Question 1

In the open-economy macroeconomic model, if the supply of loanable funds increases, net capital outflow

Accepted Answer

A)  and the real exchange rate increase. 
B)  and the real exchange rate decrease. 
C)  increases and the real exchange rate decreases. 
D)  decreases and the real exchange rate increases. 
A)  and the real exchange rate increase. 
B)  and the real exchange rate decrease. 
C)  increases and the real exchange rate decreases. 
D)  decreases and the real exchange rate increases.

Question 2

Although trade policies do not affect a country's overall trade balance, they do affect specific firms and industries.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A)  national saving. Demand comes from only domestic investment. 
B)  national saving. Demand comes from domestic investment and net capital outflow. 
C)  Only net capital outflow. Demand for loanable funds comes from national saving. 
D)  domestic investment and net capital outflow. Demand for loanable funds comes from national saving. 
A)  national saving. Demand comes from only domestic investment. 
B)  national saving. Demand comes from domestic investment and net capital outflow. 
C)  Only net capital outflow. Demand for loanable funds comes from national saving. 
D)  domestic investment and net capital outflow. Demand for loanable funds comes from national saving.

Question 4

In which case(s) does(do) a country's demand for loanable funds shift right?

Accepted Answer

A)  both an increase in the budget deficit and capital flight 
B)  an increase in the budget deficit, but not capital flight 
C)  capital flight, but not an increase in the budget deficit 
D)  neither an increase in the budget deficit nor capital flight 
A)  both an increase in the budget deficit and capital flight 
B)  an increase in the budget deficit, but not capital flight 
C)  capital flight, but not an increase in the budget deficit 
D)  neither an increase in the budget deficit nor capital flight

Question 5

In the open-economy macroeconomic model, a decrease in the domestic interest rate shifts

Accepted Answer

A)  demand in the market for foreign-currency exchange to the right. 
B)  demand in the market for foreign-currency exchange to the left. 
C)  supply in the market for foreign-currency exchange to the right. 
D)  supply in the market for foreign-currency exchange to the left. 
A)  demand in the market for foreign-currency exchange to the right. 
B)  demand in the market for foreign-currency exchange to the left. 
C)  supply in the market for foreign-currency exchange to the right. 
D)  supply in the market for foreign-currency exchange to the left.

Question 6

A country has national saving of $60 billion, government expenditures of $30 billion, domestic investment of $40 billion, and net capital outflow of $20 billion. What is its supply of loanable funds?

Accepted Answer

A)  $30 billion 
B)  $60 billion 
C)  $70 billion 
D)  $100 billion 
A)  $30 billion 
B)  $60 billion 
C)  $70 billion 
D)  $100 billion

Question 7

If the U.S. were to impose import quotas

Accepted Answer

A)  the demand for loanable funds and the demand for dollars in the market for foreign-currency exchange would both increase. 
B)  nether the demand for loanable funds nor the demand for dollars in the market for foreign-currency exchange would increase. 
C)  the demand for loanable funds would increase, but the demand for dollars in the market for foreign-currency exchange would not. 
D)  the demand for dollars in the market for foreign-currency exchange would increase, but the demand for loanable funds would not. 
A)  the demand for loanable funds and the demand for dollars in the market for foreign-currency exchange would both increase. 
B)  nether the demand for loanable funds nor the demand for dollars in the market for foreign-currency exchange would increase. 
C)  the demand for loanable funds would increase, but the demand for dollars in the market for foreign-currency exchange would not. 
D)  the demand for dollars in the market for foreign-currency exchange would increase, but the demand for loanable funds would not.

Question 8

If a U.S. resident purchases a foreign bond, her transactions are included

Accepted Answer

A)  in the U.S. supply of loanable funds and the supply of dollars in the market for foreign-currency exchange. 
B)  in the U.S. supply of loanable funds and the demand for dollars in the market for foreign-currency exchange. 
C)  in the U.S. demand for loanable funds and the supply of dollars in the market for foreign-currency exchange. 
D)  in the U.S. demand for loanable funds and the demand for dollars in the market for foreign-currency exchange. 
A)  in the U.S. supply of loanable funds and the supply of dollars in the market for foreign-currency exchange. 
B)  in the U.S. supply of loanable funds and the demand for dollars in the market for foreign-currency exchange. 
C)  in the U.S. demand for loanable funds and the supply of dollars in the market for foreign-currency exchange. 
D)  in the U.S. demand for loanable funds and the demand for dollars in the market for foreign-currency exchange.

Question 9

If at a given real interest rate desired national saving were $50 billion, domestic investment were $40 billion, and net capital outflow were $20 billion, then at that real interest rate in the loanable funds market there would be a

Accepted Answer

A)  surplus. The real interest rate would rise. 
B)  surplus. The real interest rate would fall. 
C)  shortage. The real interest rate would rise. 
D)  shortage. The interest rate would fall. 
A)  surplus. The real interest rate would rise. 
B)  surplus. The real interest rate would fall. 
C)  shortage. The real interest rate would rise. 
D)  shortage. The interest rate would fall.

