Exam 13: A Macroeconomic Theory of the Open Economy

When Mexico suffered from capital flight in 1994, which of the following best describes the effects of this event on Canadian economy?

Which of the following lists contains only things that increase when the budget deficit of the Canadian government increases?

If there is a surplus of loanable funds, which of the following best describes the consequences?

An import quota imposed by Egypt would reduce Egyptian imports, but have no impact on Egyptian exports.

Which of the following is included in the supply of dollars in the market for foreign-currency exchange in the open-economy macroeconomic model?

Suppose that Canada imposes an import quota on automobiles. In the open-economy macroeconomic model, this quota would shift which of the following curves?

In the open-economy macroeconomic model, which of the following is the key determinant of net capital outflow?

Which of the following is included in the demand for dollars in the market for foreign-currency exchange in the open-market macroeconomic model?

In the open-economy macroeconomic model, net capital outflow links the markets for loanable funds and foreign-currency exchange.

Because depreciation of the real exchange rate of the dollar increases Canadian net exports, the demand curve for dollars in the foreign-currency exchange market is downward sloping.

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

What are the effects of an increase in the supply of loanable funds?

Figure 32-1 -Refer to Figure 32-1. If the world interest rate equals 6 percent, what is the net capital outflow?

When Mexico suffered from capital flight in 1994, what happened to Mexico's real interest rate and the peso?

Which of the following does the open-economy macroeconomic model examine?

If the world real interest rate exceeds the interest rate that would occur if the Canadian economy were closed, then the Canadian net capital outflow will be which of the following?

According to the theory of purchasing-power parity, what is the shape of the demand curve for foreign-currency exchange?

If the world real interest rate is less than the real interest rate that would occur in Canada if there was no trade, then how does Canadian net capital outflow change?

Which of the following best describes the effects of an increase in real interest rates in Canada?

In the open-economy macroeconomic model, where does the supply of loanable funds come from?