Question 1

If the United States imposes an import quota on clothing,then U.S.exports

Accepted Answer

A)  increase,U.S.imports increase,and U.S.net exports will not change. 
B)  increase,U.S.imports decrease,and U.S.net exports increase. 
C)  decrease,U.S.imports increase,and U.S.net exports decrease. 
D)  decrease,U.S.imports decrease,and U.S.net exports will not change. 
A)  increase,U.S.imports increase,and U.S.net exports will not change. 
B)  increase,U.S.imports decrease,and U.S.net exports increase. 
C)  decrease,U.S.imports increase,and U.S.net exports decrease. 
D)  decrease,U.S.imports decrease,and U.S.net exports will not change.

Question 2

In the open-economy macroeconomic model,the real exchange rate does not affect net capital outflow.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following will decrease U.S.net capital outflow?

Accepted Answer

A)  capital flight from the United States 
B)  the government budget deficit increases 
C)  the U.S.imposes import quotas 
D)  None of the above is correct. 
A)  capital flight from the United States 
B)  the government budget deficit increases 
C)  the U.S.imposes import quotas 
D)  None of the above is correct.

Question 4

If a government started with a budget deficit and moved to a surplus,domestic investment

Accepted Answer

A)  and the real exchange rate would rise. 
B)  and the real exchange rate would fall. 
C)  would rise and the real exchange rate would fall. 
D)  would fall and the real exchange rate would rise. 
A)  and the real exchange rate would rise. 
B)  and the real exchange rate would fall. 
C)  would rise and the real exchange rate would fall. 
D)  would fall and the real exchange rate would rise.

Question 5

If the government of Kenya implemented a policy that decreased national saving,its real exchange rate would

Accepted Answer

A)  depreciate and Kenyan net exports would rise. 
B)  depreciate and Kenyan net exports would fall. 
C)  appreciate and Kenyan net exports would rise. 
D)  appreciate and Kenyan net exports would fall. 
A)  depreciate and Kenyan net exports would rise. 
B)  depreciate and Kenyan net exports would fall. 
C)  appreciate and Kenyan net exports would rise. 
D)  appreciate and Kenyan net exports would fall.

Question 6

A rise in the budget deficit

Accepted Answer

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

Question 7

At the equilibrium real interest rate in the open-economy macroeconomic model,the equilibrium quantity of loanable funds equals

Accepted Answer

A)  net capital outflow. 
B)  domestic investment. 
C)  foreign currency supplied. 
D)  national saving. 
A)  net capital outflow. 
B)  domestic investment. 
C)  foreign currency supplied. 
D)  national saving.

Question 8

In the open-economy macroeconomic model,if a country's interest rate falls,then its

Accepted Answer

A)  net capital outflow and its net exports rise. 
B)  net capital outflow rises and its net exports fall. 
C)  net capital outflow falls and its net exports rise. 
D)  net capital outflow and its net exports fall. 
A)  net capital outflow and its net exports rise. 
B)  net capital outflow rises and its net exports fall. 
C)  net capital outflow falls and its net exports rise. 
D)  net capital outflow and its net exports fall.

Question 9

Which of the following is a consistent response to an increase in the U.S.real interest rate?

Accepted Answer

A)  a London bank purchases a U.S.bond instead of a Japanese bond it had considered purchasing. 
B)  U.S.firms decide to buy more capital goods 
C)  a U.S.citizen decides to put less money in his savings account than he had planned. 
D)  All of the above are consistent. 
A)  a London bank purchases a U.S.bond instead of a Japanese bond it had considered purchasing. 
B)  U.S.firms decide to buy more capital goods 
C)  a U.S.citizen decides to put less money in his savings account than he had planned. 
D)  All of the above are consistent.

Question 10

According to the open-economy macroeconomic model,import quotas increase which of the following

Accepted Answer

A)  net exports and net capital outflow 
B)  net exports but not net capital outflow. 
C)  net capital outflow but not net exports. 
D)  neither net exports nor net capital outflow. 
A)  net exports and net capital outflow 
B)  net exports but not net capital outflow. 
C)  net capital outflow but not net exports. 
D)  neither net exports nor net capital outflow.

Question 11

Other things the same,a higher real exchange rate raises net exports.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

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

Question 13

In the open-economy macroeconomic model,if investment demand increases,then

Accepted Answer

A)  net exports and the real exchange rate rise. 
B)  net exports rise and the real exchange rate falls. 
C)  net exports fall and the real exchange rate rises. 
D)  net exports and the real exchange rate fall. 
A)  net exports and the real exchange rate rise. 
B)  net exports rise and the real exchange rate falls. 
C)  net exports fall and the real exchange rate rises. 
D)  net exports and the real exchange rate fall.

