Question 1

If there is a surplus of loanable funds,which of the following best describes the consequences?

Accepted Answer

A) The quantity demanded is greater than the quantity supplied, and the interest rate will rise. 
B) The quantity demanded is greater than the quantity supplied, and the interest rate will fall. 
C) The quantity demanded is less than the quantity supplied, and the interest rate will rise. 
D) The quantity demanded is less than the quantity supplied, and the interest rate will fall. 
A) The quantity demanded is greater than the quantity supplied, and the interest rate will rise. 
B) The quantity demanded is greater than the quantity supplied, and the interest rate will fall. 
C) The quantity demanded is less than the quantity supplied, and the interest rate will rise. 
D) The quantity demanded is less than the quantity supplied, and the interest rate will fall.

Question 2

If there is capital flight from Canada,how does the open-economy macroeconomic model change?

Accepted Answer

A) Both the supply of loanable funds and the supply of dollars for foreign exchange curves shift right. 
B) Both the supply of loanable funds and the supply of dollars for foreign exchange curves shift left. 
C) The supply of loanable funds shifts left, while the supply of dollars shifts right. 
D) The supply of loanable funds shifts right, while the supply of dollars shifts left. 
A) Both the supply of loanable funds and the supply of dollars for foreign exchange curves shift right. 
B) Both the supply of loanable funds and the supply of dollars for foreign exchange curves shift left. 
C) The supply of loanable funds shifts left, while the supply of dollars shifts right. 
D) The supply of loanable funds shifts right, while the supply of dollars shifts left.

Question 3

If the government of Colombia implemented a policy that reduced national saving,which of the following best predicts the consequences?

Accepted Answer

A) Its real exchange rate would depreciate, and Colombian net exports would rise. 
B) Its real exchange rate would depreciate, and Colombian net exports would fall. 
C) Its real exchange rate would appreciate, and Colombian net exports would rise. 
D) Its real exchange rate would appreciate, and Colombian net exports would fall. 
A) Its real exchange rate would depreciate, and Colombian net exports would rise. 
B) Its real exchange rate would depreciate, and Colombian net exports would fall. 
C) Its real exchange rate would appreciate, and Colombian net exports would rise. 
D) Its real exchange rate would appreciate, and Colombian net exports would fall.

Question 4

In an open economy,what does net capital outflow equal?

Accepted Answer

A) imports 
B) net exports 
C) exports 
D) net imports 
A) imports 
B) net exports 
C) exports 
D) net imports

Question 5

What is the supply and demand for loanable funds equation in an open economy?

Accepted Answer

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

Question 6

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

Accepted Answer

A) It discourages people from saving and so increases the quantity of loanable funds demanded. 
B) It discourages people from saving and so decreases the quantity of loanable funds demanded. 
C) It encourages people to save and so increases the quantity of loanable funds supplied. 
D) It encourages people to save and so decreases the quantity of loanable funds supplied. 
A) It discourages people from saving and so increases the quantity of loanable funds demanded. 
B) It discourages people from saving and so decreases the quantity of loanable funds demanded. 
C) It encourages people to save and so increases the quantity of loanable funds supplied. 
D) It encourages people to save and so decreases the quantity of loanable funds supplied.

Question 7

Figure 13-1
  
-Refer to the FigurE₁3-1e.In the figure shown,if the real interest rate is 4 percent,which of the following changes will there be pressure for?

Accepted Answer

A) the real interest rate to rise 
B) the demand for loanable funds curve to shift right 
C) the supply for loanable funds curve to shift left 
D) the real interest rate to fall 
A) the real interest rate to rise 
B) the demand for loanable funds curve to shift right 
C) the supply for loanable funds curve to shift left 
D) the real interest rate to fall

Question 8

What does the value of net exports equal?

Accepted Answer

A) the value of national saving 
B) the value of public saving 
C) the value of national saving minus imports 
D) the value of national saving minus domestic investment 
A) the value of national saving 
B) the value of public saving 
C) the value of national saving minus imports 
D) the value of national saving minus domestic investment

Question 9

If a country's imports are greater than its exports,what is the country said to have?

Accepted Answer

A) a trade surplus 
B) a trade deficit 
C) a comparative advantage 
D) an absolute advantage 
A) a trade surplus 
B) a trade deficit 
C) a comparative advantage 
D) an absolute advantage

Question 10

Since the mid-1990s,Canadian governments have tried to eliminate budget deficits.Which of the following was expected to happen?

