Question 1

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

Accepted Answer

A)  and the quantity of dollars traded rises. 
B)  rises and the quantity of dollars traded falls. 
C)  falls and the quantity of dollars traded rises. 
D)  and the quantity of dollars traded falls. 
A)  and the quantity of dollars traded rises. 
B)  rises and the quantity of dollars traded falls. 
C)  falls and the quantity of dollars traded rises. 
D)  and the quantity of dollars traded falls.

Question 2

If the U.S. government imposed quotas on imports of clothing, then U.S.

Accepted Answer

A)  imports and exports would both fall. 
B)  imports would fall and exports would rise. 
C)  imports would rise and exports would fall. 
D)  None of the above is correct. 
A)  imports and exports would both fall. 
B)  imports would fall and exports would rise. 
C)  imports would rise and exports would fall. 
D)  None of the above is correct.

Question 3

Figure 32-6
Refer to this diagram of the open-economy macroeconomic model to answer the questions below.
  
-Refer to Figure 32-6. If the economy were initially in equilibrium at r1 and e3 and the government removes import quotas, the exchange rate moves to

Accepted Answer

A)  e5 
B)  e4 
C)  e2 
D)  e1 
A)  e5 
B)  e4 
C)  e2 
D)  e1

Question 4

In the market for foreign-currency exchange, capital flight shifts

Accepted Answer

A)  the demand curve right. 
B)  the demand curve left. 
C)  the supply curve right. 
D)  the supply curve left. 
A)  the demand curve right. 
B)  the demand curve left. 
C)  the supply curve right. 
D)  the supply curve left.

Question 5

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

Accepted Answer

A) NCO > I. B) NCO S. D) NCO + I < S. A) NCO > I. B) NCO S. D) NCO + I < S.

Question 6

Other things the same, an increase in the U.S. interest rate causes the quantity of loanable funds supplied to

Accepted Answer

A)  rise because net capital outflow and domestic investment rise. 
B)  rise because national saving rises. 
C)  fall because net capital outflow and domestic investment rise. 
D)  fall because national saving falls. 
A)  rise because net capital outflow and domestic investment rise. 
B)  rise because national saving rises. 
C)  fall because net capital outflow and domestic investment rise. 
D)  fall because national saving falls.

Question 7

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

Accepted Answer

A)  the exchange rate falls so foreign residents want to buy more U.S. goods and services 
B)  the exchange rate falls so foreign residents want to buy fewer U.S. goods and services 
C)  the exchange rate rises so foreign residents want to buy more U.S. goods and services 
D)  the exchange rate rises so foreign residents want to buy fewer U.S. goods and services 
A)  the exchange rate falls so foreign residents want to buy more U.S. goods and services 
B)  the exchange rate falls so foreign residents want to buy fewer U.S. goods and services 
C)  the exchange rate rises so foreign residents want to buy more U.S. goods and services 
D)  the exchange rate rises so foreign residents want to buy fewer U.S. goods and services

Question 8

If the government of Venezuela made policy changes that increased national saving, the real exchange rate of the peso would

Accepted Answer

A)  depreciate and Venezuelan net exports would rise. 
B)  depreciate and Venezuelan net exports would fall. 
C)  appreciate and Venezuelan net exports would rise. 
D)  appreciate and Venezuelan net exports would fall. 
A)  depreciate and Venezuelan net exports would rise. 
B)  depreciate and Venezuelan net exports would fall. 
C)  appreciate and Venezuelan net exports would rise. 
D)  appreciate and Venezuelan net exports would fall.

Question 9

If the demand for dollars in the market for foreign-currency exchange shifts right, then the exchange rate

Accepted Answer

A)  rises and the quantity of dollars exchanged rises. 
B)  rises and the quantity of dollars exchanged does not change. 
C)  falls and the quantity of dollars exchanged falls. 
D)  falls and the quantity of dollars exchanged does not change. 
A)  rises and the quantity of dollars exchanged rises. 
B)  rises and the quantity of dollars exchanged does not change. 
C)  falls and the quantity of dollars exchanged falls. 
D)  falls and the quantity of dollars exchanged does not change.

Question 10

A rise in the government budget deficit

Accepted Answer

A)  increases the interest rate so in the market for foreign-currency exchange, supply shifts right. 
B)  increases the interest rate so in the market for foreign-currency exchange, supply shifts left. 
C)  decreases the interest rate so in the market for foreign-currency exchange, supply shifts left. 
D)  decreases the interest rate so in the market for foreign-currency exchange supply shifts right. 
A)  increases the interest rate so in the market for foreign-currency exchange, supply shifts right. 
B)  increases the interest rate so in the market for foreign-currency exchange, supply shifts left. 
C)  decreases the interest rate so in the market for foreign-currency exchange, supply shifts left. 
D)  decreases the interest rate so in the market for foreign-currency exchange supply shifts right.

Question 11

Figure 32-6
Refer to this diagram of the open-economy macroeconomic model to answer the questions below.
  
-Refer to Figure 32-6. Which of the following shifts show the effects of an import quota?