Question 10

When Mexico suffered from capital flight in 1994, the U.S. real interest rate

Accepted Answer

A)  rose and the real exchange rate of the dollar appreciated. 
B)  rose and the real exchange rate of the dollar depreciated. 
C)  fell and the real exchange rate of the dollar appreciated. 
D)  fell and the real exchange rate of the dollar depreciated. 
A)  rose and the real exchange rate of the dollar appreciated. 
B)  rose and the real exchange rate of the dollar depreciated. 
C)  fell and the real exchange rate of the dollar appreciated. 
D)  fell and the real exchange rate of the dollar depreciated.

Question 11

If the U.S. government increased its deficit, then

Accepted Answer

A)  U.S. bonds would pay higher interest but a dollar would purchase fewer foreign goods. 
B)  U.S. bonds would pay higher interest and a dollar would purchase more foreign goods. 
C)  U.S. bonds would pay lower interest and a dollar would purchase fewer foreign goods. 
D)  U.S. bonds would pay lower interest but a dollar would purchase more foreign goods. 
A)  U.S. bonds would pay higher interest but a dollar would purchase fewer foreign goods. 
B)  U.S. bonds would pay higher interest and a dollar would purchase more foreign goods. 
C)  U.S. bonds would pay lower interest and a dollar would purchase fewer foreign goods. 
D)  U.S. bonds would pay lower interest but a dollar would purchase more foreign goods.

Question 12

Other things the same, as the real interest rate falls

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.

Question 13

When the U.S. real exchange rate appreciates, U.S. goods become

Accepted Answer

A)  more attractive to consumers in the U.S. and abroad. 
B)  more attractive to consumers in the U.S. and less attractive to consumers abroad. 
C)  less attractive to consumers in the U.S. and abroad. 
D)  less attractive to consumers in the U.S. and more attractive to consumers abroad. 
A)  more attractive to consumers in the U.S. and abroad. 
B)  more attractive to consumers in the U.S. and less attractive to consumers abroad. 
C)  less attractive to consumers in the U.S. and abroad. 
D)  less attractive to consumers in the U.S. and more attractive to consumers abroad.

Question 14

In the open economy macroeconomic model, the amount of dollars demanded in the market for foreign-currency exchange at a given real exchange rate increases if

Accepted Answer

A)  either U.S. imports or exports increase. 
B)  either U.S. imports or exports decrease. 
C)  either U.S. imports increase or U.S. exports decrease. 
D)  either U.S. imports decrease or U.S. exports increase. 
A)  either U.S. imports or exports increase. 
B)  either U.S. imports or exports decrease. 
C)  either U.S. imports increase or U.S. exports decrease. 
D)  either U.S. imports decrease or U.S. exports increase.

Question 15

A tax on imported goods is called a(n)

Accepted Answer

A)  excise tax. 
B)  tariff. 
C)  import quota. 
D)  None of the above is correct. 
A)  excise tax. 
B)  tariff. 
C)  import quota. 
D)  None of the above is correct.

In the open-economy macroeconomic model, if the supply of loanable funds increases, net capital outflow

Although trade policies do not affect a country's overall trade balance, they do affect specific firms and industries.

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

In which case(s) does(do) a country's demand for loanable funds shift right?

In the open-economy macroeconomic model, a decrease in the domestic interest rate shifts

A country has national saving of $60 billion, government expenditures of $30 billion, domestic investment of $40 billion, and net capital outflow of $20 billion. What is its supply of loanable funds?

If the U.S. were to impose import quotas

If a U.S. resident purchases a foreign bond, her transactions are included

If at a given real interest rate desired national saving were $50 billion, domestic investment were $40 billion, and net capital outflow were $20 billion, then at that real interest rate in the loanable funds market there would be a

When Mexico suffered from capital flight in 1994, the U.S. real interest rate

If the U.S. government increased its deficit, then

Other things the same, as the real interest rate falls

When the U.S. real exchange rate appreciates, U.S. goods become

In the open economy macroeconomic model, the amount of dollars demanded in the market for foreign-currency exchange at a given real exchange rate increases if

A tax on imported goods is called a(n)

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

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 14: A Macroeconomic Theory of the Open Economy

In the open-economy macroeconomic model, if the supply of loanable funds increases, net capital outflow

Although trade policies do not affect a country's overall trade balance, they do affect specific firms and industries.

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

In which case(s) does(do) a country's demand for loanable funds shift right?

In the open-economy macroeconomic model, a decrease in the domestic interest rate shifts

A country has national saving of $60 billion, government expenditures of $30 billion, domestic investment of $40 billion, and net capital outflow of $20 billion. What is its supply of loanable funds?

If the U.S. were to impose import quotas

If a U.S. resident purchases a foreign bond, her transactions are included

If at a given real interest rate desired national saving were $50 billion, domestic investment were $40 billion, and net capital outflow were $20 billion, then at that real interest rate in the loanable funds market there would be a

When Mexico suffered from capital flight in 1994, the U.S. real interest rate

If the U.S. government increased its deficit, then

Other things the same, as the real interest rate falls

When the U.S. real exchange rate appreciates, U.S. goods become

In the open economy macroeconomic model, the amount of dollars demanded in the market for foreign-currency exchange at a given real exchange rate increases if

A tax on imported goods is called a(n)

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

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomic Models

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters