Exam 32: A Macroeconomic Theory of the Open Economy

In the open-economy macroeconomic model,the supply curve of currency is vertical because the quantity of currency supplied does not depend on the real exchange rate.

When Mexico suffered from capital flight in 1994,the U.S.real interest rate

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

The country of Meditor is politically very stable and has a long tradition of respecting property rights.If several other countries suddenly became politically unstable,we would expect Meditor's

Net capital outflow is equal to

Net capital outflow represents the quantity of dollars supplied in the foreign-currency exchange market.

Other things the same,when an Australian company imports sporting equipment from the U.S.,the open-economy macroeconomic model treats this transaction as an increase in the quantity of dollars demanded in the U.S.foreign-currency exchange market.

When Mexico suffered from capital flight in 1994,U.S.demand for loanable funds

If interest rates rose more in France than in the U.S.,then other things the same

Because depreciation of the real exchange rate of the dollar increases U.S.net exports,the demand curve for dollars in the foreign-currency exchange market is downward sloping.

In the open-economy macroeconomic model,if the supply of loanable funds increases,the interest rate

When the U.S.real interest rate falls,owning U.S.assets is

How are the identities S = NCO + I and NCO = NX related to the foreign currency exchange market and the loanable funds market?

In the open-economy macroeconomic model,other things the same,a decrease in the interest rate shifts

Suppose that the U.S.imposed an import quota on beef.Sales of U.S.beef producers would

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

If there is capital flight from the United States,then the demand for loanable funds

-Refer to Figure 32-5.If the economy were initially in equilibrium at r₂ and E₃ and the government removed import quotas,the exchange rate would

Which of the following would cause the real exchange rate of the U.S.dollar to depreciate?

If the quantity of loanable funds supplied is greater than the quantity demanded,then