Question 1

If the demand for loanable funds shifts left,then

Accepted Answer

A)  the real interest rate and the equilibrium quantity of loanable funds both fall. 
B)  the real interest rate falls and the equilibrium quantity of loanable funds rises. 
C)  the real interest rate and the equilibrium quantity of loanable funds both rise. 
D)  the real interest rate rises and the equilibrium quantity of loanable funds falls. 
A)  the real interest rate and the equilibrium quantity of loanable funds both fall. 
B)  the real interest rate falls and the equilibrium quantity of loanable funds rises. 
C)  the real interest rate and the equilibrium quantity of loanable funds both rise. 
D)  the real interest rate rises and the equilibrium quantity of loanable funds falls.

Question 2

A trade policy is a government policy

Accepted Answer

A)  directed toward the goal of improving the tradeoff between equity and efficiency. 
B)  that directly influences the quantity of goods and services that a country imports or exports. 
C)  intended to exploit the tradeoff between inflation and unemployment by altering the budget deficit. 
D)  concerning employment laws.. 
A)  directed toward the goal of improving the tradeoff between equity and efficiency. 
B)  that directly influences the quantity of goods and services that a country imports or exports. 
C)  intended to exploit the tradeoff between inflation and unemployment by altering the budget deficit. 
D)  concerning employment laws..

Question 3

How are the identities S = NCO + I and NCO = NX related to the foreign currency exchange market and the loanable funds market?

Accepted Answer

S is national saving,which is the source

Question 4

If the U.S.government imposes a quota on toy imports,then

Accepted Answer

A)  net capital outflow rises. 
B)  net exports rise. 
C)  the exchange rate rises. 
D)  All of the above are correct. 
A)  net capital outflow rises. 
B)  net exports rise. 
C)  the exchange rate rises. 
D)  All of the above are correct.

Question 5

An increase in real interest rates in the United States

Accepted Answer

A)  discourages both U.S.and foreign residents from buying U.S.assets. 
B)  encourages both U.S.and foreign residents to buy U.S.assets. 
C)  encourages U.S.residents to buy U.S.assets,but discourages foreign residents from buying U.S.assets. 
D)  encourages foreign residents to buy U.S.assets,but discourages U.S.residents from buying U.S.assets. 
A)  discourages both U.S.and foreign residents from buying U.S.assets. 
B)  encourages both U.S.and foreign residents to buy U.S.assets. 
C)  encourages U.S.residents to buy U.S.assets,but discourages foreign residents from buying U.S.assets. 
D)  encourages foreign residents to buy U.S.assets,but discourages U.S.residents from buying U.S.assets.

Question 6

When a country experiences capital flight,the interest rate

Accepted Answer

A)  falls because the demand for loanable funds shifts left. 
B)  falls because the supply for loanable funds shifts right. 
C)  rises because the demand for loanable funds shifts right. 
D)  rises because the supply for loanable funds shifts left. 
A)  falls because the demand for loanable funds shifts left. 
B)  falls because the supply for loanable funds shifts right. 
C)  rises because the demand for loanable funds shifts right. 
D)  rises because the supply for loanable funds shifts left.

Question 7

The variable that links the market for loanable funds and the market for foreign-currency exchange is

Accepted Answer

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

Question 8

What do trade policies do to the standard of living?

Accepted Answer

Trade policies reduce both imports and e

Question 9

In the open-economy macroeconomic model,the market for loanable funds identity can be written as

Accepted Answer

A)  S = I 
B)  S = NCO 
C)  S = I + NCO 
D)  S + I = NCO 
A)  S = I 
B)  S = NCO 
C)  S = I + NCO 
D)  S + I = NCO

Question 10

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

Accepted Answer

A)  A retail outlet in Canada wants to buy handbags from a U.S.manufacturer. 
B)  A U.S.bank loans dollars to Karen,a U.S.resident,who wants to purchase a car in the U.S. 
C)  A U.S.based law firm wants to build a new office in Japan. 
D)  All of the above are correct. 
A)  A retail outlet in Canada wants to buy handbags from a U.S.manufacturer. 
B)  A U.S.bank loans dollars to Karen,a U.S.resident,who wants to purchase a car in the U.S. 
C)  A U.S.based law firm wants to build a new office in Japan. 
D)  All of the above are correct.

Question 11

If the supply of loanable funds shifts right,then

Accepted Answer

A)  the real interest rate and the equilibrium quantity of loanable funds both fall. 
B)  the real interest rate falls and the equilibrium quantity of loanable funds rises. 
C)  the real interest rate and the equilibrium quantity of loanable funds both rise. 
D)  the real interest rate rises and the equilibrium quantity of loanable funds falls. 
A)  the real interest rate and the equilibrium quantity of loanable funds both fall. 
B)  the real interest rate falls and the equilibrium quantity of loanable funds rises. 
C)  the real interest rate and the equilibrium quantity of loanable funds both rise. 
D)  the real interest rate rises and the equilibrium quantity of loanable funds falls.

Question 12

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

Accepted Answer

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

Question 13

An increase in the budget deficit

Accepted Answer

A)  reduces net capital outflow and domestic investment. 
B)  reduces net capital outflow and raises domestic investment. 
C)  raises net capital outflow and domestic investment 
D)  raises net capital outflow and reduces domestic investment. 
A)  reduces net capital outflow and domestic investment. 
B)  reduces net capital outflow and raises domestic investment. 
C)  raises net capital outflow and domestic investment 
D)  raises net capital outflow and reduces domestic investment.

Question 14

If the real exchange rate for the dollar is below the equilibrium level,the quantity of dollars supplied in the market for foreign-currency exchange is

Accepted Answer

A)  less than the quantity demanded and the dollar will appreciate. 
B)  less than the quantity demanded and the dollar will depreciate. 
C)  greater than the quantity demanded and the dollar will appreciate. 
D)  greater than the quantity demanded and the dollar will depreciate. 
A)  less than the quantity demanded and the dollar will appreciate. 
B)  less than the quantity demanded and the dollar will depreciate. 
C)  greater than the quantity demanded and the dollar will appreciate. 
D)  greater than the quantity demanded and the dollar will depreciate.

Question 15

When a government increases its budget deficit,then that country's

Accepted Answer

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

Question 16

Suppose that the U.S.imposed an import quota on beef.Sales of U.S.beef producers would

Accepted Answer

A)  rise and exports of other industries would increase. 
B)  rise and exports of other industries would decline. 
C)  not change,exports of other industries would increase. 
D)  not change,exports of other industries would decline. 
A)  rise and exports of other industries would increase. 
B)  rise and exports of other industries would decline. 
C)  not change,exports of other industries would increase. 
D)  not change,exports of other industries would decline.

Question 17

In the long run import quotas do not affect the size of net exports.

Accepted Answer

A) True 
 B)False

Question 18

If the U.S.government imposed a quota on toy imports,then

Accepted Answer

A)  imports and exports would both fall. 
B)  imports would fall and exports would rise. 
C)  imports would rise and exports would fall. 
D)  None of the above is correct. 
A)  imports and exports would both fall. 
B)  imports would fall and exports would rise. 
C)  imports would rise and exports would fall. 
D)  None of the above is correct.

Question 19

The theory of purchasing-power parity implies that the demand curve for foreign-currency exchange is

Accepted Answer

A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical. 
A)  downward sloping. 
B)  upward sloping. 
C)  horizontal. 
D)  vertical.

Question 20

Other things the same,as the real interest rate rises

Accepted Answer

A)  domestic investment and net capital outflow both rise. 
B)  domestic investment and net capital outflow both fall. 
C)  domestic investment rises and net capital outflow falls. 
D)  domestic investment falls and net capital outflow rises. 
A)  domestic investment and net capital outflow both rise. 
B)  domestic investment and net capital outflow both fall. 
C)  domestic investment rises and net capital outflow falls. 
D)  domestic investment falls and net capital outflow rises.

Exam 32: A Macroeconomic Theory of the Open Economy

If the demand for loanable funds shifts left,then

A trade policy is a government policy

How are the identities S = NCO + I and NCO = NX related to the foreign currency exchange market and the loanable funds market?

If the U.S.government imposes a quota on toy imports,then

An increase in real interest rates in the United States

When a country experiences capital flight,the interest rate

The variable that links the market for loanable funds and the market for foreign-currency exchange is

What do trade policies do to the standard of living?

In the open-economy macroeconomic model,the market for loanable funds identity can be written as

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

If the supply of loanable funds shifts right,then

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

An increase in the budget deficit

If the real exchange rate for the dollar is below the equilibrium level,the quantity of dollars supplied in the market for foreign-currency exchange is

When a government increases its budget deficit,then that country's

Suppose that the U.S.imposed an import quota on beef.Sales of U.S.beef producers would

In the long run import quotas do not affect the size of net exports.

If the U.S.government imposed a quota on toy imports,then

The theory of purchasing-power parity implies that the demand curve for foreign-currency exchange is

Other things the same,as the real interest rate rises

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