Question 1

Figure 13-1
  
-Refer to the FigurE₁3-1.In the figure shown,if the real interest rate is 6 percent,what is the result?

Accepted Answer

A) surplus of $4000 
B) surplus of $2000 
C) shortage of $4000 
D) shortage of $2000 
A) surplus of $4000 
B) surplus of $2000 
C) shortage of $4000 
D) shortage of $2000

Question 2

A drop in the Peruvian real interest rate reduces Peruvian net capital outflow.

Accepted Answer

A) True 
 B)False

Question 3

How does an increase in the Canadian government budget deficit change the graph representing the Canadian market for loanable funds?

Accepted Answer

A) The supply of loanable funds curve shifts to the right. 
B) The supply of loanable funds curve shifts to the left. 
C) The demand for loanable funds shifts to the right. 
D) The demand for loanable funds shifts to the left. 
A) The supply of loanable funds curve shifts to the right. 
B) The supply of loanable funds curve shifts to the left. 
C) The demand for loanable funds shifts to the right. 
D) The demand for loanable funds shifts to the left.

Question 4

Figure 13-2
  
-Refer to the FigurE₁3-2.If the economy were initially in equilibrium at r₀ and E₀ and the government removed import quotas,what would happen to the exchange rate?

Accepted Answer

A) It would appreciate to E₁. 
B) It would appreciate to E₂. 
C) It would depreciate to E₁. 
D) It would depreciate to E₂. 
A) It would appreciate to E₁. 
B) It would appreciate to E₂. 
C) It would depreciate to E₁. 
D) It would depreciate to E₂.

Question 5

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

Accepted Answer

A) Interest rates rise, and the trade balance moves toward surplus. 
B) Interest rates rise, and the trade balance moves toward deficit. 
C) Interest rates fall, and the trade balance moves toward surplus. 
D) Interest rates fall, and the trade balance moves toward deficit. 
A) Interest rates rise, and the trade balance moves toward surplus. 
B) Interest rates rise, and the trade balance moves toward deficit. 
C) Interest rates fall, and the trade balance moves toward surplus. 
D) Interest rates fall, and the trade balance moves toward deficit.

Question 6

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

Accepted Answer

A) loanable funds demanded 
B) loanable funds supplied 
C) domestic investment 
D) net capital outflow 
A) loanable funds demanded 
B) loanable funds supplied 
C) domestic investment 
D) net capital outflow

Question 7

Figure 13-2
  
-Refer to the FigurE₁3-2.If the interest rate was initially at r₀ and an import quota was imposed,what would happen to the real interest rate?

Accepted Answer

A) It would not change because the world interest rate is not affected. 
B) It would decrease because supply would shift right. 
C) It would not change because both supply and demand would shift right. 
D) It would decrease because demand would shift left. 
A) It would not change because the world interest rate is not affected. 
B) It would decrease because supply would shift right. 
C) It would not change because both supply and demand would shift right. 
D) It would decrease because demand would shift left.

Question 8

If the government started with a budget deficit and moved to a surplus,which of the following best describes the effects of these changes?

Accepted Answer

A) Domestic investment would rise, and the trade balance would move towards surplus. 
B) Domestic investment would rise, and the trade balance would move towards deficit. 
C) Domestic investment would fall, and the trade balance would move towards surplus. 
D) Domestic investment would fall, and the trade balance would move towards deficit. 
A) Domestic investment would rise, and the trade balance would move towards surplus. 
B) Domestic investment would rise, and the trade balance would move towards deficit. 
C) Domestic investment would fall, and the trade balance would move towards surplus. 
D) Domestic investment would fall, and the trade balance would move towards deficit.

Question 9

In an open economy,what does the market for loanable funds equate national saving with?

Accepted Answer

A) domestic investment 
B) net capital outflow 
C) the sum of national consumption and government spending 
D) the sum of domestic investment and net capital outflow 
A) domestic investment 
B) net capital outflow 
C) the sum of national consumption and government spending 
D) the sum of domestic investment and net capital outflow

Question 10

Which of the following is most likely to increase Canadian exports?

Accepted Answer

A) The government increases its spending. 
B) The government reduces the size of the budget surplus. 
C) Canada reduces its restrictions on foreign imports. 
D) Taxes on domestic saving rise. 
A) The government increases its spending. 
B) The government reduces the size of the budget surplus. 
C) Canada reduces its restrictions on foreign imports. 
D) Taxes on domestic saving rise.

