Exam 14: A Macroeconomic Theory of the Open Economy

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

In the open-economy macroeconomic model, as the exchange rate rises,

In the open-economy macroeconomic model, the supply curve of currency is vertical because the quantity of currency supplied does not depend on the real exchange rate.

If the real exchange rate for the dollar is above the equilibrium level, the quantity of dollars supplied in the market for foreign-currency exchange is

In the open-economy macroeconomic model, other things the same, when a U.S. resident imports a foreign good, the demand for dollars in the foreign-currency exchange market decreases.

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

If the French government increases its expenditures and reduces taxes, then France's interest rate

Which of the following would make both the equilibrium real interest rate and the equilibrium quantity of loanable funds decrease?

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

At a given real exchange rate, which of the following, by itself, would increase the supply of dollars in the market for foreign-currency exchange?

Which of the following is considered part of the supply of U.S. dollars in the market for foreign-currency exchange in the open-economy macroeconomic model?

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

If the U.S. imposed an import quota on farm machinery, then sales of U.S. farm machinery equipment producers would

Other things the same an increase in the interest rate

During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would

If there is a surplus in the U.S. loanable funds market, then

The purchase of a capital asset adds to the demand for loanable funds only if that asset is a domestic one.

If a county becomes less likely to default on its bonds, what happens to that country's interest rate and exchange rate? Explain.

What effect do protectionist policies have on the trade deficit?

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