Question 1

During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would

Accepted Answer

A) shift both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange right 
B) shift the demand for loanable funds right and shift the supply of dollars in the market for foreign-currency exchange left 
C) shift the demand for loanable funds left and shift the supply of dollars in the market for foreign-currency exchange right 
D) shift both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange left 
A) shift both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange right 
B) shift the demand for loanable funds right and shift the supply of dollars in the market for foreign-currency exchange left 
C) shift the demand for loanable funds left and shift the supply of dollars in the market for foreign-currency exchange right 
D) shift both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange left

Question 2

When a country experiences capital flight its currency

Accepted Answer

A) appreciates and net exports rise. 
B) appreciates and net exports fall. 
C) depreciates and net exports rise. 
D) depreciates and net exports fall. 
A) appreciates and net exports rise. 
B) appreciates and net exports fall. 
C) depreciates and net exports rise. 
D) depreciates and net exports fall.

Question 3

Explain how an increase in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate.

Accepted Answer

An increase in demand for capital goods

Question 4

Over the past three decades, the United States has

Accepted Answer

A) generally had, or been very near to a trade balance. 
B) had trade deficits in about as many years as it has trade surpluses. 
C) persistently had a trade deficit. 
D) persistently had a trade surplus. 
A) generally had, or been very near to a trade balance. 
B) had trade deficits in about as many years as it has trade surpluses. 
C) persistently had a trade deficit. 
D) persistently had a trade surplus.

Question 5

If a country's budget deficit decreases, then the exchange rate

Accepted Answer

A) rises, which raises net exports. 
B) rises, which reduces net exports. 
C) falls, which raises net exports. 
D) falls, which reduces net exports. 
A) rises, which raises net exports. 
B) rises, which reduces net exports. 
C) falls, which raises net exports. 
D) falls, which reduces net exports.

Question 6

Figure 19-1  
-Refer to Figure 19-1. In the Figure shown, if the real interest rate is 6 percent, the quantity of loanable funds demanded is

Accepted Answer

A) $20 billion, and the quantity supplied is $40 billion. 
B) $20 billion, and the quantity supplied is $60 billion. 
C) $60 billion, and the quantity supplied is $20 billion. 
D) $60 billion, and the quantity supplied is $40 billion. 
A) $20 billion, and the quantity supplied is $40 billion. 
B) $20 billion, and the quantity supplied is $60 billion. 
C) $60 billion, and the quantity supplied is $20 billion. 
D) $60 billion, and the quantity supplied is $40 billion.

Question 7

If a country went from a government budget deficit to a surplus, national saving would

Accepted Answer

A) increase, shifting the supply of loanable funds right. 
B) increase, shifting the supply of loanable funds left. 
C) decrease, shifting the demand for loanable funds right. 
D) decrease, shifting the demand for loanable funds left. 
A) increase, shifting the supply of loanable funds right. 
B) increase, shifting the supply of loanable funds left. 
C) decrease, shifting the demand for loanable funds right. 
D) decrease, shifting the demand for loanable funds left.

Question 8

If the U.S. were to impose import quotas

Accepted Answer

A) the demand for loanable funds and the demand for dollars in the market for foreign-currency exchange would both increase. 
B) nether the demand for loanable funds nor the demand for dollars in the market for foreign-currency exchange would increase. 
C) the demand for loanable funds would increase, but the demand for dollars in the market for foreign-currency exchange would not. 
D) the demand for dollars in the market for foreign-currency exchange would increase, but the demand for loanable funds would not. 
A) the demand for loanable funds and the demand for dollars in the market for foreign-currency exchange would both increase. 
B) nether the demand for loanable funds nor the demand for dollars in the market for foreign-currency exchange would increase. 
C) the demand for loanable funds would increase, but the demand for dollars in the market for foreign-currency exchange would not. 
D) the demand for dollars in the market for foreign-currency exchange would increase, but the demand for loanable funds would not.

