Question 1

The value of net exports equals the value of

Accepted Answer

A)  national saving. 
B)  public saving. 
C)  national saving - net capital outflow. 
D)  national saving - domestic investment. 
A)  national saving. 
B)  public saving. 
C)  national saving - net capital outflow. 
D)  national saving - domestic investment.

Question 2

In the open-economy macroeconomic model,if a country's interest rate rises,its net capital outflow

Accepted Answer

A)  rises and the real exchange rate rises. 
B)  falls and the real exchange rate falls. 
C)  rises and the real exchange rate falls. 
D)  falls and the real exchange rate rises. 
A)  rises and the real exchange rate rises. 
B)  falls and the real exchange rate falls. 
C)  rises and the real exchange rate falls. 
D)  falls and the real exchange rate rises.

Question 3

A country has national saving of $60 billion,government expenditures of $30 billion,domestic investment of $40 billion,and net capital outflow of $20 billion.What is its supply of loanable funds?

Accepted Answer

A)  $30 billion 
B)  $60 billion 
C)  $70 billion 
D)  $100 billion 
A)  $30 billion 
B)  $60 billion 
C)  $70 billion 
D)  $100 billion

Question 4

Figure 32-7  
-Refer to Figure 32-7.Suppose the Mexican economy starts at r0 and E1.Which of the following new equilibrium is consistent with capital flight?

Accepted Answer

A)  ro and E0 
B)  r1 and E0 
C)  r1 and E1 
D)  None of the above is correct. 
A)  ro and E0 
B)  r1 and E0 
C)  r1 and E1 
D)  None of the above is correct.

Question 5

Which of the following would make the equilibrium real interest rate increase and the equilibrium quantity of funds decrease?

Accepted Answer

A)  The demand for loanable funds shifts right. 
B)  The demand for loanable funds shifts left. 
C)  The supply of loanable funds shifts right. 
D)  The supply of loanable funds shifts left. 
A)  The demand for loanable funds shifts right. 
B)  The demand for loanable funds shifts left. 
C)  The supply of loanable funds shifts right. 
D)  The supply of loanable funds shifts left.

Question 6

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

Accepted Answer

A)  rises and the quantity of dollars exchanged falls. 
B)  rises and the quantity of dollars exchanged does not change. 
C)  falls and the quantity of dollars exchanged rises. 
D)  falls and the quantity of dollars exchanged does not change. 
A)  rises and the quantity of dollars exchanged falls. 
B)  rises and the quantity of dollars exchanged does not change. 
C)  falls and the quantity of dollars exchanged rises. 
D)  falls and the quantity of dollars exchanged does not change.

Question 7

According to the open-economy macroeconomic model,if the United States moved from a government budget deficit to a government budget surplus,U.S.real interest rates would increase and the real exchange rate of the U.S.dollar would appreciate.

Accepted Answer

A) True 
 B)False

Question 8

In an open economy,national saving equals

Accepted Answer

A)  domestic investment plus net capital outflow. 
B)  domestic investment minus net capital outflow. 
C)  domestic investment. 
D)  net capital outflow. 
A)  domestic investment plus net capital outflow. 
B)  domestic investment minus net capital outflow. 
C)  domestic investment. 
D)  net capital outflow.

Question 9

A tax on imported goods is called a(n)

Accepted Answer

A)  excise tax. 
B)  tariff. 
C)  import quota. 
D)  None of the above is correct. 
A)  excise tax. 
B)  tariff. 
C)  import quota. 
D)  None of the above is correct.

Question 10

If a country's budget deficit decreases,then the exchange rate

Accepted Answer

A)  rises,which raises net exports. 
B)  rises,which reduces net exports. 
C)  falls,which raises net exports. 
D)  falls,which reduces net exports. 
A)  rises,which raises net exports. 
B)  rises,which reduces net exports. 
C)  falls,which raises net exports. 
D)  falls,which reduces net exports.

Question 11

When a country imposes a trade restriction,the real exchange rate of that country's currency appreciates.

Accepted Answer

A) True 
 B)False

Question 12

An increase in the budget deficit makes domestic interest rates

Accepted Answer

A)  rise because the supply of loanable funds shifts left. 
B)  fall because the supply of loanable funds shifts left. 
C)  rise because the demand for loanable funds shifts right. 
D)  fall because the demand for loanable funds shifts right. 
A)  rise because the supply of loanable funds shifts left. 
B)  fall because the supply of loanable funds shifts left. 
C)  rise because the demand for loanable funds shifts right. 
D)  fall because the demand for loanable funds shifts right.

Question 13

Suppose that the Turkish government budget deficit increases.What curves in the open-economy macroeconomic model shift? Explain why each curve shifts the direction it does.

Accepted Answer

The supply of Turkish loanable funds cur

Question 14

Figure 32-4  
-Refer to Figure 32-5.Starting from r2 and E3,an increase in the budget deficit can be illustrated as a move to

Accepted Answer

A)  r1 and E4. 
B)  r1 and E2. 
C)  r3 and E4. 
D)  r3 and E2. 
A)  r1 and E4. 
B)  r1 and E2. 
C)  r3 and E4. 
D)  r3 and E2.

Question 15

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

Accepted Answer

A)  left,which would make the real exchange rate of the Kenyan schilling appreciate. 
B)  left,which would make the real exchange rate of the Kenyan schilling depreciate. 
C)  right,which would make the real exchange rate of the Kenyan schilling appreciate. 
D)  right,which would make the real exchange rate of the Kenyan schilling depreciate. 
A)  left,which would make the real exchange rate of the Kenyan schilling appreciate. 
B)  left,which would make the real exchange rate of the Kenyan schilling depreciate. 
C)  right,which would make the real exchange rate of the Kenyan schilling appreciate. 
D)  right,which would make the real exchange rate of the Kenyan schilling depreciate.

