Question 1

If there is a surplus in the market for loanable funds, then the interest rate

Accepted Answer

A)  rises, so national saving rises. 
B)  rises, so national saving falls. 
C)  falls, so national saving rises. 
D)  falls, so national saving falls. 
A)  rises, so national saving rises. 
B)  rises, so national saving falls. 
C)  falls, so national saving rises. 
D)  falls, so national saving falls.

Question 2

According to the open-economy macroeconomic model, if the U.S. government budget deficit increases, then both U.S. domestic investment and U.S. net capital outflow decrease.

Accepted Answer

A) True 
 B)False

Question 3

Suppose that U.S. citizens start saving more. What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate?

Accepted Answer

The supply of loanable funds increases,

Question 4

Explain how a decrease in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate.

Accepted Answer

A decrease in demand for capital goods i

Question 5

A country produces two goods, soda and chips. It currently exports soda and imports chips. If it were to impose a tariff on chips,

Accepted Answer

A)  both imports of chips and exports of sodas would rise. 
B)  imports of chips would rise, but exports of sodas would fall. 
C)  imports of chips would fall, but exports of sodas would rise. 
D)  both imports of chips and exports of sodas would fall. 
A)  both imports of chips and exports of sodas would rise. 
B)  imports of chips would rise, but exports of sodas would fall. 
C)  imports of chips would fall, but exports of sodas would rise. 
D)  both imports of chips and exports of sodas would fall.

Question 6

A tax on imported goods is called an)

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.

Question 7

If a country removes an import quota, what happens to its exchange rate, its exports, and its net exports?

Accepted Answer

Its exchange rate fa

Question 8

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

Accepted Answer

The answer of What is the source of the demand...

Question 9

When a country's government budget deficit decreases,

Accepted Answer

A)  the real exchange rate of its currency and its net exports increase. 
B)  the real exchange rate of its currency and its net exports decrease. 
C)  the real exchange rate of its currency increases and its net exports decrease. 
D)  the real exchange rate of its currency decreases and its net exports increase. 
A)  the real exchange rate of its currency and its net exports increase. 
B)  the real exchange rate of its currency and its net exports decrease. 
C)  the real exchange rate of its currency increases and its net exports decrease. 
D)  the real exchange rate of its currency decreases and its net exports increase.

Question 10

In which cases 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 11

When the U.S. real interest rate falls, purchasing U.S. assets becomes

Accepted Answer

A)  less attractive and so U.S. net capital outflow rises. 
B)  less attractive and so U.S. net capital outflow falls. 
C)  more attractive and so U.S. net capital outflow rises. 
D)  more attractive and so U.S. net capital outflow falls. 
A)  less attractive and so U.S. net capital outflow rises. 
B)  less attractive and so U.S. net capital outflow falls. 
C)  more attractive and so U.S. net capital outflow rises. 
D)  more attractive and so U.S. net capital outflow falls.

Question 12

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 13

If for some reason Americans desired to decrease their purchases of foreign assets, then other things the same

Accepted Answer

A)  both the real exchange rate and the quantity of dollars exchanged in the market for foreign-currency exchange would fall. 
B)  both the real exchange rate and the quantity of dollars exchanged in the market for foreign-currency would rise. 
C)  the real exchange rate would rise and the quantity of dollars exchanged in the market for foreign-currency would fall. 
D)  the real exchange rate would fall and the quantity of dollars exchanged in the market for foreign-currency would rise. 
A)  both the real exchange rate and the quantity of dollars exchanged in the market for foreign-currency exchange would fall. 
B)  both the real exchange rate and the quantity of dollars exchanged in the market for foreign-currency would rise. 
C)  the real exchange rate would rise and the quantity of dollars exchanged in the market for foreign-currency would fall. 
D)  the real exchange rate would fall and the quantity of dollars exchanged in the market for foreign-currency would rise.

Question 14

When a country experiences capital flight its currency

Accepted Answer

A)  appreciates and net exports rise. 
B)  appreciates and net exports fall. 
C)  depreciates and net exports rise. 
D)  depreciates and net exports fall. 
A)  appreciates and net exports rise. 
B)  appreciates and net exports fall. 
C)  depreciates and net exports rise. 
D)  depreciates and net exports fall.

Question 15

If the quantity of loanable funds supplied is greater than the quantity demanded, then there is a

Accepted Answer

A)  shortage of loanable funds and the interest rate will fall. 
B)  shortage of loanable funds and the interest rate will rise. 
C)  surplus of loanable funds and the interest rate will fall. 
D)  surplus of loanable funds and the interest rate will rise. 
A)  shortage of loanable funds and the interest rate will fall. 
B)  shortage of loanable funds and the interest rate will rise. 
C)  surplus of loanable funds and the interest rate will fall. 
D)  surplus of loanable funds and the interest rate will rise.