Question 9

When a country suffers from capital flight, the demand for loanable funds in that country shifts

Accepted Answer

A) right, which increases interest rates in that country. 
B) right, which decreases interest rates in that country. 
C) left, which increases interest rates in that country. 
D) left, which decreases interest rates in that country. 
A) right, which increases interest rates in that country. 
B) right, which decreases interest rates in that country. 
C) left, which increases interest rates in that country. 
D) left, which decreases interest rates in that country.

Question 10

If fear of default on bonds issued by U.S. corporations rise, then

Accepted Answer

A) net capital outflow and the exchange rate both rise. 
B) net capital outflow rises and the exchange rate falls. 
C) net capital outflow falls and the exchange rate rises. 
D) net capital outflow and the exchange rate both fall. 
A) net capital outflow and the exchange rate both rise. 
B) net capital outflow rises and the exchange rate falls. 
C) net capital outflow falls and the exchange rate rises. 
D) net capital outflow and the exchange rate both fall.

Question 11

Which of the following would not be a consequence of an increase in the U.S. government budget deficit?

Accepted Answer

A) The U.S. trade balance rises. 
B) The U.S. interest rate rises. 
C) Domestic investment in the U.S. falls. 
D) The real exchange rate of the U.S. dollar appreciates. 
A) The U.S. trade balance rises. 
B) The U.S. interest rate rises. 
C) Domestic investment in the U.S. falls. 
D) The real exchange rate of the U.S. dollar appreciates.

Question 12

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

Accepted Answer

A) U.S. citizens would buy more German bonds and German citizens would buy more U.S. bonds. 
B) U.S. citizens would buy more German bonds and German citizens would buy fewer U.S. bonds. 
C) U.S. citizens would buy fewer German bonds and German citizens would buy more U.S. bonds. 
D) U.S. citizens would buy fewer German bonds and German citizens would buy fewer U.S. bonds. 
A) U.S. citizens would buy more German bonds and German citizens would buy more U.S. bonds. 
B) U.S. citizens would buy more German bonds and German citizens would buy fewer U.S. bonds. 
C) U.S. citizens would buy fewer German bonds and German citizens would buy more U.S. bonds. 
D) U.S. citizens would buy fewer German bonds and German citizens would buy fewer U.S. bonds.

Question 13

Although trade policies do not affect a country's overall trade balance, they do affect specific firms and industries.

Accepted Answer

A) True 
 B)False

Question 14

Why do higher real interest rates lead to lower net capital outflow?

Accepted Answer

Higher U.S. interest rates make U.S. ass

During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would

When a country experiences capital flight its currency

Explain how an increase in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate.

Over the past three decades, the United States has

If a country's budget deficit decreases, then the exchange rate

Figure 19-1 -Refer to Figure 19-1. In the Figure shown, if the real interest rate is 6 percent, the quantity of loanable funds demanded is

If a country went from a government budget deficit to a surplus, national saving would

If the U.S. were to impose import quotas

When a country suffers from capital flight, the demand for loanable funds in that country shifts

If fear of default on bonds issued by U.S. corporations rise, then

Which of the following would not be a consequence of an increase in the U.S. government budget deficit?

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

Although trade policies do not affect a country's overall trade balance, they do affect specific firms and industries.

Why do higher real interest rates lead to lower net capital outflow?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 19: A Macroeconomic Theory of the Open Economy

During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would

When a country experiences capital flight its currency

Explain how an increase in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate.

Over the past three decades, the United States has

If a country's budget deficit decreases, then the exchange rate

Figure 19-1 -Refer to Figure 19-1. In the Figure shown, if the real interest rate is 6 percent, the quantity of loanable funds demanded is

If a country went from a government budget deficit to a surplus, national saving would

If the U.S. were to impose import quotas

When a country suffers from capital flight, the demand for loanable funds in that country shifts

If fear of default on bonds issued by U.S. corporations rise, then

Which of the following would not be a consequence of an increase in the U.S. government budget deficit?

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

Although trade policies do not affect a country's overall trade balance, they do affect specific firms and industries.

Why do higher real interest rates lead to lower net capital outflow?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters