Question 1

Figure 20-4
  
-Which of the situations illustrated in Figure 20-4 shows a currency appreciation leading to disinflation?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 2

An expansionary monetary policy will

Accepted Answer

A) increase imports. 
B) decrease exports. 
C) increase a current account deficit. 
D) decrease a capital account surplus. 
A) increase imports. 
B) decrease exports. 
C) increase a current account deficit. 
D) decrease a capital account surplus.

Question 3

The sum of capital inflows and the trade balance must be zero.

Accepted Answer

A) True 
 B)False

Question 4

Did the large U.S.budget deficits in the 1980s "crowd out" investment as some economists had predicted?

Accepted Answer

A) Yes, investment dropped as predicted. 
B) Yes, although investment did not fall nearly as much as some had feared. 
C) No, investment was not crowded out, but net exports dropped. 
D) No, no crowding out at all occurred. 
A) Yes, investment dropped as predicted. 
B) Yes, although investment did not fall nearly as much as some had feared. 
C) No, investment was not crowded out, but net exports dropped. 
D) No, no crowding out at all occurred.

Question 5

In the spring of 2002, the United States imposed tariffs on imported steel to protect the jobs of American steel workers and protect the production of the American steel industry.Why might this policy not work to increase overall employment in the United States?

Accepted Answer

This type of trade policy is commonly ca

Question 6

The sequence of events following a contractionary monetary policy would be higher interest rates followed by dollar

Accepted Answer

A) depreciation, higher exports, and lower imports. 
B) depreciation, lower exports, and higher imports. 
C) appreciation, lower exports, and higher imports. 
D) appreciation, higher exports, and lower imports. 
A) depreciation, higher exports, and lower imports. 
B) depreciation, lower exports, and higher imports. 
C) appreciation, lower exports, and higher imports. 
D) appreciation, higher exports, and lower imports.

Question 7

Figure 20-3
  
-Which of the situations illustrated in Figure 20-3 shows the effects of a currency appreciation leading to real GDP growth?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 8

A currency appreciation is disinflationary and contractionary if the

Accepted Answer

A) inward shift of the aggregate demand curve due to the fall in exports exceeds the outward shift of the aggregate supply curve due to lower input prices. 
B) outward shift of the aggregate demand curve due to the rise in exports exceeds the outward shift of the aggregate supply curve due to lower input prices. 
C) outward shift of the aggregate demand curve due to the fall in exports exceeds the inward shift of the aggregate supply curve due to higher input prices. 
D) inward shift of the aggregate demand curve due to lower input prices exceeds the outward shift of the aggregate supply curve due to the rise in exports. 
A) inward shift of the aggregate demand curve due to the fall in exports exceeds the outward shift of the aggregate supply curve due to lower input prices. 
B) outward shift of the aggregate demand curve due to the rise in exports exceeds the outward shift of the aggregate supply curve due to lower input prices. 
C) outward shift of the aggregate demand curve due to the fall in exports exceeds the inward shift of the aggregate supply curve due to higher input prices. 
D) inward shift of the aggregate demand curve due to lower input prices exceeds the outward shift of the aggregate supply curve due to the rise in exports.

Question 9

Expansionary fiscal policy in an open economy has a

Accepted Answer

A) greater effect than in a closed economy. 
B) similar effect in a closed economy. 
C) smaller effect than in a closed economy. 
D) greater effect than monetary policy. 
A) greater effect than in a closed economy. 
B) similar effect in a closed economy. 
C) smaller effect than in a closed economy. 
D) greater effect than monetary policy.

Question 10

For a major country with extensive capital flows, what is the effect of a decrease in interest rates?

Accepted Answer

A) a currency depreciation and increased net exports 
B) a currency depreciation and reduced net exports 
C) a currency appreciation and increased net exports 
D) a currency appreciation and reduced net exports 
A) a currency depreciation and increased net exports 
B) a currency depreciation and reduced net exports 
C) a currency appreciation and increased net exports 
D) a currency appreciation and reduced net exports

Question 11

Protectionism may reduce imports, and it will also

Accepted Answer

A) appreciate the dollar, reducing exports. 
B) appreciate the dollar, increasing exports. 
C) depreciate the dollar, increasing exports. 
D) depreciate the dollar, reducing exports. 
A) appreciate the dollar, reducing exports. 
B) appreciate the dollar, increasing exports. 
C) depreciate the dollar, increasing exports. 
D) depreciate the dollar, reducing exports.

