer to the FigurE₁3-1.If the world interest rate equals 4 percent,what is the net capital outflow?

Accepted Answer

A) $4000 
B) $2000 
C) -$2000 
D) -$4000 
A) $4000 
B) $2000 
C) -$2000 
D) -$4000

Question 20

An import quota imposed by Egypt would reduce Egyptian imports,but have no impact on Egyptian exports.

Accepted Answer

A) True 
 B)False

What effect does a fall in the real interest rate have on the quantity of loanable funds?

If policymakers impose import restrictions on automobiles,the Canadian trade deficit would shrink.

In the open-economy macroeconomic model,net exports represent the quantity of dollars demanded in the foreign-currency exchange market.

Which of the following best describes the effects of trade policies?

Which of the following best defines capital flight?

Suppose that from 1980 to 1987,Canadian net capital outflows decreased.According to the open-economy macroeconomic model,which of the following could have caused this?

If foreign investors believe that the Hungarian government will default on their debt,which of the following might happen?

Figure 13-1 -Refer to the FigurE₁3-1.In the figure shown,if the real interest rate is 4 percent,what is the quantity of loanable funds demanded?

Which of the following best predicts the effects of an increase in the Canadian real interest rate?

Suppose a prime ministerial candidate promises to increase the government budget surplus and claims that doing so will stop Canadian citizens from investing in foreign companies and increase the value of the dollar.Evaluate this promise.

In the open-economy macroeconomic model,how can the market for loanable funds identity be written?

What does a higher real interest rate lower the quantity of?

What is the term for a limit on the quantity of an imported good?

Suppose that in the 1990s,Canadian net capital outflow fell.Which of the following could explain this?

If the real interest rate were above the equilibrium rate,there would be a shortage of loanable funds.

If Canadian firms decide to invest more domestically at each interest rate,which of the following best describes the results?

The key determinant of net capital outflow is the real exchange rate.

In the open-economy macroeconomic model,net capital outflow links the markets for loanable funds and foreign-currency exchange.

Figure 13-1 -Refer to the FigurE₁3-1.If the world interest rate equals 4 percent,what is the net capital outflow?

An import quota imposed by Egypt would reduce Egyptian imports,but have no impact on Egyptian exports.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains from Trade

The Market Forces of Supply and Demand (PART 1)

The Market Forces of Supply and Demand (PART 2)

Measuring a Nation's Income

Measuring the Cost of Living

Production and Growth

Saving,Investment,and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff between Inflation and Unemployment

Five Debates over Macroeconomic Policy

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Exam 13: A Macroeconomic Theory of the Small Open Economy

What effect does a fall in the real interest rate have on the quantity of loanable funds?

If policymakers impose import restrictions on automobiles,the Canadian trade deficit would shrink.

In the open-economy macroeconomic model,net exports represent the quantity of dollars demanded in the foreign-currency exchange market.

Which of the following best describes the effects of trade policies?

Which of the following best defines capital flight?

Suppose that from 1980 to 1987,Canadian net capital outflows decreased.According to the open-economy macroeconomic model,which of the following could have caused this?

If foreign investors believe that the Hungarian government will default on their debt,which of the following might happen?

Figure 13-1 -Refer to the FigurE₁3-1.In the figure shown,if the real interest rate is 4 percent,what is the quantity of loanable funds demanded?

Which of the following best predicts the effects of an increase in the Canadian real interest rate?

Suppose a prime ministerial candidate promises to increase the government budget surplus and claims that doing so will stop Canadian citizens from investing in foreign companies and increase the value of the dollar.Evaluate this promise.

In the open-economy macroeconomic model,how can the market for loanable funds identity be written?

What does a higher real interest rate lower the quantity of?

What is the term for a limit on the quantity of an imported good?

Suppose that in the 1990s,Canadian net capital outflow fell.Which of the following could explain this?

If the real interest rate were above the equilibrium rate,there would be a shortage of loanable funds.

If Canadian firms decide to invest more domestically at each interest rate,which of the following best describes the results?

The key determinant of net capital outflow is the real exchange rate.

In the open-economy macroeconomic model,net capital outflow links the markets for loanable funds and foreign-currency exchange.

Figure 13-1 -Refer to the FigurE₁3-1.If the world interest rate equals 4 percent,what is the net capital outflow?

An import quota imposed by Egypt would reduce Egyptian imports,but have no impact on Egyptian exports.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains from Trade

The Market Forces of Supply and Demand (PART 1)

The Market Forces of Supply and Demand (PART 2)

Measuring a Nation's Income

Measuring the Cost of Living

Production and Growth

Saving,Investment,and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff between Inflation and Unemployment

Five Debates over Macroeconomic Policy

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