Exam 14: A Macroeconomic Theory of the Open Economy

If the budget deficit increases, then

Which of the following contains a list only of things that decrease when the budget deficit of the U.S. increases?

In the open­economy macroeconomic model, if a country's supply of loanable funds shifts right, then

Other things the same, if the real interest rate in a country falls, domestic residents will desire to purchase

Suppose the U.S. supply of loanable funds shifts left. This will

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

Which of the following is included in the demand for dollars in the market for foreign-currency exchange in the open-economy macroeconomic model?

Trade policies

If U.S. residents want to buy more foreign bonds, then in the market for foreign-currency exchange the exchange rate

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 candidate's promise.

If a country raises its budget deficit, then its

A rise in the government budget deficit

In the open-economy macroeconomic model, equilibrium in the market for foreign-currency exchange is determined by the equality between the supply of dollars which comes from

If a country's budget deficit decreases, then the exchange rate

Which of the following is consistent with moving from a shortage to equilibrium in the market for foreign currency exchange?

In an open economy, the demand for loanable funds comes from both domestic investment and net capital outflow.

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

In the open-economy macroeconomic model, other things the same, which of the following both make the exchange rate fall?

Other things the same, as the real interest rate falls

If the budget deficit increases, then