Question 1

Suppose the U.S.supply of loanable funds shifts left.This will

Accepted Answer

A)  increase U.S.net capital outflow and increase the quantity of loanable funds demanded. 
B)  increase U.S.net capital outflow and decrease the quantity of loanable funds demanded. 
C)  decrease U.S.net capital outflow and increase the quantity of loanable funds demanded. 
D)  decrease U.S.net capital outflow and decrease the quantity of loanable funds demanded. 
A)  increase U.S.net capital outflow and increase the quantity of loanable funds demanded. 
B)  increase U.S.net capital outflow and decrease the quantity of loanable funds demanded. 
C)  decrease U.S.net capital outflow and increase the quantity of loanable funds demanded. 
D)  decrease U.S.net capital outflow and decrease the quantity of loanable funds demanded.

Question 2

If the real interest rate were above the equilibrium rate,there would be a shortage of loanable funds.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following is the most accurate statement?

Accepted Answer

A)  Trade policy has neither microeconomic nor macroeconomic effects. 
B)  Trade policy has similar microeconomic and macroeconomic effects. 
C)  The effects of trade policy are more macroeconomic than microeconomic. 
D)  The effects of trade policy are more microeconomic than macroeconomic. 
A)  Trade policy has neither microeconomic nor macroeconomic effects. 
B)  Trade policy has similar microeconomic and macroeconomic effects. 
C)  The effects of trade policy are more macroeconomic than microeconomic. 
D)  The effects of trade policy are more microeconomic than macroeconomic.

Question 4

Which of the following increases if the U.S.imposes an import quota on computer components?

Accepted Answer

A)  U.S.exports 
B)  U.S.imports 
C)  U.S.net exports 
D)  None of the above increases. 
A)  U.S.exports 
B)  U.S.imports 
C)  U.S.net exports 
D)  None of the above increases.

Question 5

Capital flight refers to

Accepted Answer

A)  the movement of workers across international borders in response to exchange rate changes. 
B)  the movement of funds between financial intermediaries when interest rates change. 
C)  the ability of foreign direct investment to lift a country out of poverty. 
D)  a large and sudden movement of funds out of a country. 
A)  the movement of workers across international borders in response to exchange rate changes. 
B)  the movement of funds between financial intermediaries when interest rates change. 
C)  the ability of foreign direct investment to lift a country out of poverty. 
D)  a large and sudden movement of funds out of a country.

Question 6

Figure 32-2  
-Refer to Figure 32-2.At what real exchange rate is the quantity of dollars demanded equal to 100?

Accepted Answer

A)  1.4 
B)  1 
C)  .6 
D)  None of the above are correct. 
A)  1.4 
B)  1 
C)  .6 
D)  None of the above are correct.

Question 7

If the government of Japan raised its budget deficit,then the yen would

Accepted Answer

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

Question 8

In the open-economy macroeconomic model,net exports equal the quantity of dollars demanded in the foreign-currency exchange market.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would tend to shift the supply of dollars in the market for foreign-currency exchange in the open-economy macroeconomic model to the right?

Accepted Answer

A)  The exchange rate rises. 
B)  The exchange rate falls. 
C)  The expected rate of return on U.S.assets rises. 
D)  The expected rate of return on U.S.assets falls. 
A)  The exchange rate rises. 
B)  The exchange rate falls. 
C)  The expected rate of return on U.S.assets rises. 
D)  The expected rate of return on U.S.assets falls.

Question 10

Figure 32-2  
-Refer to Figure 32-2.If the real exchange rate is .6,then there is a

Accepted Answer

A)  surplus of 100 so the real exchange rate will fall. 
B)  surplus of 100 so the real exchange rate will rise. 
C)  shortage of 100 so the real exchange rate will fall. 
D)  shortage of 100 so the real exchange rate will rise. 
A)  surplus of 100 so the real exchange rate will fall. 
B)  surplus of 100 so the real exchange rate will rise. 
C)  shortage of 100 so the real exchange rate will fall. 
D)  shortage of 100 so the real exchange rate will rise.

Question 11

If Argentina suffers from capital flight,Argentinean domestic investment and Argentinean net exports will both decline.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following is correct in an open economy?

Accepted Answer

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

Question 13

The explanation for the slope of

Accepted Answer

A)  the supply of loanable funds curve is based on the logic that a higher real interest rate leads to higher saving. 
B)  the demand for loanable funds curve is based on the logic that a higher interest rate leads to higher saving. 
C)  the supply of loanable funds curve is based on the logic that a higher real interest rate leads to lower saving. 
D)  the demand for loanable funds curve is based on the logic that a higher interest rate leads to lower saving. 
A)  the supply of loanable funds curve is based on the logic that a higher real interest rate leads to higher saving. 
B)  the demand for loanable funds curve is based on the logic that a higher interest rate leads to higher saving. 
C)  the supply of loanable funds curve is based on the logic that a higher real interest rate leads to lower saving. 
D)  the demand for loanable funds curve is based on the logic that a higher interest rate leads to lower saving.

Question 14

In the open-economy macroeconomic model,the supply of loanable funds comes from

Accepted Answer

A)  the sum of domestic investment and net capital outflow. 
B)  the sum of national saving and net capital outflow. 
C)  national saving. 
D)  net exports 
A)  the sum of domestic investment and net capital outflow. 
B)  the sum of national saving and net capital outflow. 
C)  national saving. 
D)  net exports

Question 15

Which of the following is most likely to increase the exports of a country?

Accepted Answer

A)  The government gives subsidies to firms that export goods or services. 
B)  The government reduces the size of the budget surplus. 
C)  Political instability within the country increases modestly. 
D)  None of the above will increase exports. 
A)  The government gives subsidies to firms that export goods or services. 
B)  The government reduces the size of the budget surplus. 
C)  Political instability within the country increases modestly. 
D)  None of the above will increase exports.

Question 16

Which of the following is the correct way to show the effects of a newly imposed import quota?

Accepted Answer

A)  Shift the demand for loanable funds right,the supply of dollars in the market for foreign-currency exchange right,and the demand for dollars left. 
B)  Shift the demand for loanable funds right,and the supply of dollars in the market for foreign-currency exchange left. 
C)  Shift the demand for dollars in the market for foreign-currency exchange left. 
D)  None of the above is correct. 
A)  Shift the demand for loanable funds right,the supply of dollars in the market for foreign-currency exchange right,and the demand for dollars left. 
B)  Shift the demand for loanable funds right,and the supply of dollars in the market for foreign-currency exchange left. 
C)  Shift the demand for dollars in the market for foreign-currency exchange left. 
D)  None of the above is correct.

Question 17

Suppose a country experiences capital flight.Of the demand for loanable funds and the supply of currency in the market for foreign-currency exchange,which shifts right?

Accepted Answer

A)  only the demand for loanable funds 
B)  only the supply of its currency in the market for foreign-currency exchange 
C)  both curves shift right 
D)  neither curve shifts right 
A)  only the demand for loanable funds 
B)  only the supply of its currency in the market for foreign-currency exchange 
C)  both curves shift right 
D)  neither curve shifts right

Question 18

If the government of a country with a zero trade balance started with a budget deficit and moved to a budget surplus,domestic investment would

Accepted Answer

A)  rise and there would be a trade surplus. 
B)  rise and there would be a trade deficit. 
C)  fall and there would be a trade surplus. 
D)  fall and there would be a trade deficit. 
A)  rise and there would be a trade surplus. 
B)  rise and there would be a trade deficit. 
C)  fall and there would be a trade surplus. 
D)  fall and there would be a trade deficit.

Question 19

The key determinant of net capital outflow is the real interest rate.

Accepted Answer

A) True 
 B)False

Question 20

The open-economy macroeconomic model examines the determination of

Accepted Answer

A)  the output growth rate and the real interest rate. 
B)  unemployment and the exchange rate. 
C)  the output growth rate and the inflation rate. 
D)  the trade balance and the exchange rate. 
A)  the output growth rate and the real interest rate. 
B)  unemployment and the exchange rate. 
C)  the output growth rate and the inflation rate. 
D)  the trade balance and the exchange rate.

Exam 32: A Macroeconomic Theory of the Open Economy

Suppose the U.S.supply of loanable funds shifts left.This will

If the real interest rate were above the equilibrium rate,there would be a shortage of loanable funds.

Which of the following is the most accurate statement?

Which of the following increases if the U.S.imposes an import quota on computer components?

Capital flight refers to

Figure 32-2 -Refer to Figure 32-2.At what real exchange rate is the quantity of dollars demanded equal to 100?

If the government of Japan raised its budget deficit,then the yen would

In the open-economy macroeconomic model,net exports equal the quantity of dollars demanded in the foreign-currency exchange market.

Which of the following would tend to shift the supply of dollars in the market for foreign-currency exchange in the open-economy macroeconomic model to the right?

Figure 32-2 -Refer to Figure 32-2.If the real exchange rate is .6,then there is a

If Argentina suffers from capital flight,Argentinean domestic investment and Argentinean net exports will both decline.

Which of the following is correct in an open economy?

The explanation for the slope of

In the open-economy macroeconomic model,the supply of loanable funds comes from

Which of the following is most likely to increase the exports of a country?

Which of the following is the correct way to show the effects of a newly imposed import quota?

Suppose a country experiences capital flight.Of the demand for loanable funds and the supply of currency in the market for foreign-currency exchange,which shifts right?

If the government of a country with a zero trade balance started with a budget deficit and moved to a budget surplus,domestic investment would

The key determinant of net capital outflow is the real interest rate.

The open-economy macroeconomic model examines the determination of

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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