Question 11

Which of the following is the most accurate statement about trade policy?

Accepted Answer

A) Trade policy has neither microeconomic nor macroeconomic effects. 
B) Trade policy has similar microeconomic and macroeconomic effects. 
C) The effects of trade policy are more macroeconomic than microeconomic. 
D) The effects of trade policy are more microeconomic than macroeconomic. 
A) Trade policy has neither microeconomic nor macroeconomic effects. 
B) Trade policy has similar microeconomic and macroeconomic effects. 
C) The effects of trade policy are more macroeconomic than microeconomic. 
D) The effects of trade policy are more microeconomic than macroeconomic.

Question 12

Other things the same,when a Canadian company imports wool from Australia,the open-economy macroeconomic model treats this transaction as a decrease in the quantity of dollars demanded in the Canadian foreign-currency exchange market.

Accepted Answer

A) True 
 B)False

Question 13

If a government started with a deficit and moved to a surplus,which of the following best describes the effects of these changes?

Accepted Answer

A) Domestic investment and the real exchange rate would rise. 
B) Domestic investment and the real exchange rate would fall. 
C) Domestic investment would rise, and the real exchange rate would fall. 
D) Domestic investment would fall, and the real exchange rate would rise. 
A) Domestic investment and the real exchange rate would rise. 
B) Domestic investment and the real exchange rate would fall. 
C) Domestic investment would rise, and the real exchange rate would fall. 
D) Domestic investment would fall, and the real exchange rate would rise.

Question 14

If a government increases its budget deficit,which of the following best describes the consequences?

Accepted Answer

A) Interest rates and domestic investment rise. 
B) Interest rates and domestic investment fall. 
C) Interest rates rise, and domestic investment falls. 
D) Interest rates fall, and domestic investment rises. 
A) Interest rates and domestic investment rise. 
B) Interest rates and domestic investment fall. 
C) Interest rates rise, and domestic investment falls. 
D) Interest rates fall, and domestic investment rises.

Question 15

In the open-economy macroeconomic model,where does the supply of loanable funds come from?

Accepted Answer

A) national saving 
B) private saving 
C) domestic investment 
D) the sum of domestic investment and net capital outflow 
A) national saving 
B) private saving 
C) domestic investment 
D) the sum of domestic investment and net capital outflow

Question 16

In the open-economy macroeconomic model,what does the quantity of dollars demanded in the foreign-currency exchange market depend on?

Accepted Answer

A) the real exchange rate and import quotas 
B) the real exchange rate and government deficit 
C) the real interest rate and import quotas 
D) the real interest rate and government deficit 
A) the real exchange rate and import quotas 
B) the real exchange rate and government deficit 
C) the real interest rate and import quotas 
D) the real interest rate and government deficit

Question 17

Suppose a foreign real estate company wants to build a number of new houses in Canada.How does this affect the Canadian market for loanable funds?

Accepted Answer

A) The supply of loanable funds increases. 
B) The demand for loanable funds increases. 
C) The supply of loanable funds decreases. 
D) The demand for loanable funds decreases. 
A) The supply of loanable funds increases. 
B) The demand for loanable funds increases. 
C) The supply of loanable funds decreases. 
D) The demand for loanable funds decreases.

Question 18

Suppose the Canadian government institutes a "Buy Canadian" campaign,in order to encourage spending on domestic goods.What effect will this have on the Canadian trade balance?

Accepted Answer

Such a campaign will increase the demand

Question 19

According to the open-economy macroeconomic model,which of the following would NOT be a consequence of an increase in the Canadian government budget deficit?

Accepted Answer

A) Canadian trade balance rises. 
B) Canadian net capital outflow falls. 
C) Canadian investment abroad decreases. 
D) The real exchange rate of the Canadian dollar appreciates. 
A) Canadian trade balance rises. 
B) Canadian net capital outflow falls. 
C) Canadian investment abroad decreases. 
D) The real exchange rate of the Canadian dollar appreciates.

Question 20

Jack and Jill are co-owners of the Canadian firm Wells Grey Petroleum.Jack borrows money to build an oil well in Alberta.Jill borrows money to build an oil well in Venezuela.How does this affect the market for loanable funds in Canada?

