Exam 19: A Macroeconomic Theory of the Open Economy: Part A

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Other things the same,if the U.S.interest rate rises,what happens to the net capital outflow of other countries?

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Question 1

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As the U.S. real interest rate rises, U.S. bonds become more attractive to both domestic and foreign residents. The resulting reduction in the purchase of foreign bonds by U.S. residents and increase in the purchase of U.S bonds by foreign residents both increase the net capital outflow of foreign countries.

What happens to each of the following if investment becomes less desirable at each interest rate? A.the interest rate B.net capital outflow C.the exchange rate

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Question 2

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The interest rate falls, net capital outflow rises, the exchange rate falls.

Other things the same,which curve in the market for foreign-currency exchange shifts and which direction does it shift if net capital outflow rises?

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Question 3

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The supply curve shifts right.

A country recently had 500 billion euros of national saving and 200 billion euros of domestic investment.What was its net capital outflow? What was its quantity of loanable funds demanded?

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Question 4

What happens to each of the following if investment becomes more desirable at each interest rate? A.the interest rate B.net capital outflow C.the exchange rate

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Question 5

What happens to each of the following if the supply of loanable funds shifts left? A.the interest rate B.net capital outflow C.the exchange rate

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Question 6

If people in the U.S.choose to save a smaller percentage of income,what will happen to the interest rate,net capital outflow,the exchange rate,and net exports?

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Question 7

Other things the same, if the U.S. interest rate rises, U.S. assets become __ attractive. So, desired net capital outflow _. This change in net capital outflow, shifts the __ curve in the market for foreign-currency exchange to the .

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Question 8

Which curve in the market for foreign-currency exchange shifts and which direction does it shift if the government budget deficit increases? Explain why an increase in the budget deficit shifts this curve.

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Question 9

An economy recently had 800 billion euros of saving and 600 billion euros of net capital outflow.What was its investment? What was its quantity of loanable funds supplied?

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Question 10

What do trade policies do to the standard of living?

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Question 11

What is the source of the supply of dollars in the market for foreign-currency exchange?

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Question 12

If a country's government moves from a budget deficit to a budget surplus,which curve in the market for loanable funds shifts and which direction does it shift? What happens to the interest rate?

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Question 13

A country reduces its government budget deficit and also makes political reforms that lead people to believe this country's assets are less risky.Given the combination of a reduced deficit and lower asset risk,what happens to the interest rate?

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Question 14

What happens to domestic investment as the real interest rate rises? Explain your answer.

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Question 15

If the exchange rate rises, domestic goods become relatively ____ expensive. This change in the affordability of domestic goods makes domestic goods _ attractive to foreigners. So, _ __.

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Question 16

What are the sources of the demand for loanable funds? What happens to the quantity of loanable funds demanded when the interest rate rises?

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Question 17

If the exchange rate falls, domestic goods become relatively ____ expensive. This change in the affordability of domestic goods makes domestic goods _ attractive to domestic residents. So, _ __.

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Question 18

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

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Question 19

Political events convince people that the assets of country x are now riskier.As a result of this change which curves in the open-economy macroeconomic model shift and which direction do they shift for country x?

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Question 20

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Exam 19: A Macroeconomic Theory of the Open Economy: Part A

Other things the same,if the U.S.interest rate rises,what happens to the net capital outflow of other countries?

What happens to each of the following if investment becomes less desirable at each interest rate? A.the interest rate B.net capital outflow C.the exchange rate

Other things the same,which curve in the market for foreign-currency exchange shifts and which direction does it shift if net capital outflow rises?

A country recently had 500 billion euros of national saving and 200 billion euros of domestic investment.What was its net capital outflow? What was its quantity of loanable funds demanded?

What happens to each of the following if investment becomes more desirable at each interest rate? A.the interest rate B.net capital outflow C.the exchange rate

What happens to each of the following if the supply of loanable funds shifts left? A.the interest rate B.net capital outflow C.the exchange rate

If people in the U.S.choose to save a smaller percentage of income,what will happen to the interest rate,net capital outflow,the exchange rate,and net exports?

Other things the same, if the U.S. interest rate rises, U.S. assets become ____ attractive. So, desired net capital outflow _____. This change in net capital outflow, shifts the __________ curve in the market for foreign-currency exchange to the ______.

Which curve in the market for foreign-currency exchange shifts and which direction does it shift if the government budget deficit increases? Explain why an increase in the budget deficit shifts this curve.

An economy recently had 800 billion euros of saving and 600 billion euros of net capital outflow.What was its investment? What was its quantity of loanable funds supplied?

What do trade policies do to the standard of living?

What is the source of the supply of dollars in the market for foreign-currency exchange?

If a country's government moves from a budget deficit to a budget surplus,which curve in the market for loanable funds shifts and which direction does it shift? What happens to the interest rate?

A country reduces its government budget deficit and also makes political reforms that lead people to believe this country's assets are less risky.Given the combination of a reduced deficit and lower asset risk,what happens to the interest rate?

What happens to domestic investment as the real interest rate rises? Explain your answer.

If the exchange rate rises, domestic goods become relatively ______ expensive. This change in the affordability of domestic goods makes domestic goods _____ attractive to foreigners. So, _______ ______.

What are the sources of the demand for loanable funds? What happens to the quantity of loanable funds demanded when the interest rate rises?

If the exchange rate falls, domestic goods become relatively ______ expensive. This change in the affordability of domestic goods makes domestic goods _____ attractive to domestic residents. So, _______ ______.

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

Political events convince people that the assets of country x are now riskier.As a result of this change which curves in the open-economy macroeconomic model shift and which direction do they shift for country x?

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Other things the same, if the U.S. interest rate rises, U.S. assets become __ attractive. So, desired net capital outflow _. This change in net capital outflow, shifts the __ curve in the market for foreign-currency exchange to the .

If the exchange rate rises, domestic goods become relatively ____ expensive. This change in the affordability of domestic goods makes domestic goods _ attractive to foreigners. So, _ __.

If the exchange rate falls, domestic goods become relatively ____ expensive. This change in the affordability of domestic goods makes domestic goods _ attractive to domestic residents. So, _ __.