Question 1

What is the natural level of output?

Accepted Answer

The natural level of output is

Question 2

The aggregate demand curve (AD)for an open economy is derived from the

Accepted Answer

A)  IS curve 
B)  LM curve 
C)  BP curve 
D)  all of the above 
A)  IS curve 
B)  LM curve 
C)  BP curve 
D)  all of the above

Question 3

Which of the following is a correct statement about the effects of monetary and fiscal policies?

Accepted Answer

A)  Monetary policy is effective under a fixed exchange rate regime, but not under flexible rates. 
B)  A monetary shock will shift the aggregate demand curve in the same direction, whether exchange rates are fixed or flexible. 
C)  A real shock will shift the aggregate demand curve under fixed but not flexible exchange rates. 
D)  Monetary policy can always be used to correct real shocks, whether exchange rates are fixed or flexible. 
A)  Monetary policy is effective under a fixed exchange rate regime, but not under flexible rates. 
B)  A monetary shock will shift the aggregate demand curve in the same direction, whether exchange rates are fixed or flexible. 
C)  A real shock will shift the aggregate demand curve under fixed but not flexible exchange rates. 
D)  Monetary policy can always be used to correct real shocks, whether exchange rates are fixed or flexible.

Question 4

A nation's output in the short-run can

Accepted Answer

A)  exceed its natural level 
B)  fall short of its natural level 
C)  equal to its natural level 
D)  any of the above 
A)  exceed its natural level 
B)  fall short of its natural level 
C)  equal to its natural level 
D)  any of the above

Question 5

Output in the short run exceeds the natural level of output if expected prices

Accepted Answer

A)  exceed actual prices 
B)  are lower than actual prices 
C)  are equal to actual prices 
D)  any of the above 
A)  exceed actual prices 
B)  are lower than actual prices 
C)  are equal to actual prices 
D)  any of the above

Question 6

With high short-term international capital flows,fixed exchange rates,and flexible prices

Accepted Answer

A)  monetary policy is effective 
B)  fiscal policy is effective 
C)  both fiscal and monetary policies are effective 
D)  neither fiscal policy nor monetary policies are effective 
A)  monetary policy is effective 
B)  fiscal policy is effective 
C)  both fiscal and monetary policies are effective 
D)  neither fiscal policy nor monetary policies are effective

Question 7

Which of the following statements is false?

Accepted Answer

A)  expansionary fiscal or monetary policy can increase the nation's output temporarily above its natural level 
B)  expansionary fiscal or monetary policy can used to correct a recession but only at the expense of higher prices in the nation 
C)  a recession cannot be eliminated automatically even if domestic prices are flexible downward 
D)  when prices are not flexible downward inflation may be less costly that recession 
A)  expansionary fiscal or monetary policy can increase the nation's output temporarily above its natural level 
B)  expansionary fiscal or monetary policy can used to correct a recession but only at the expense of higher prices in the nation 
C)  a recession cannot be eliminated automatically even if domestic prices are flexible downward 
D)  when prices are not flexible downward inflation may be less costly that recession

Question 8

During the last decade the inflation rate in the U.S.has been roughly

Accepted Answer

A)  0% 
B)  3% 
C)  5% 
D)  8% 
A)  0% 
B)  3% 
C)  5% 
D)  8%

Question 9

An autonomous improvement in the nation's trade balance under fixed exchange rates will cause the nation's aggregate demand curve to

Accepted Answer

A)  shift to the right 
B)  shift to the left 
C)  remain unchanged 
D)  any of the above 
A)  shift to the right 
B)  shift to the left 
C)  remain unchanged 
D)  any of the above

Question 10

Suppose that the economy is in long-run equilibrium,and people in other countries suddenly decide to purchase fewer US goods.Explain the short-run effects on the US economy under both fixed and flexible exchange rates.

Accepted Answer

Under fixed exchange rates,aggregate dem

What is the natural level of output?

The aggregate demand curve (AD)for an open economy is derived from the

Which of the following is a correct statement about the effects of monetary and fiscal policies?

A nation's output in the short-run can

Output in the short run exceeds the natural level of output if expected prices

With high short-term international capital flows,fixed exchange rates,and flexible prices

Which of the following statements is false?

During the last decade the inflation rate in the U.S.has been roughly

An autonomous improvement in the nation's trade balance under fixed exchange rates will cause the nation's aggregate demand curve to

Suppose that the economy is in long-run equilibrium,and people in other countries suddenly decide to purchase fewer US goods.Explain the short-run effects on the US economy under both fixed and flexible exchange rates.

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Demand and Supply, offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open Economy Macroeconomics: Adjustment Policies

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, present, and Future Answers to Selected Problems on Web

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Exam 19: Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

What is the natural level of output?

The aggregate demand curve (AD)for an open economy is derived from the

Which of the following is a correct statement about the effects of monetary and fiscal policies?

A nation's output in the short-run can

Output in the short run exceeds the natural level of output if expected prices

With high short-term international capital flows,fixed exchange rates,and flexible prices

Which of the following statements is false?

During the last decade the inflation rate in the U.S.has been roughly

An autonomous improvement in the nation's trade balance under fixed exchange rates will cause the nation's aggregate demand curve to

Suppose that the economy is in long-run equilibrium,and people in other countries suddenly decide to purchase fewer US goods.Explain the short-run effects on the US economy under both fixed and flexible exchange rates.

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Demand and Supply, offer Curves, and the Terms of Trade

Factor Endowments and the Heckscherohlin Theory

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Trade Restrictions: Tariffs

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange Rates

The Income Adjustment Mechanism and Synthesis of Automatic Adjustments

Open Economy Macroeconomics: Adjustment Policies

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past, present, and Future Answers to Selected Problems on Web

Filters