Accepted Answer

A) Jack increases the demand for loanable funds. 
B) Jill increases the demand for loanable funds. 
C) Jack increases the supply for loanable funds. 
D) Jill increases the supply of loanable funds. 
A) Jack increases the demand for loanable funds. 
B) Jill increases the demand for loanable funds. 
C) Jack increases the supply for loanable funds. 
D) Jill increases the supply of loanable funds.

Figure 13-1 -Refer to the FigurE₁3-1.In the figure shown,if the real interest rate is 6 percent,what is the result?

A drop in the Peruvian real interest rate reduces Peruvian net capital outflow.

How does an increase in the Canadian government budget deficit change the graph representing the Canadian market for loanable funds?

Figure 13-2 -Refer to the FigurE₁3-2.If the economy were initially in equilibrium at r₀ and E₀ and the government removed import quotas,what would happen to the exchange rate?

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

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

Figure 13-2 -Refer to the FigurE₁3-2.If the interest rate was initially at r₀ and an import quota was imposed,what would happen to the real interest rate?

If the government started with a budget deficit and moved to a surplus,which of the following best describes the effects of these changes?

In an open economy,what does the market for loanable funds equate national saving with?

Which of the following is most likely to increase Canadian exports?

Which of the following is the most accurate statement about trade policy?

Other things the same,when a Canadian company imports wool from Australia,the open-economy macroeconomic model treats this transaction as a decrease in the quantity of dollars demanded in the Canadian foreign-currency exchange market.

If a government started with a deficit and moved to a surplus,which of the following best describes the effects of these changes?

If a government increases its budget deficit,which of the following best describes the consequences?

In the open-economy macroeconomic model,where does the supply of loanable funds come from?

In the open-economy macroeconomic model,what does the quantity of dollars demanded in the foreign-currency exchange market depend on?

Suppose a foreign real estate company wants to build a number of new houses in Canada.How does this affect the Canadian market for loanable funds?

Suppose the Canadian government institutes a "Buy Canadian" campaign,in order to encourage spending on domestic goods.What effect will this have on the Canadian trade balance?

According to the open-economy macroeconomic model,which of the following would NOT be a consequence of an increase in the Canadian government budget deficit?

Jack and Jill are co-owners of the Canadian firm Wells Grey Petroleum.Jack borrows money to build an oil well in Alberta.Jill borrows money to build an oil well in Venezuela.How does this affect the market for loanable funds in Canada?

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

Figure 13-1 -Refer to the FigurE₁3-1.In the figure shown,if the real interest rate is 6 percent,what is the result?

A drop in the Peruvian real interest rate reduces Peruvian net capital outflow.

How does an increase in the Canadian government budget deficit change the graph representing the Canadian market for loanable funds?

Figure 13-2 -Refer to the FigurE₁3-2.If the economy were initially in equilibrium at r₀ and E₀ and the government removed import quotas,what would happen to the exchange rate?

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

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

Figure 13-2 -Refer to the FigurE₁3-2.If the interest rate was initially at r₀ and an import quota was imposed,what would happen to the real interest rate?

If the government started with a budget deficit and moved to a surplus,which of the following best describes the effects of these changes?

In an open economy,what does the market for loanable funds equate national saving with?

Which of the following is most likely to increase Canadian exports?

Which of the following is the most accurate statement about trade policy?

Other things the same,when a Canadian company imports wool from Australia,the open-economy macroeconomic model treats this transaction as a decrease in the quantity of dollars demanded in the Canadian foreign-currency exchange market.

If a government started with a deficit and moved to a surplus,which of the following best describes the effects of these changes?

If a government increases its budget deficit,which of the following best describes the consequences?

In the open-economy macroeconomic model,where does the supply of loanable funds come from?

In the open-economy macroeconomic model,what does the quantity of dollars demanded in the foreign-currency exchange market depend on?

Suppose a foreign real estate company wants to build a number of new houses in Canada.How does this affect the Canadian market for loanable funds?

Suppose the Canadian government institutes a "Buy Canadian" campaign,in order to encourage spending on domestic goods.What effect will this have on the Canadian trade balance?

According to the open-economy macroeconomic model,which of the following would NOT be a consequence of an increase in the Canadian government budget deficit?

Jack and Jill are co-owners of the Canadian firm Wells Grey Petroleum.Jack borrows money to build an oil well in Alberta.Jill borrows money to build an oil well in Venezuela.How does this affect the market for loanable funds in Canada?

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