Exam 19: A Macroeconomic Theory of the Open Economy

In the open-economy macroeconomic model, at the equilibrium real interest rate, the amount that people (including government) want to save exactly balances desired domestic investment.

If Kenya experienced capital flight, the supply of Kenyan schillings in the market for foreign-currency exchange would shift

Other things the same, if the expected return on U.S. assets increased, the

When a country imposes an import quota, its exchange rate

In the open-economy macroeconomic model, if the supply of loanable funds shifts right

If the risk of buying U.S. assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds, then

Which of the following would shift the demand for dollars in the market for foreign currency exchange to the right?

Suppose the real exchange rate is such that the market for foreign-currency exchange has a surplus. This surplus will lead to

Which of the following would both make a country's real exchange rate rise?

If a country experiences capital flight, which of the following lists only curves that shift right?

Figure 19-2 -Refer to Figure 19-2. What are the equilibrium values of the real exchange rate and net exports?

In the 1980s, both the U.S. government budget and U.S. trade deficits increased.

An increase in the budget surplus

In the open-economy macroeconomic model, other things the same, when a U.S. resident imports a foreign good, the demand for dollars in the foreign-currency exchange market decreases.

Other things the same, an increase in the U.S. real interest rate induces

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

In the open-economy macroeconomic model, the supply of loanable funds equals

In the open-economy macroeconomic model, a higher U.S. real exchange rate makes

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

If people decide that some country is now a more risky place to keep their saving, then at the original interest rate in that country there is a