Exam 19: A Macroeconomic Theory of the Open Economy

Other things the same, if the U.S. interest rate rises, U.S. assets become ____ attractive. So, desired net capital outflow _____. This change in net capital outflow shifts the __________ curve in the market for foreign-currency exchange to the ______.

Which of the following would tend to shift the supply of dollars in the market for foreign-currency exchange in the open-economy macroeconomic model to the right?

Refer to Budget Reform. What does this policy change do to net capital outflows? Defend your answer.

If a country has a positive net capital outflow, then

A tax on imported goods is called an)

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 ______.

What happens to each of the following if investment becomes more desirable at each interest rate? a. the interest rate b. net capital outflow c. the exchange rate

If the supply of loanable funds shifts right, then the equilibrium

Refer to Depositors Move Funds Out of Greek Banks. What happened to the domestic equilibrium interest rate and quantity of loanable funds supplied?

Refer to Shoe Quota. As a result of the quota, is there initially a surplus or a shortage in the market for foreign- currency exchange? Carefully explain how people's response to this surplus or shortage and the resulting changes in their behavior leads to a new equilibrium exchange rate.

Other things the same, if the interest rate falls, then

If the demand for net exports rises, which of the following happens in the open-economy macroeconomic model?

If a country raises its budget deficit then

Which of the following would cause the real exchange rate of the U.S. dollar to appreciate?

In an open economy, the demand for loanable funds comes from

If Argentina suffers from capital flight, Argentinean domestic investment and Argentinean net exports will both decline.

If a government increases its budget deficit, then domestic interest rates

Which of the following would not be a consequence of an increase in the U.S. government budget deficit?

Other things the same, a higher real interest rate raises the quantity of

In the United States in the early 1980s, there was a government budget