Question 1

If interest rates rise in the U.S., then other things the same

Accepted Answer

A)  foreigners would buy more U.S. bonds which increases the quantity of loanable funds demanded in the U.S. 
B)  foreigners would buy more U.S. bonds which reduces the quantity of loanable funds demanded in the U.S. 
C)  foreigners would buy fewer U.S. bonds which increases the quantity of loanable funds demanded in the U.S. 
D)  foreigners would buy fewer U.S. bonds which reduces the quantity of loanable funds demanded in the U.S. 
A)  foreigners would buy more U.S. bonds which increases the quantity of loanable funds demanded in the U.S. 
B)  foreigners would buy more U.S. bonds which reduces the quantity of loanable funds demanded in the U.S. 
C)  foreigners would buy fewer U.S. bonds which increases the quantity of loanable funds demanded in the U.S. 
D)  foreigners would buy fewer U.S. bonds which reduces the quantity of loanable funds demanded in the U.S.

Question 2

In the open-economy macroeconomic model, if a country's interest rate rises, then its

Accepted Answer

A)  net capital outflow and net exports rise. 
B)  net capital outflow rises and its net exports fall. 
C)  net capital outflow falls and its net exports rise. 
D)  net capital outflow and net exports fall. 
A)  net capital outflow and net exports rise. 
B)  net capital outflow rises and its net exports fall. 
C)  net capital outflow falls and its net exports rise. 
D)  net capital outflow and net exports fall.

Question 3

If a country has a positive net capital outflow, then

Accepted Answer

A)  on net it is purchasing assets from abroad. This adds to its demand for domestically generated loanable funds. 
B)  on net it is purchasing assets from abroad. This subtracts from its demand for domestically generated loanable funds. 
C)  on net other countries are purchasing assets from it. This adds to its demand for domestically generated loanable funds. 
D)  on net other countries are purchasing assets from it. This subtracts from its demand for domestically generated loanable funds. 
A)  on net it is purchasing assets from abroad. This adds to its demand for domestically generated loanable funds. 
B)  on net it is purchasing assets from abroad. This subtracts from its demand for domestically generated loanable funds. 
C)  on net other countries are purchasing assets from it. This adds to its demand for domestically generated loanable funds. 
D)  on net other countries are purchasing assets from it. This subtracts from its demand for domestically generated loanable funds.

Question 4

If the government of a country with a zero trade balances increases its budget deficit, then interest rates

Accepted Answer

A)  rise and the trade balance moves to a surplus. 
B)  rise and the trade balance moves to a deficit. 
C)  fall and the trade balance moves to a surplus. 
D)  fall and the trade balance moves to a deficit. 
A)  rise and the trade balance moves to a surplus. 
B)  rise and the trade balance moves to a deficit. 
C)  fall and the trade balance moves to a surplus. 
D)  fall and the trade balance moves to a deficit.

Question 5

In the open-economy macroeconomic model, if investment demand increases, then

Accepted Answer

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

Question 6

A large and sudden movement of funds out of a country is called

Accepted Answer

A)  arbitrage. 
B)  capital flight. 
C)  crowding out. 
D)  capital mobility. 
A)  arbitrage. 
B)  capital flight. 
C)  crowding out. 
D)  capital mobility.

Question 7

An increase in a country's budget surplus shifts its

Accepted Answer

A)  demand for loanable funds right and decreases investment spending. 
B)  supply of loanable funds right and increases investment spending. 
C)  supply of loanable funds left and decreases investment spending. 
D)  None of the above is correct. 
A)  demand for loanable funds right and decreases investment spending. 
B)  supply of loanable funds right and increases investment spending. 
C)  supply of loanable funds left and decreases investment spending. 
D)  None of the above is correct.