Accepted Answer

A) This would decrease national saving, appreciate the real exchange rate, and decrease net exports. 
B) This would increase national saving, appreciate the real exchange rate, and increase net exports. 
C) This would increase national saving, depreciate the real exchange rate, and increase net exports. 
D) This would decrease national saving, depreciate the real exchange rate, and decrease net exports. 
A) This would decrease national saving, appreciate the real exchange rate, and decrease net exports. 
B) This would increase national saving, appreciate the real exchange rate, and increase net exports. 
C) This would increase national saving, depreciate the real exchange rate, and increase net exports. 
D) This would decrease national saving, depreciate the real exchange rate, and decrease net exports.

Question 11

In the open-economy macroeconomic model,where does the demand for loanable funds come from?

Accepted Answer

A) domestic investment 
B) net exports 
C) net capital outflow 
D) the sum of net capital outflow and domestic investment 
A) domestic investment 
B) net exports 
C) net capital outflow 
D) the sum of net capital outflow and domestic investment

Question 12

Which of the following is consistent with positive net exports?

Accepted Answer

A) Exports are greater than imports. 
B) Net capital outflow is negative. 
C) Exports are less than imports. 
D) Net capital outflow is zero. 
A) Exports are greater than imports. 
B) Net capital outflow is negative. 
C) Exports are less than imports. 
D) Net capital outflow is zero.

Question 13

When Mexico suffered from capital flight in 1994,what happened to Mexico's net exports?

Accepted Answer

A) They decreased. 
B) They did not change. 
C) They increased. 
D) They decreased until the peso appreciated; then they increased. 
A) They decreased. 
B) They did not change. 
C) They increased. 
D) They decreased until the peso appreciated; then they increased.

Question 14

Which of the following best describes the effects of an increase in real interest rates in Canada?

Accepted Answer

A) It discourages both Canadian and foreign residents from buying Canadian assets. 
B) It encourages both Canadian and foreign residents to buy Canadian assets. 
C) It encourages Canadian residents to buy Canadian assets, but discourages foreign residents from buying Canadian assets. 
D) It encourages foreign residents to buy Canadian assets, but discourages Canadian residents from buying Canadian assets. 
A) It discourages both Canadian and foreign residents from buying Canadian assets. 
B) It encourages both Canadian and foreign residents to buy Canadian assets. 
C) It encourages Canadian residents to buy Canadian assets, but discourages foreign residents from buying Canadian assets. 
D) It encourages foreign residents to buy Canadian assets, but discourages Canadian residents from buying Canadian assets.

Question 15

In an open economy,what are the determinants of the prevailing real interest rate?

Accepted Answer

A) domestic supply and domestic demand for loanable funds 
B) world supply and domestic demand for loanable funds 
C) world supply and world demand for loanable funds 
D) domestic supply and world demand for loanable funds 
A) domestic supply and domestic demand for loanable funds 
B) world supply and domestic demand for loanable funds 
C) world supply and world demand for loanable funds 
D) domestic supply and world demand for loanable funds

Question 16

Which of the following lists contains only things that decrease when the budget deficit of the Canadian government increases?

Accepted Answer

A) Canadian net exports, national saving, and net capital outflow 
B) Canadian supply of loanable funds, the real exchange rate of the dollar, and domestic investment 
C) Canadian imports, interest rates, and the real exchange rate of the dollar 
D) national saving, net exports, and the quantity demanded for loanable funds for domestic investment 
A) Canadian net exports, national saving, and net capital outflow 
B) Canadian supply of loanable funds, the real exchange rate of the dollar, and domestic investment 
C) Canadian imports, interest rates, and the real exchange rate of the dollar 
D) national saving, net exports, and the quantity demanded for loanable funds for domestic investment

Question 17

What happens in Canada when the Canadian government imposes an import quota on computer components?

Accepted Answer

A) the real interest rate increases 
B) the real interest rate decreases 
C) the real exchange rate increases 
D) the real exchange rate decreases 
A) the real interest rate increases 
B) the real interest rate decreases 
C) the real exchange rate increases 
D) the real exchange rate decreases

Question 18

How does a change in government budget affect national saving?

Accepted Answer

A) An increase in budget deficit increases national saving. 
B) An increase in budget surplus increases national saving. 
C) A decrease in budget surplus increases national saving. 
D) A decrease in budget deficit does not affect national saving. 
A) An increase in budget deficit increases national saving. 
B) An increase in budget surplus increases national saving. 
C) A decrease in budget surplus increases national saving. 
D) A decrease in budget deficit does not affect national saving.

Question 19

Which of the following would NOT be a consequence of an increase in the Canadian government's budget deficit?

Accepted Answer

A) Canadian interest rates rise. 
B) Canadian net capital outflow falls. 
C) The real exchange rate of the Canadian dollar depreciates. 
D) The Canadian supply of loanable funds shifts left. 
A) Canadian interest rates rise. 
B) Canadian net capital outflow falls. 
C) The real exchange rate of the Canadian dollar depreciates. 
D) The Canadian supply of loanable funds shifts left.

Question 20

If the government of India made policy changes that increased national saving,which of the following best predicts the consequences?

Accepted Answer

A) The real exchange rate of the rupee would depreciate, and Indian net exports would rise. 
B) The real exchange rate of the rupee would depreciate, and Indian net exports would fall. 
C) The real exchange rate of the rupee would appreciate, and Indian net exports would rise. 
D) The real exchange rate of the rupee would appreciate, and Indian net exports would fall. 
A) The real exchange rate of the rupee would depreciate, and Indian net exports would rise. 
B) The real exchange rate of the rupee would depreciate, and Indian net exports would fall. 
C) The real exchange rate of the rupee would appreciate, and Indian net exports would rise. 
D) The real exchange rate of the rupee would appreciate, and Indian net exports would fall.

If there is a surplus of loanable funds,which of the following best describes the consequences?

If there is capital flight from Canada,how does the open-economy macroeconomic model change?

If the government of Colombia implemented a policy that reduced national saving,which of the following best predicts the consequences?

In an open economy,what does net capital outflow equal?

What is the supply and demand for loanable funds equation in an open economy?

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

Figure 13-1 -Refer to the FigurE₁3-1e.In the figure shown,if the real interest rate is 4 percent,which of the following changes will there be pressure for?

What does the value of net exports equal?

If a country's imports are greater than its exports,what is the country said to have?

Since the mid-1990s,Canadian governments have tried to eliminate budget deficits.Which of the following was expected to happen?

In the open-economy macroeconomic model,where does the demand for loanable funds come from?

Which of the following is consistent with positive net exports?

When Mexico suffered from capital flight in 1994,what happened to Mexico's net exports?

Which of the following best describes the effects of an increase in real interest rates in Canada?

In an open economy,what are the determinants of the prevailing real interest rate?

Which of the following lists contains only things that decrease when the budget deficit of the Canadian government increases?

What happens in Canada when the Canadian government imposes an import quota on computer components?

How does a change in government budget affect national saving?

Which of the following would NOT be a consequence of an increase in the Canadian government's budget deficit?

If the government of India made policy changes that increased national saving,which of the following best predicts the consequences?

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

If there is a surplus of loanable funds,which of the following best describes the consequences?

If there is capital flight from Canada,how does the open-economy macroeconomic model change?

If the government of Colombia implemented a policy that reduced national saving,which of the following best predicts the consequences?

In an open economy,what does net capital outflow equal?

What is the supply and demand for loanable funds equation in an open economy?

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

Figure 13-1 -Refer to the FigurE₁3-1e.In the figure shown,if the real interest rate is 4 percent,which of the following changes will there be pressure for?

What does the value of net exports equal?

If a country's imports are greater than its exports,what is the country said to have?

Since the mid-1990s,Canadian governments have tried to eliminate budget deficits.Which of the following was expected to happen?

In the open-economy macroeconomic model,where does the demand for loanable funds come from?

Which of the following is consistent with positive net exports?

When Mexico suffered from capital flight in 1994,what happened to Mexico's net exports?

Which of the following best describes the effects of an increase in real interest rates in Canada?

In an open economy,what are the determinants of the prevailing real interest rate?

Which of the following lists contains only things that decrease when the budget deficit of the Canadian government increases?

What happens in Canada when the Canadian government imposes an import quota on computer components?

How does a change in government budget affect national saving?

Which of the following would NOT be a consequence of an increase in the Canadian government's budget deficit?

If the government of India made policy changes that increased national saving,which of the following best predicts the consequences?

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

Filters