Question 1

The primary focus of the open-economy macroeconomic model is the determination of GDP and the price level.

Accepted Answer

A) True 
 B)False

Question 2

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

Accepted Answer

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

Question 3

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 4

Other things the same, a higher real exchange rate raises net exports.

Accepted Answer

A) True 
 B)False

Question 5

If interest rates rose more in the U.S. than in France, then other things the same

Accepted Answer

A)  U.S. citizens would buy more French bonds and French citizens would buy more U.S. bonds. 
B)  U.S. citizens would buy more French bonds and French citizens would buy fewer U.S. bonds. 
C)  U.S. citizens would buy fewer French bonds and French citizens would buy more U.S. bonds. 
D)  U.S. citizens would buy fewer French bonds and French citizens would buy fewer U.S. bonds. 
A)  U.S. citizens would buy more French bonds and French citizens would buy more U.S. bonds. 
B)  U.S. citizens would buy more French bonds and French citizens would buy fewer U.S. bonds. 
C)  U.S. citizens would buy fewer French bonds and French citizens would buy more U.S. bonds. 
D)  U.S. citizens would buy fewer French bonds and French citizens would buy fewer U.S. bonds.

Question 6

In the open-economy macroeconomic model, the real exchange rate does not affect net capital outflow.

Accepted Answer

A) True 
 B)False

Question 7

In the open-economy macroeconomic model, which of the following increases net capital outflow?

Accepted Answer

A)  a fall in the real exchange rate, but not a fall in the real interest rate 
B)  a fall in the real interest rate, but not a fall in the real exchange rate 
C)  both a fall in the real exchange rate and a fall in the real interest rate 
D)  neither a fall in the real exchange rate nor a fall in the real interest rate 
A)  a fall in the real exchange rate, but not a fall in the real interest rate 
B)  a fall in the real interest rate, but not a fall in the real exchange rate 
C)  both a fall in the real exchange rate and a fall in the real interest rate 
D)  neither a fall in the real exchange rate nor a fall in the real interest rate

Question 8

When a country imposes a trade restriction, the real exchange rate of that country's currency appreciates.

Accepted Answer

A) True 
 B)False

Question 9

If U.S. citizens decide to save a smaller fraction of their incomes, U.S. domestic investment

Accepted Answer

A)  increases, and U.S. net capital outflow increases. 
B)  increases, and U.S. net capital outflow decreases. 
C)  decreases, and U.S. net capital outflow increases. 
D)  decreases, and U.S. net capital outflow decreases. 
A)  increases, and U.S. net capital outflow increases. 
B)  increases, and U.S. net capital outflow decreases. 
C)  decreases, and U.S. net capital outflow increases. 
D)  decreases, and U.S. net capital outflow decreases.

Question 10

When a country experiences capital flight, the interest rate

Accepted Answer

A)  falls because the demand for loanable funds shifts left. 
B)  falls because the supply for loanable funds shifts right. 
C)  rises because the demand for loanable funds shifts right. 
D)  rises because the supply for loanable funds shifts left. 
A)  falls because the demand for loanable funds shifts left. 
B)  falls because the supply for loanable funds shifts right. 
C)  rises because the demand for loanable funds shifts right. 
D)  rises because the supply for loanable funds shifts left.

Question 11

If the U.S. imposed an import quota on furniture, U.S. net exports of furniture

Accepted Answer

A)  and net exports of other U.S. goods and services would rise. 
B)  would rise but net exports of other goods and services would fall. 
C)  would fall but net exports of other goods and services would rise. 
D)  and net exports of other U.S. goods and services would fall. 
A)  and net exports of other U.S. goods and services would rise. 
B)  would rise but net exports of other goods and services would fall. 
C)  would fall but net exports of other goods and services would rise. 
D)  and net exports of other U.S. goods and services would fall.

Question 12

Other things the same, when the real exchange rate of the dollar appreciates, U.S. goods become more desirable to U.S. residents, but less desirable to foreign residents.

Accepted Answer

A) True 
 B)False

Question 13

In the 1980s, the U.S. government budget deficit rose. At the same time the U.S. trade deficit grew larger, the real exchange rate of the dollar appreciated, and U.S. net capital outflow decreased. Which of these events is contrary to what the open-economy macroeconomic model predicts concerning the effects of an increase in the budget deficit?

