Exam 19: A Macroeconomic Theory of the Open Economy

In an open economy, national saving equals

When a country experiences capital flight, the interest rate

When the real exchange rate for the dollar appreciates, U.S. goods become

In the open-economy macroeconomic model, equilibrium in the market for foreign-currency exchange is determined by the equality between the supply of dollars which comes from

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

Other things the same, as the real interest rate rises

Other things the same, which of the following would shift the supply of dollars in the market for foreign exchange to the right?

If a country's budget deficit increases, then in the foreign exchange market,

If the supply of loanable funds shifts right, then

If the exchange rate rises, which of the following falls in the open-economy macroeconomic model?

An increase in the budget deficit causes net capital outflow to

Over the past two decades the U.S. has persistently had trade deficits.

In the open-economy macroeconomic model, the amount of net capital outflow represents the quantity of dollars

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.

Other things the same, when the real exchange rate of the dollar appreciates, U.S. goods become more attractive to U.S. residents, but less attractive to foreign residents.

In the open economy macroeconomic model, the price that balances supply and demand in the market for foreign-currency exchange model is the

A drop in a country's real interest rate reduces that country's net capital outflow.

When a country experiences capital flight its

Capital flight raises a country's interest rate.

If a country raises its budget deficit, the net capital outflow