Exam 19: A Macroeconomic Theory of the Open Economy

A decrease in the budget deficit causes domestic interest rates

Other things the same, if the U.S. interest rate rises, what happens to the net capital outflow of other countries?

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

In the open­economy macroeconomic model, if a country's interest rate falls, then its

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

Suppose that the United States imposes an import quota on televisions. In the open-economy macroeconomic model this quota shifts the

If the United States imposes an import quota on clothing, then U.S. exports

A country has output of $600 billion, consumption of $350 billion, government expenditures of $90 billion and investment of $60 billion. What is its supply of loanable funds?

A firm produces construction equipment, some of which it exports. Which of the following effects of an increase in the government budget deficit would likely reduce the quantity of equipment it sells?

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

Over the past two decades the U.S. has persistently had trade deficits.

If the U.S. imposed import quotas on cotton, then which of the following would rise?

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

Figure 32-1 -Refer to Figure 32-1. If the real interest rate is 2 percent, there will be a

Which of the following is always correct in an open economy?

In an open economy, the source of the demand for loanable funds is

In the open-economy macroeconomic model, at the equilibrium real interest rate, the amount that people including government) want to save exactly balances desired domestic investment.

A country has private saving of $500 billion, public saving of -$100 billion, domestic investment of $150 billion, and net capital outflow of $250 billion. What is its supply of loanable funds?

Refer to Budget in Recession. This change in the deficit causes net capital outflow to change. How is this change in net capital outflow shown in the market for foreign-currency exchange? What happens to the exchange rate?

Other things the same, an increase in the U.S. real interest rate induces