Accepted Answer

A)  the U.S. trade deficit grew 
B)  the real exchange rate of the dollar appreciated 
C)  U.S. net capital outflow fell 
D)  None of the above is contrary to the predictions of the model. 
A)  the U.S. trade deficit grew 
B)  the real exchange rate of the dollar appreciated 
C)  U.S. net capital outflow fell 
D)  None of the above is contrary to the predictions of the model.

Question 14

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 15

In the long run, import quotas increase net exports.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A)  U.S. supply of loanable funds, U.S. net capital outflow, U.S. domestic investment 
B)  U.S. supply of loanable funds, U.S. exports, the real exchange rate of the dollar 
C)  U.S. interest rates, the real exchange rate of the dollar, U.S. domestic investment 
D)  the real exchange rate of the dollar, U.S. net capital outflow, U.S. net exports 
A)  U.S. supply of loanable funds, U.S. net capital outflow, U.S. domestic investment 
B)  U.S. supply of loanable funds, U.S. exports, the real exchange rate of the dollar 
C)  U.S. interest rates, the real exchange rate of the dollar, U.S. domestic investment 
D)  the real exchange rate of the dollar, U.S. net capital outflow, U.S. net exports

Question 17

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 18

If the people thought that many banks in a certain country were at or near the point of bankruptcy, then that country's real exchange rate

Accepted Answer

A)  and net exports would rise. 
B)  would rise and its net exports would fall. 
C)  would fall and its net exports would rise. 
D)  and its net exports would fall. 
A)  and net exports would rise. 
B)  would rise and its net exports would fall. 
C)  would fall and its net exports would rise. 
D)  and its net exports would fall.

Question 19

If China experienced capital flight, the supply of Chinese yuan in the market for foreign-currency exchange would shift

Accepted Answer

A)  left, which would make the real exchange rate of the Chinese yuan appreciate. 
B)  left, which would make the real exchange rate of the Chinese yuan depreciate. 
C)  right, which would make the real exchange rate of the Chinese yuan appreciate. 
D)  right, which would make the real exchange rate of the Chinese yuan depreciate. 
A)  left, which would make the real exchange rate of the Chinese yuan appreciate. 
B)  left, which would make the real exchange rate of the Chinese yuan depreciate. 
C)  right, which would make the real exchange rate of the Chinese yuan appreciate. 
D)  right, which would make the real exchange rate of the Chinese yuan depreciate.

Question 20

Capital flight raises a country's real exchange rate.

Accepted Answer

A) True 
 B)False

The primary focus of the open-economy macroeconomic model is the determination of GDP and the price level.

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

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

Other things the same, a higher real exchange rate raises net exports.

If interest rates rose more in the U.S. than in France, then other things the same

In the open-economy macroeconomic model, the real exchange rate does not affect net capital outflow.

In the open-economy macroeconomic model, which of the following increases net capital outflow?

When a country imposes a trade restriction, the real exchange rate of that country's currency appreciates.

If U.S. citizens decide to save a smaller fraction of their incomes, U.S. domestic investment

When a country experiences capital flight, the interest rate

If the U.S. imposed an import quota on furniture, U.S. net exports of furniture

Other things the same, when the real exchange rate of the dollar appreciates, U.S. goods become more desirable to U.S. residents, but less desirable to foreign residents.

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

In the long run, import quotas increase net exports.

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

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

If the people thought that many banks in a certain country were at or near the point of bankruptcy, then that country's real exchange rate

If China experienced capital flight, the supply of Chinese yuan in the market for foreign-currency exchange would shift

Capital flight raises a country'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 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

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Exam 14: A Macroeconomic Theory of the Open Economy

The primary focus of the open-economy macroeconomic model is the determination of GDP and the price level.

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

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

Other things the same, a higher real exchange rate raises net exports.

If interest rates rose more in the U.S. than in France, then other things the same

In the open-economy macroeconomic model, the real exchange rate does not affect net capital outflow.

In the open-economy macroeconomic model, which of the following increases net capital outflow?

When a country imposes a trade restriction, the real exchange rate of that country's currency appreciates.

If U.S. citizens decide to save a smaller fraction of their incomes, U.S. domestic investment

When a country experiences capital flight, the interest rate

If the U.S. imposed an import quota on furniture, U.S. net exports of furniture

Other things the same, when the real exchange rate of the dollar appreciates, U.S. goods become more desirable to U.S. residents, but less desirable to foreign residents.

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

In the long run, import quotas increase net exports.

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

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

If the people thought that many banks in a certain country were at or near the point of bankruptcy, then that country's real exchange rate

If China experienced capital flight, the supply of Chinese yuan in the market for foreign-currency exchange would shift

Capital flight raises a country'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 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