Question 16

Budget in Recession
During a recession government revenues from the income tax fall and government transfers rise as the reduction in income and the rise in unemployment raise the number of people who qualify for benefits.
-Refer to Budget in Recession. What does this change in the deficit do to net capital outflows? Defend your answer.

Accepted Answer

Net capital outflow falls because the do

Question 17

If the U.S. government imposed quotas on imports of clothing, then U.S.

Accepted Answer

A)  imports and exports would both fall. 
B)  imports would fall and exports would rise. 
C)  imports would rise and exports would fall. 
D)  None of the above is correct. 
A)  imports and exports would both fall. 
B)  imports would fall and exports would rise. 
C)  imports would rise and exports would fall. 
D)  None of the above is correct.

Question 18

If the exchange rate rises, foreign residents want to purchase ______ domestic goods and domestic residents want to purchase _____ foreign goods. In the market for foreign-currency exchange, these changes are shown as a _______ in the quantity of dollars ______.

Accepted Answer

fewer, mor

Question 19

In the 1980s, both the U.S. government budget and U.S. trade deficits increased.

Accepted Answer

A) True 
 B)False

Question 20

In the open-economy macroeconomic model, the market for loanable funds equates national saving with

Accepted Answer

A)  domestic investment. 
B)  net capital outflow. 
C)  the sum of national consumption and government spending. 
D)  the sum of domestic investment and net capital outflow. 
A)  domestic investment. 
B)  net capital outflow. 
C)  the sum of national consumption and government spending. 
D)  the sum of domestic investment and net capital outflow.

If there is a surplus in the market for loanable funds, then the interest rate

According to the open-economy macroeconomic model, if the U.S. government budget deficit increases, then both U.S. domestic investment and U.S. net capital outflow decrease.

Suppose that U.S. citizens start saving more. What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate?

Explain how a decrease in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate.

A country produces two goods, soda and chips. It currently exports soda and imports chips. If it were to impose a tariff on chips,

A tax on imported goods is called an)

If a country removes an import quota, what happens to its exchange rate, its exports, and its net exports?

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

When a country's government budget deficit decreases,

In which cases does/do a country's demand for loanable funds shift right?

When the U.S. real interest rate falls, purchasing U.S. assets becomes

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

If for some reason Americans desired to decrease their purchases of foreign assets, then other things the same

When a country experiences capital flight its currency

If the quantity of loanable funds supplied is greater than the quantity demanded, then there is a

If the U.S. government imposed quotas on imports of clothing, then U.S.

If the exchange rate rises, foreign residents want to purchase ____ domestic goods and domestic residents want to purchase _ foreign goods. In the market for foreign-currency exchange, these changes are shown as a _ in the quantity of dollars __.

In the 1980s, both the U.S. government budget and U.S. trade deficits increased.

In the open-economy macroeconomic model, the market for loanable funds equates national saving with

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 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

Six Debates Over Macroeconomic Policy

Filters

Exam 14: A Macroeconomic Theory of the Open Economy

If there is a surplus in the market for loanable funds, then the interest rate

According to the open-economy macroeconomic model, if the U.S. government budget deficit increases, then both U.S. domestic investment and U.S. net capital outflow decrease.

Suppose that U.S. citizens start saving more. What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate?

Explain how a decrease in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate.

A country produces two goods, soda and chips. It currently exports soda and imports chips. If it were to impose a tariff on chips,

A tax on imported goods is called an)

If a country removes an import quota, what happens to its exchange rate, its exports, and its net exports?

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

When a country's government budget deficit decreases,

In which cases does/do a country's demand for loanable funds shift right?

When the U.S. real interest rate falls, purchasing U.S. assets becomes

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

If for some reason Americans desired to decrease their purchases of foreign assets, then other things the same

When a country experiences capital flight its currency

If the quantity of loanable funds supplied is greater than the quantity demanded, then there is a

If the U.S. government imposed quotas on imports of clothing, then U.S.

If the exchange rate rises, foreign residents want to purchase ______ domestic goods and domestic residents want to purchase _____ foreign goods. In the market for foreign-currency exchange, these changes are shown as a _______ in the quantity of dollars ______.

In the 1980s, both the U.S. government budget and U.S. trade deficits increased.

In the open-economy macroeconomic model, the market for loanable funds equates national saving with

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 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

Six Debates Over Macroeconomic Policy

Filters

If the exchange rate rises, foreign residents want to purchase ____ domestic goods and domestic residents want to purchase _ foreign goods. In the market for foreign-currency exchange, these changes are shown as a _ in the quantity of dollars __.