Question 8

When a country experiences capital flight its

Accepted Answer

A)  net capital outflow increases and its real exchange rate rises. 
B)  net capital outflow increases and its real exchange rate falls. 
C)  net capital outflow decreases and its real exchange rate rises. 
D)  net capital outflow decreases and its real exchange rate falls. 
A)  net capital outflow increases and its real exchange rate rises. 
B)  net capital outflow increases and its real exchange rate falls. 
C)  net capital outflow decreases and its real exchange rate rises. 
D)  net capital outflow decreases and its real exchange rate falls.

Question 9

In which case(s) does(do) a country's supply of loanable funds shift left?

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 10

A U.S.-imposed quota on appliances would shift

Accepted Answer

A)  both the demand and supply curves in the market for foreign-currency exchange right 
B)  both the demand and supply curves in the market for foreign-currency exchange right. 
C)  only the demand curve in the market for foreign-currency exchange right. 
D)  only the supply curve in the market for foreign-currency exchange right 
A)  both the demand and supply curves in the market for foreign-currency exchange right 
B)  both the demand and supply curves in the market for foreign-currency exchange right. 
C)  only the demand curve in the market for foreign-currency exchange right. 
D)  only the supply curve in the market for foreign-currency exchange right

Question 11

In the open-economy macroeconomic model, if the U.S. interest rate rises, then its

Accepted Answer

A)  net capital outflow rises, so the supply of dollars in the market for foreign exchange shifts right. 
B)  net capital outflow rises, so the demand for dollars in the market for foreign exchange shifts right. 
C)  net capital outflow falls, so the supply of dollars in the market for foreign exchange shifts left. 
D)  net capital outflow falls, so the demand for dollars in the market for foreign exchange shifts left. 
A)  net capital outflow rises, so the supply of dollars in the market for foreign exchange shifts right. 
B)  net capital outflow rises, so the demand for dollars in the market for foreign exchange shifts right. 
C)  net capital outflow falls, so the supply of dollars in the market for foreign exchange shifts left. 
D)  net capital outflow falls, so the demand for dollars in the market for foreign exchange shifts left.

Question 12

In the open-economy macroeconomic model, net capital outflow links the markets for loanable funds and foreign-currency exchange.

Accepted Answer

A) True 
 B)False

Question 13

If the demand for dollars in the market for foreign-currency exchange shifts right, then the exchange rate

Accepted Answer

A)  rises and the quantity of dollars exchanged rises. 
B)  rises and the quantity of dollars exchanged does not change. 
C)  falls and the quantity of dollars exchanged falls. 
D)  falls and the quantity of dollars exchanged does not change. 
A)  rises and the quantity of dollars exchanged rises. 
B)  rises and the quantity of dollars exchanged does not change. 
C)  falls and the quantity of dollars exchanged falls. 
D)  falls and the quantity of dollars exchanged does not change.

Question 14

If the British government raised its budget deficit, then the pound (Britain's currency) would

Accepted Answer

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

Question 15

Which of the following would shift the demand for dollars in the market for foreign currency exchange to the right?

Accepted Answer

A)  foreign citizens want to buy more U.S. goods and services at a given exchange rate 
B)  foreign citizens want to buy fewer U.S. goods and services at a given exchange rate 
C)  foreign citizens want to buy more U.S. bonds 
D)  foreign citizens want to by fewer U.S. bonds 
A)  foreign citizens want to buy more U.S. goods and services at a given exchange rate 
B)  foreign citizens want to buy fewer U.S. goods and services at a given exchange rate 
C)  foreign citizens want to buy more U.S. bonds 
D)  foreign citizens want to by fewer U.S. bonds

Question 16

Suppose a presidential candidate promises to increase the government budget surplus and claims that doing so will stop U.S. citizens from investing in foreign companies and increase the value of the dollar. Evaluate this promise.

Accepted Answer

An increase in the government budget sur

Question 17

In the open-economy macroeconomic model, if the supply of loanable funds shifts left

Accepted Answer

A)  the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts right. 
B)  the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts left. 
C)  the interest rate falls and the demand for dollars in the market for foreign currency exchange shifts right. 
D)  the interest rate falls and the demand for dollars in the market for foreign currency exchange shifts left. 
A)  the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts right. 
B)  the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts left. 
C)  the interest rate falls and the demand for dollars in the market for foreign currency exchange shifts right. 
D)  the interest rate falls and the demand for dollars in the market for foreign currency exchange shifts left.

