Question 1

What is the correct way to show the effects of a new import quota?

Accepted Answer

A)  Shift the demand for loanable funds right,the supply of dollars for foreign exchange right,and the demand for dollars left. 
B)  Shift the demand for loanable funds right,and the supply of dollars for foreign exchange left. 
C)  Shift the demand for dollars for foreign-currency exchange left. 
D)  Shift the demand for dollars for foreign-currency exchange right. 
A)  Shift the demand for loanable funds right,the supply of dollars for foreign exchange right,and the demand for dollars left. 
B)  Shift the demand for loanable funds right,and the supply of dollars for foreign exchange left. 
C)  Shift the demand for dollars for foreign-currency exchange left. 
D)  Shift the demand for dollars for foreign-currency exchange right. D

Question 2

What macroeconomic measures are considered fixed in our open-economy model?

Accepted Answer

A)  the exchange rate,GDP,and the world real interest rate 
B)  the exchange rate,world real interest rate,and the inflation rate 
C)  net capital outflow,the inflation rate,and the price level 
D)  GDP,the price level,and the world real interest rate 
A)  the exchange rate,GDP,and the world real interest rate 
B)  the exchange rate,world real interest rate,and the inflation rate 
C)  net capital outflow,the inflation rate,and the price level 
D)  GDP,the price level,and the world real interest rate D

Question 3

What are the effects of an increase in the supply of loanable funds?

Accepted Answer

A)  Net capital outflow and the real exchange rate both increase. 
B)  Net capital outflow and the real exchange rate both decrease. 
C)  Net capital outflow increases,and the real exchange rate decreases. 
D)  Net capital outflow decreases,and the real exchange rate increases. 
A)  Net capital outflow and the real exchange rate both increase. 
B)  Net capital outflow and the real exchange rate both decrease. 
C)  Net capital outflow increases,and the real exchange rate decreases. 
D)  Net capital outflow decreases,and the real exchange rate increases. C

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

What would make the equilibrium interest rate increase and the equilibrium quantity of funds decrease?

Accepted Answer

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

Question 6

According to the open-economy macroeconomic model,what would NOT be a consequence of an increase in the Canadian government budget deficit?

Accepted Answer

A)  Canadian trade balance rises. 
B)  Canadian net capital outflow falls. 
C)  Canadian investment abroad decreases. 
D)  The real exchange rate of the Canadian dollar appreciates. 
A)  Canadian trade balance rises. 
B)  Canadian net capital outflow falls. 
C)  Canadian investment abroad decreases. 
D)  The real exchange rate of the Canadian dollar appreciates.

Question 7

The People's Republic of China has had a large trade surplus in recent years.What is the most likely explanation of this surplus?

Accepted Answer

A)  China has a high rate of inflation,which reduces the value of its currency. 
B)  China has a large supply of labour,so low wages give it a competitive edge. 
C)  China has many trade barriers,which restrict the ability of other countries to sell their products in China. 
D)  China has a large amount of saving relative to domestic investment. 
A)  China has a high rate of inflation,which reduces the value of its currency. 
B)  China has a large supply of labour,so low wages give it a competitive edge. 
C)  China has many trade barriers,which restrict the ability of other countries to sell their products in China. 
D)  China has a large amount of saving relative to domestic investment.

Question 8

When a country experiences capital flight,which statement best explains the effects?

Accepted Answer

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

Question 9

What is most likely to increase exports in the country of Bardia?

Accepted Answer

A)  a reduction in political instability 
B)  introduce a consumption tax 
C)  a reduction in the size of the government's budget surplus 
D)  an import quota 
A)  a reduction in political instability 
B)  introduce a consumption tax 
C)  a reduction in the size of the government's budget surplus 
D)  an import quota

Question 10

An import quota imposed by Egypt would reduce Egyptian imports,but have no impact on Egyptian exports.

Accepted Answer

A) True 
 B)False

Question 11

What is the supply and demand for loanable funds equation 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 12

If policymakers impose import restrictions on automobiles,the Canadian trade deficit would shrink.

Accepted Answer

A) True 
 B)False

Question 13

If the world real interest rate is less than the real interest rate that would occur in Canada if there was no trade,what should we expect to happen in the supply and demand for loanable funds graph?

Accepted Answer

A)  the supply curve to shift to the left 
B)  the demand curve to shift to the right 
C)  net capital outflow to remain unchanged 
D)  net capital outflow to decrease 
A)  the supply curve to shift to the left 
B)  the demand curve to shift to the right 
C)  net capital outflow to remain unchanged 
D)  net capital outflow to decrease

Question 14

If the real exchange rate of the Canadian dollar were above its equilibrium level,the real exchange rate of the Canadian dollar would appreciate.

Accepted Answer

A) True 
 B)False

Question 15

What is most likely to increase Canadian exports?

Accepted Answer

A)  The government increases its spending. 
B)  The government reduces the size of the budget surplus. 
C)  Canada reduces its restrictions on foreign imports. 
D)  Taxes on domestic saving rise. 
A)  The government increases its spending. 
B)  The government reduces the size of the budget surplus. 
C)  Canada reduces its restrictions on foreign imports. 
D)  Taxes on domestic saving rise.

Question 16

Mexico suffered from capital flight in 1994.Which statement best describes the effects of this event on the Canadian economy?

Accepted Answer

A)  Canadian demand for loanable funds and Canadian net capital outflow rose. 
B)  Canadian demand for loanable funds and Canadian net capital outflow fell. 
C)  Canadian demand for loanable funds fell,and Canadian net capital outflow rose. 
D)  Canadian demand for loanable funds rose,and Canadian net capital outflow fell. 
A)  Canadian demand for loanable funds and Canadian net capital outflow rose. 
B)  Canadian demand for loanable funds and Canadian net capital outflow fell. 
C)  Canadian demand for loanable funds fell,and Canadian net capital outflow rose. 
D)  Canadian demand for loanable funds rose,and Canadian net capital outflow fell.

Question 17

Which statement best explains the effect of trade policies on the trade balance?

Accepted Answer

A)  Trade policies alter the trade balance because they alter imports of the country that implemented them. 
B)  Trade policies alter the trade balance because they alter net capital outflow of the country that implemented them. 
C)  Trade policies do not alter the trade balance because they cannot alter the national saving or domestic investment of the country that implements them. 
D)  Trade policies do not alter the trade balance because they cannot alter the real exchange rate of the currency of the country that implements them. 
A)  Trade policies alter the trade balance because they alter imports of the country that implemented them. 
B)  Trade policies alter the trade balance because they alter net capital outflow of the country that implemented them. 
C)  Trade policies do not alter the trade balance because they cannot alter the national saving or domestic investment of the country that implements them. 
D)  Trade policies do not alter the trade balance because they cannot alter the real exchange rate of the currency of the country that implements them.

Question 18

Jack and Jill are co-owners of the Canadian firm,Peak Petroleum Pipeline.Jack borrows money to build a pipeline from Alberta to the BC coast.Jill borrows money to build a pipeline in Venezuela.How does this affect the market for loanable funds in Canada?

Accepted Answer

A)  Jack increases the demand for loanable funds. 
B)  Jill increases the demand for loanable funds. 
C)  Jack increases the supply for loanable funds. 
D)  Jill increases the supply of loanable funds. 
A)  Jack increases the demand for loanable funds. 
B)  Jill increases the demand for loanable funds. 
C)  Jack increases the supply for loanable funds. 
D)  Jill increases the supply of loanable funds.

Question 19

Other things the same,when a Canadian company imports wool from Australia,the open-economy macroeconomic model treats this transaction as a decrease in the quantity of dollars demanded in the Canadian foreign-currency exchange market.

Accepted Answer

A) True 
 B)False

Question 20

Which statement is the most accurate description of trade policy?

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.

What is the correct way to show the effects of a new import quota?

What macroeconomic measures are considered fixed in our open-economy model?

What are the effects of an increase in the supply of loanable funds?

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

What would make the equilibrium interest rate increase and the equilibrium quantity of funds decrease?

According to the open-economy macroeconomic model,what would NOT be a consequence of an increase in the Canadian government budget deficit?

The People's Republic of China has had a large trade surplus in recent years.What is the most likely explanation of this surplus?

When a country experiences capital flight,which statement best explains the effects?

What is most likely to increase exports in the country of Bardia?

An import quota imposed by Egypt would reduce Egyptian imports,but have no impact on Egyptian exports.

What is the supply and demand for loanable funds equation in an open economy?

If policymakers impose import restrictions on automobiles,the Canadian trade deficit would shrink.

If the world real interest rate is less than the real interest rate that would occur in Canada if there was no trade,what should we expect to happen in the supply and demand for loanable funds graph?

If the real exchange rate of the Canadian dollar were above its equilibrium level,the real exchange rate of the Canadian dollar would appreciate.

What is most likely to increase Canadian exports?

Mexico suffered from capital flight in 1994.Which statement best describes the effects of this event on the Canadian economy?

Which statement best explains the effect of trade policies on the trade balance?

Jack and Jill are co-owners of the Canadian firm,Peak Petroleum Pipeline.Jack borrows money to build a pipeline from Alberta to the BC coast.Jill borrows money to build a pipeline in Venezuela.How does this affect the market for loanable funds in Canada?

Other things the same,when a Canadian company imports wool from Australia,the open-economy macroeconomic model treats this transaction as a decrease in the quantity of dollars demanded in the Canadian foreign-currency exchange market.

Which statement is the most accurate description of trade policy?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

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 Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 13: A Macroeconomic Theory of the Small Open Economy

What is the correct way to show the effects of a new import quota?

What macroeconomic measures are considered fixed in our open-economy model?

What are the effects of an increase in the supply of loanable funds?

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

What would make the equilibrium interest rate increase and the equilibrium quantity of funds decrease?

According to the open-economy macroeconomic model,what would NOT be a consequence of an increase in the Canadian government budget deficit?

The People's Republic of China has had a large trade surplus in recent years.What is the most likely explanation of this surplus?

When a country experiences capital flight,which statement best explains the effects?

What is most likely to increase exports in the country of Bardia?

An import quota imposed by Egypt would reduce Egyptian imports,but have no impact on Egyptian exports.

What is the supply and demand for loanable funds equation in an open economy?

If policymakers impose import restrictions on automobiles,the Canadian trade deficit would shrink.

If the world real interest rate is less than the real interest rate that would occur in Canada if there was no trade,what should we expect to happen in the supply and demand for loanable funds graph?

If the real exchange rate of the Canadian dollar were above its equilibrium level,the real exchange rate of the Canadian dollar would appreciate.

What is most likely to increase Canadian exports?

Mexico suffered from capital flight in 1994.Which statement best describes the effects of this event on the Canadian economy?

Which statement best explains the effect of trade policies on the trade balance?

Jack and Jill are co-owners of the Canadian firm,Peak Petroleum Pipeline.Jack borrows money to build a pipeline from Alberta to the BC coast.Jill borrows money to build a pipeline in Venezuela.How does this affect the market for loanable funds in Canada?

Other things the same,when a Canadian company imports wool from Australia,the open-economy macroeconomic model treats this transaction as a decrease in the quantity of dollars demanded in the Canadian foreign-currency exchange market.

Which statement is the most accurate description of trade policy?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

Unemployment and Its Natural Rate

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 Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters