Exam 19: A Macroeconomic Theory of the Open Economy

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

In the market for foreign-currency exchange, the source of the supply of dollars is _________. The supply curve is _________ because _____________.

From 2001 to 2004 the U.S. budget went from surplus to deficit. According to the open economy macroeconomic model, this change should have

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

If U.S. citizens decide to save a larger fraction of their incomes, the real interest rate

Over the past two decades, the U.S. has persistently exported more goods and services than it has imported.

In the open-economy macroeconomic model, net capital outflow links the markets for loanable funds and foreign- currency exchange.

The value of net exports equals the value of

Refer to Budget Reform. What does this policy change do to the equilibrium values of the interest rate and the quantity of loanable funds?

In the open-economy macroeconomic model, the

If a country raises its budget deficit, then net capital outflow

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

An increase in the budget surplus

Capital flight increases a country's interest rate. This increase in the interest rate makes net capital outflow lower than it would be had the interest rate stayed the same.

If a government has a budget surplus, then public saving

Refer to Depositors Move Funds Out of Greek Banks. Which curve in the domestic loanable funds market shifted and which direction did it shift?

In the open-economy macroeconomic model, the quantity of dollars demanded in the market for foreign-currency exchange

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

What is the source of the supply of loanable funds in the open-economy macroeconomic model?

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