Question 18

In the open-economy macroeconomic model, the supply of dollars in the market for foreign-currency exchange is upward sloping.

Accepted Answer

A) True 
 B)False

Question 19

In the open-economy macroeconomic model, if the real exchange rate of the U.S. dollar were above its equilibrium level, the real exchange rate of the U.S. dollar would appreciate.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following could explain a decrease in the U.S. real exchange rate?

Accepted Answer

A)  the U.S. government budget deficit rises 
B)  the U.S. impose import quotas 
C)  the default risk of U.S. assets rise 
D)  All of the above are correct. 
A)  the U.S. government budget deficit rises 
B)  the U.S. impose import quotas 
C)  the default risk of U.S. assets rise 
D)  All of the above are correct.

If interest rates rise in the U.S., then other things the same

In the open-economy macroeconomic model, if a country's interest rate rises, then its

If a country has a positive net capital outflow, then

If the government of a country with a zero trade balances increases its budget deficit, then interest rates

In the open-economy macroeconomic model, if investment demand increases, then

A large and sudden movement of funds out of a country is called

An increase in a country's budget surplus shifts its

When a country experiences capital flight its

In which case(s) does(do) a country's supply of loanable funds shift left?

A U.S.-imposed quota on appliances would shift

In the open-economy macroeconomic model, if the U.S. interest rate rises, then its

In the open-economy macroeconomic model, net capital outflow links the markets for loanable funds and foreign-currency exchange.

If the demand for dollars in the market for foreign-currency exchange shifts right, then the exchange rate

If the British government raised its budget deficit, then the pound (Britain's currency) would

Which of the following would shift the demand for dollars in the market for foreign currency exchange to the right?

Suppose a presidential candidate promises to increase the government budget surplus and claims that doing so will stop U.S. citizens from investing in foreign companies and increase the value of the dollar. Evaluate this promise.

In the open-economy macroeconomic model, if the supply of loanable funds shifts left

In the open-economy macroeconomic model, the supply of dollars in the market for foreign-currency exchange is upward sloping.

In the open-economy macroeconomic model, if the real exchange rate of the U.S. dollar were above its equilibrium level, the real exchange rate of the U.S. dollar would appreciate.

Which of the following could explain a decrease in the U.S. real exchange rate?

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

If interest rates rise in the U.S., then other things the same

In the open-economy macroeconomic model, if a country's interest rate rises, then its

If a country has a positive net capital outflow, then

If the government of a country with a zero trade balances increases its budget deficit, then interest rates

In the open-economy macroeconomic model, if investment demand increases, then

A large and sudden movement of funds out of a country is called

An increase in a country's budget surplus shifts its

When a country experiences capital flight its

In which case(s) does(do) a country's supply of loanable funds shift left?

A U.S.-imposed quota on appliances would shift

In the open-economy macroeconomic model, if the U.S. interest rate rises, then its

In the open-economy macroeconomic model, net capital outflow links the markets for loanable funds and foreign-currency exchange.

If the demand for dollars in the market for foreign-currency exchange shifts right, then the exchange rate

If the British government raised its budget deficit, then the pound (Britain's currency) would

Which of the following would shift the demand for dollars in the market for foreign currency exchange to the right?

Suppose a presidential candidate promises to increase the government budget surplus and claims that doing so will stop U.S. citizens from investing in foreign companies and increase the value of the dollar. Evaluate this promise.

In the open-economy macroeconomic model, if the supply of loanable funds shifts left

In the open-economy macroeconomic model, the supply of dollars in the market for foreign-currency exchange is upward sloping.

In the open-economy macroeconomic model, if the real exchange rate of the U.S. dollar were above its equilibrium level, the real exchange rate of the U.S. dollar would appreciate.

Which of the following could explain a decrease in the U.S. real exchange rate?

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