Exam 16: Macroeconomic Policy in an Open Economy

A system of floating exchange rates and high capital mobility strengthens which policy in combating a recession:

In a closed economy,which of the following will cause the economy's aggregate demand curve to shift to the right?

Suppose the United States faces domestic inflation and a current account surplus.Should the United States revalue the dollar,one would expect the:

Under a fixed exchange-rate system and high capital mobility,an expansion in the domestic money supply leads to:

Given an open economy with high capital mobility and fixed exchange rates,suppose an expansionary fiscal policy is implemented to combat recession.The initial and secondary effects of the policy cause aggregate demand to increase,thus strengthening the policy's expansionary effect.

All of the following are obstacles to international economic policy coordination except:

Suppose the United States faces domestic recession and a current account deficit.Should the United States devalue the dollar,one would expect the:

Policy coordination is complicated by

Refer to Exhibit 16.1.The Federal Reserve might refuse to support the accord on the grounds that when helping to drive the dollar's exchange value downward,it promotes an increase in the U.S.:

Given fixed exchange rates,assume Mexico initiates expansionary monetary and fiscal policies to combat recession.These policies will also:

A problem that economic policy makers confront when attempting to promote both internal and external balance for the nation is that monetary or fiscal policies aimed at the domestic sector also have impacts on:

Given an open economy with high capital mobility,monetary policy is strengthened under fixed exchange rates.

Expenditure-switching policies include fiscal policy and monetary policy.

Which policy is an expenditure-switching policy?

Under a system of managed-floating exchange rates with heavy exchange rate intervention:

Given an open economy with high capital mobility and floating exchange rates,suppose an expansionary monetary policy is implemented to combat recession.The initial and secondary effects of the policy

Which policies are expenditure-changing policies?

International policy coordination is plagued by differing national economic objectives,institutions,political climates,and phases in the business cycle.

Nations have typically placed greater importance to the goal of internal balance than to the goal of external balance.

Given a system of floating exchange rates,an expansionary monetary policy by the Federal Reserve will cause