Question 16

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

Accepted Answer

A)  U.S.goods more expensive relative to foreign goods and reduces the quantity of dollars supplied. 
B)  U.S.goods more expensive relative to foreign goods and reduces the quantity of dollars demanded. 
C)  foreign goods more expensive relative to U.S.goods and reduces the quantity of dollars supplied. 
D)  foreign goods more expensive relative to U.S.goods and reduces the quantity of dollars demanded. 
A)  U.S.goods more expensive relative to foreign goods and reduces the quantity of dollars supplied. 
B)  U.S.goods more expensive relative to foreign goods and reduces the quantity of dollars demanded. 
C)  foreign goods more expensive relative to U.S.goods and reduces the quantity of dollars supplied. 
D)  foreign goods more expensive relative to U.S.goods and reduces the quantity of dollars demanded.

Question 17

Which of the following would both raise the U.S.exchange rate?

Accepted Answer

A)  capital flight from other countries to the U.S.occurs and the U.S.moves from budget surplus to budget deficit 
B)  capital flight from other countries to the U.S.occurs and the U.S.moves from budget deficit to budget surplus 
C)  capital flight from the U.S.to other countries occurs,the U.S.moves from budget surplus to budget deficit 
D)  capital flight from U.S.to other countries occurs,the U.S.moves from budget deficit to budget surplus 
A)  capital flight from other countries to the U.S.occurs and the U.S.moves from budget surplus to budget deficit 
B)  capital flight from other countries to the U.S.occurs and the U.S.moves from budget deficit to budget surplus 
C)  capital flight from the U.S.to other countries occurs,the U.S.moves from budget surplus to budget deficit 
D)  capital flight from U.S.to other countries occurs,the U.S.moves from budget deficit to budget surplus

Question 18

Which of the following is most likely to increase U.S.exports?

Accepted Answer

A)  The government gives subsidies to U.S.firms that export goods or services. 
B)  The government reduces the size of the budget surplus. 
C)  The United States unilaterally reduces its restrictions on foreign imports. 
D)  Taxes on domestic saving rise. 
A)  The government gives subsidies to U.S.firms that export goods or services. 
B)  The government reduces the size of the budget surplus. 
C)  The United States unilaterally reduces its restrictions on foreign imports. 
D)  Taxes on domestic saving rise.

Question 19

State what,if anything,each of the following does to the supply or demand of loanable funds.
a.
net capital outflow increases at each interest rate
b.
domestic investment increases at each interest rate
c.
the government deficit increases
d.
private saving increases

Accepted Answer

a.
the demand for loanable fun

Question 20

Suppose that the United States imposes an import quota on televisions.In the open-economy macroeconomic model this quota shifts the

Accepted Answer

A)  U.S.supply of loanable funds left. 
B)  U.S.demand for loanable funds left. 
C)  demand for U.S.dollars in the market for foreign-currency exchange right. 
D)  supply of U.S.dollars in the market for foreign-currency exchange left. 
A)  U.S.supply of loanable funds left. 
B)  U.S.demand for loanable funds left. 
C)  demand for U.S.dollars in the market for foreign-currency exchange right. 
D)  supply of U.S.dollars in the market for foreign-currency exchange left.

Exam 32: A Macroeconomic Theory of the Open Economy

The value of net exports equals the value of

In the open-economy macroeconomic model,if a country's interest rate rises,its net capital outflow

A country has national saving of $60 billion,government expenditures of $30 billion,domestic investment of $40 billion,and net capital outflow of $20 billion.What is its supply of loanable funds?

Figure 32-7 -Refer to Figure 32-7.Suppose the Mexican economy starts at r0 and E1.Which of the following new equilibrium is consistent with capital flight?

Which of the following would make the equilibrium real interest rate increase and the equilibrium quantity of funds decrease?

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

According to the open-economy macroeconomic model,if the United States moved from a government budget deficit to a government budget surplus,U.S.real interest rates would increase and the real exchange rate of the U.S.dollar would appreciate.

In an open economy,national saving equals

A tax on imported goods is called a(n)

If a country's budget deficit decreases,then the exchange rate

When a country imposes a trade restriction,the real exchange rate of that country's currency appreciates.

An increase in the budget deficit makes domestic interest rates

Suppose that the Turkish government budget deficit increases.What curves in the open-economy macroeconomic model shift? Explain why each curve shifts the direction it does.

Figure 32-4 -Refer to Figure 32-5.Starting from r2 and E3,an increase in the budget deficit can be illustrated as a move to

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

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

Which of the following would both raise the U.S.exchange rate?

Which of the following is most likely to increase U.S.exports?

State what,if anything,each of the following does to the supply or demand of loanable funds. a. net capital outflow increases at each interest rate b. domestic investment increases at each interest rate c. the government deficit increases d. private saving increases

Suppose that the United States imposes an import quota on televisions.In the open-economy macroeconomic model this quota shifts the

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

Filters

Figure 32-7 -Refer to Figure 32-7.Suppose the Mexican economy starts at r₀ and E₁.Which of the following new equilibrium is consistent with capital flight?

Figure 32-4 -Refer to Figure 32-5.Starting from r₂ and E₃,an increase in the budget deficit can be illustrated as a move to