Question 12

If the federal government has a deficit, and the current account is in balance, then

Accepted Answer

A) I = S. 
B) I > S. 
C) S > I. 
D) S + I = 0. 
A) I = S. 
B) I > S. 
C) S > I. 
D) S + I = 0.

Question 13

The international trade response to a contractionary monetary policy will cause aggregate demand to shift ____ and aggregate supply to shift ____.

Accepted Answer

A) outward, outward 
B) inward, outward 
C) outward, inward 
D) inward, inward 
A) outward, outward 
B) inward, outward 
C) outward, inward 
D) inward, inward

Question 14

The U.S.trade deficit is made possible, in part, because of foreigners' demand for U.S.financial assets.

Accepted Answer

A) True 
 B)False

Question 15

Why is fiscal policy less effective in an open economy than in a closed economy?

Accepted Answer

A) Expansionary fiscal policy raises demand for imports, which reduces aggregate demand. 
B) Expansionary fiscal policy raises interest rates, which raises the value of the currency, and reduces aggregate demand. 
C) Expansionary fiscal policy raises the value of the currency, which reduces demand for exports. 
D) Expansionary fiscal policy has all the above effects. 
A) Expansionary fiscal policy raises demand for imports, which reduces aggregate demand. 
B) Expansionary fiscal policy raises interest rates, which raises the value of the currency, and reduces aggregate demand. 
C) Expansionary fiscal policy raises the value of the currency, which reduces demand for exports. 
D) Expansionary fiscal policy has all the above effects.

Question 16

Figure 20-7
  
-In Figure 20-7, there are three aggregate expenditure functions (C + I + G + X − IM) for an open economy.Which of the following would cause a movement from B to A?

Accepted Answer

A) a recession in Southeast Asia 
B) an economic expansion in Japan 
C) a depreciation of the dollar 
D) an increase in the interest rate 
A) a recession in Southeast Asia 
B) an economic expansion in Japan 
C) a depreciation of the dollar 
D) an increase in the interest rate

Question 17

Which of the following would lead to a depreciating dollar?

Accepted Answer

A) a higher federal deficit 
B) lower interest rates 
C) higher interest rates 
D) contractionary monetary policy 
A) a higher federal deficit 
B) lower interest rates 
C) higher interest rates 
D) contractionary monetary policy

Question 18

An appreciation of the Japanese yen would shift the Japanese aggregate demand curve inward.

Accepted Answer

A) True 
 B)False

Question 19

What are some of the suggested remedies for the U.S.trade deficits?
 What remedies have been attempted?
 What remedies are left to try?

Accepted Answer

At certain points in the business cycle,

Exam 37: Exchange Rates and the Macroeconomy

Figure 20-4 -Which of the situations illustrated in Figure 20-4 shows a currency appreciation leading to disinflation?

An expansionary monetary policy will

The sum of capital inflows and the trade balance must be zero.

Did the large U.S.budget deficits in the 1980s "crowd out" investment as some economists had predicted?

In the spring of 2002, the United States imposed tariffs on imported steel to protect the jobs of American steel workers and protect the production of the American steel industry.Why might this policy not work to increase overall employment in the United States?

The sequence of events following a contractionary monetary policy would be higher interest rates followed by dollar

Figure 20-3 -Which of the situations illustrated in Figure 20-3 shows the effects of a currency appreciation leading to real GDP growth?

A currency appreciation is disinflationary and contractionary if the

Expansionary fiscal policy in an open economy has a

For a major country with extensive capital flows, what is the effect of a decrease in interest rates?

Protectionism may reduce imports, and it will also

If the federal government has a deficit, and the current account is in balance, then

The international trade response to a contractionary monetary policy will cause aggregate demand to shift ____ and aggregate supply to shift ____.

The U.S.trade deficit is made possible, in part, because of foreigners' demand for U.S.financial assets.

Why is fiscal policy less effective in an open economy than in a closed economy?

Figure 20-7 -In Figure 20-7, there are three aggregate expenditure functions (C + I + G + X − IM) for an open economy.Which of the following would cause a movement from B to A?

Which of the following would lead to a depreciating dollar?

An appreciation of the Japanese yen would shift the Japanese aggregate demand curve inward.

What are some of the suggested remedies for the U.S.trade deficits? What remedies have been attempted? What remedies are left to try?

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Demand and Elasticity

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Filters

The international trade response to a contractionary monetary policy will cause aggregate demand to shift and aggregate supply to shift .