Exam 32: A Macroeconomic Theory of the Open Economy

An increase in the budget deficit causes domestic interest rates

If the demand for dollars in the market for foreign-currency exchange shifts right,then the exchange rate

In 1995 House Speaker Newt Gingrich threatened to send the United States into default on its debt.During the day of this announcement,U.S.interest rates rose and the real exchange rate of the U.S.dollar depreciated.Which of these changes is consistent with the results of the open-economy macroeconomic model?

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

Other things the same,if the U.S.real exchange rate depreciated,then U.S.net exports would

In the open-economy macroeconomic model,if for some reason foreign citizens want to purchase more U.S.goods and services at each exchange rate,then

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

If the U.S.imposed an import quota on construction equipment,then the sales of U.S.construction equipment producers would

The country of Frequencia is politically very stable and has a long tradition of respecting property rights.If several other countries suddenly became politically unstable,we would expect Frequencia's

When Mexico suffered from capital flight in 1994,the U.S.real interest rate

When Mexico suffered from capital flight in 1994,Mexico's real interest rate

Which of the following leads to an increase in net exports in the long run?

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

A higher U.S.interest rate discourages Americans from buying foreign assets and encourages foreigners to buy U.S.assets.

If policymakers impose import restrictions on clothing,the U.S.trade deficit will shrink.

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

Figure 32-1 -Refer to Figure 32-1.In the Figure shown,if the real interest rate is 6 percent,the quantity of loanable funds demanded is

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

Suppose the U.S.government institutes a "Buy American" campaign,in order to encourage spending on domestic goods.What effect will this have on the U.S.trade balance?

Other things the same,when a Greek company imports bicycles from the U.S. ,the open-economy macroeconomic model treats this transaction as an increase in the quantity of dollars demanded in the U.S.foreign-currency exchange market.