Question 14

If a government increases its budget deficit,then the real exchange rate

Accepted Answer

A)  and domestic investment rise. 
B)  and domestic investment fall. 
C)  rises and domestic investment falls. 
D)  falls and domestic investment rises. 
A)  and domestic investment rise. 
B)  and domestic investment fall. 
C)  rises and domestic investment falls. 
D)  falls and domestic investment rises.

Question 15

If the U.S.government increased its deficit,then

Accepted Answer

A)  U.S.bonds would pay higher interest but a dollar would purchase fewer foreign goods. 
B)  U.S.bonds would pay higher interest and a dollar would purchase more foreign goods. 
C)  U.S.bonds would pay lower interest and a dollar would purchase fewer foreign goods.. 
D)  U.S.bonds would pay lower interest but a dollar would purchase more foreign goods. 
A)  U.S.bonds would pay higher interest but a dollar would purchase fewer foreign goods. 
B)  U.S.bonds would pay higher interest and a dollar would purchase more foreign goods. 
C)  U.S.bonds would pay lower interest and a dollar would purchase fewer foreign goods.. 
D)  U.S.bonds would pay lower interest but a dollar would purchase more foreign goods.

Question 16

Other things the same,people in the U.S.would want to save more if the real interest rate in the U.S.

Accepted Answer

A)  fell.The increased saving would increase the quantity of loanable funds demanded. 
B)  fell.The increased saving would increase the quantity of loanable funds supplied. 
C)  rose.The increased saving would increase the quantity of loanable funds demanded. 
D)  rose.The increased saving would increase the quantity of loanable funds supplied. 
A)  fell.The increased saving would increase the quantity of loanable funds demanded. 
B)  fell.The increased saving would increase the quantity of loanable funds supplied. 
C)  rose.The increased saving would increase the quantity of loanable funds demanded. 
D)  rose.The increased saving would increase the quantity of loanable funds supplied.

Question 17

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

Accepted Answer

A)  raises net capital outflow which decreases the quantity of loanable funds demanded. 
B)  raises net capital outflow which increases the quantity of loanable funds demanded. 
C)  lowers net capital outflow which decreases the quantity of loanable funds demanded. 
D)  lowers net capital outflow which increases the quantity of loanable funds demanded. 
A)  raises net capital outflow which decreases the quantity of loanable funds demanded. 
B)  raises net capital outflow which increases the quantity of loanable funds demanded. 
C)  lowers net capital outflow which decreases the quantity of loanable funds demanded. 
D)  lowers net capital outflow which increases the quantity of loanable funds demanded.

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

In the open-economy macroeconomic model,if the supply of loanable funds increases,then the interest rate

Accepted Answer

A)  and the real exchange rate increase. 
B)  and the real exchange rate decrease. 
C)  increases and the real exchange rate decreases. 
D)  decreases and the real exchange rate increases. 
A)  and the real exchange rate increase. 
B)  and the real exchange rate decrease. 
C)  increases and the real exchange rate decreases. 
D)  decreases and the real exchange rate increases.

Question 20

If the U.S.government went from a budget deficit to a budget surplus then

Accepted Answer

A)  the interest rate and the real exchange rate would increase. 
B)  the interest rate and the real exchange rate would decrease. 
C)  the interest rate would increase and the real exchange rate would decrease. 
D)  the interest rate would decrease and the real exchange rate would increase. 
A)  the interest rate and the real exchange rate would increase. 
B)  the interest rate and the real exchange rate would decrease. 
C)  the interest rate would increase and the real exchange rate would decrease. 
D)  the interest rate would decrease and the real exchange rate would increase.

Exam 32: A Macroeconomic Theory of the Open Economy

If the United States imposes an import quota on clothing,then U.S.exports

In the open-economy macroeconomic model,the real exchange rate does not affect net capital outflow.

Which of the following will decrease U.S.net capital outflow?

If a government started with a budget deficit and moved to a surplus,domestic investment

If the government of Kenya implemented a policy that decreased national saving,its real exchange rate would

A rise in the budget deficit

At the equilibrium real interest rate in the open-economy macroeconomic model,the equilibrium quantity of loanable funds equals

In the open-economy macroeconomic model,if a country's interest rate falls,then its

Which of the following is a consistent response to an increase in the U.S.real interest rate?

According to the open-economy macroeconomic model,import quotas increase which of the following

Other things the same,a higher real exchange rate raises net exports.

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

In the open-economy macroeconomic model,if investment demand increases,then

If a government increases its budget deficit,then the real exchange rate

If the U.S.government increased its deficit,then

Other things the same,people in the U.S.would want to save more if the real interest rate in the U.S.

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

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

In the open-economy macroeconomic model,if the supply of loanable funds increases,then the interest rate

If the U.S.government went from a budget deficit to a budget surplus then

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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 Macroeconomics: Basic Concepts

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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