Accepted Answer

A)  shifting the middle supply curve in panel c to the one to its left. 
B)  shifting the demand curve from the right to the left in panel c. 
C)  shifting the demand curve from the left to the right in panel c. 
D)  None of the above is correct. 
A)  shifting the middle supply curve in panel c to the one to its left. 
B)  shifting the demand curve from the right to the left in panel c. 
C)  shifting the demand curve from the left to the right in panel c. 
D)  None of the above is correct.

Question 12

Other things the same, a decrease in the interest rate

Accepted Answer

A)  reduces domestic investment which reduces the quantity of loanable funds supplied. 
B)  reduces domestic investment which reduces the quantity of loan funds demanded. 
C)  raises domestic investment which raises the quantity of loanable funds supplied. 
D)  raises domestic investment which raises the quantity of loanable funds demanded. 
A)  reduces domestic investment which reduces the quantity of loanable funds supplied. 
B)  reduces domestic investment which reduces the quantity of loan funds demanded. 
C)  raises domestic investment which raises the quantity of loanable funds supplied. 
D)  raises domestic investment which raises the quantity of loanable funds demanded.

Question 13

A U.S.-imposed quota on automobiles would shift

Accepted Answer

A)  both the demand and supply curves in the market for foreign-currency exchange right. 
B)  both the demand and supply curves in the market for foreign-currency exchange right 
C)  only the demand curve in the market for foreign-currency exchange right. 
D)  only the supply curve in the market for foreign-currency exchange right 
A)  both the demand and supply curves in the market for foreign-currency exchange right. 
B)  both the demand and supply curves in the market for foreign-currency exchange right 
C)  only the demand curve in the market for foreign-currency exchange right. 
D)  only the supply curve in the market for foreign-currency exchange right

Question 14

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 15

In which cases) doesdo) a country's demand for loanable funds shift right?

Accepted Answer

A)  both an increase in the budget deficit and capital flight 
B)  an increase in the budget deficit, but not capital flight 
C)  capital flight, but not an increase in the budget deficit 
D)  neither an increase in the budget deficit nor capital flight 
A)  both an increase in the budget deficit and capital flight 
B)  an increase in the budget deficit, but not capital flight 
C)  capital flight, but not an increase in the budget deficit 
D)  neither an increase in the budget deficit nor capital flight

Question 16

In 2009 Greece's budget deficit rose and people became worried about the ability of the Greek government to make payments on its debt. Which of the these events reduces a country's real exchange rate?

Accepted Answer

A)  an increase in the budget deficit, and increased concerns about the ability of the government to pay back its debt 
B)  an increase in the budget deficit, but not increased concerns about the ability of the government to pay back its debt 
C)  increased concerns about the ability of the government to pay back its debt, but not an increase in the budget deficit 
D)  neither an increase in the budget deficit, nor increased concerns about the ability of the government to pay back its debt 
A)  an increase in the budget deficit, and increased concerns about the ability of the government to pay back its debt 
B)  an increase in the budget deficit, but not increased concerns about the ability of the government to pay back its debt 
C)  increased concerns about the ability of the government to pay back its debt, but not an increase in the budget deficit 
D)  neither an increase in the budget deficit, nor increased concerns about the ability of the government to pay back its debt

Question 17

If the demand for loanable funds shifts right, then

Accepted Answer

A)  the real interest rate and the equilibrium quantity of loanable funds both fall. 
B)  the real interest rate falls and the equilibrium quantity of loanable funds rises. 
C)  the real interest rate and the equilibrium quantity of loanable funds both rise. 
D)  the real interest rate rises and the equilibrium quantify of loanable funds falls. 
A)  the real interest rate and the equilibrium quantity of loanable funds both fall. 
B)  the real interest rate falls and the equilibrium quantity of loanable funds rises. 
C)  the real interest rate and the equilibrium quantity of loanable funds both rise. 
D)  the real interest rate rises and the equilibrium quantify of loanable funds falls.

Question 18

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 19

Refer to Shoe Quota. What is a quota? What is a tariff?

Accepted Answer

A quota limits the quantity of

Question 20

Which of the following would shift the demand for dollars in the market for foreign currency exchange to the right?

Accepted Answer

A)  foreign citizens want to buy more U.S. goods and services at a given exchange rate 
B)  foreign citizens want to buy fewer U.S. goods and services at a given exchange rate 
C)  foreign citizens want to buy more U.S. bonds 
D)  foreign citizens want to by fewer U.S. bonds 
A)  foreign citizens want to buy more U.S. goods and services at a given exchange rate 
B)  foreign citizens want to buy fewer U.S. goods and services at a given exchange rate 
C)  foreign citizens want to buy more U.S. bonds 
D)  foreign citizens want to by fewer U.S. bonds

Exam 19: A Macroeconomic Theory of the Open Economy

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

If the U.S. government imposed quotas on imports of clothing, then U.S.

Figure 32-6 Refer to this diagram of the open-economy macroeconomic model to answer the questions below. -Refer to Figure 32-6. If the economy were initially in equilibrium at r1 and e3 and the government removes import quotas, the exchange rate moves to

In the market for foreign-currency exchange, capital flight shifts

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

Other things the same, an increase in the U.S. interest rate causes the quantity of loanable funds supplied to

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

If the government of Venezuela made policy changes that increased national saving, the real exchange rate of the peso would

If the demand for dollars in the market for foreign-currency exchange shifts right, then the exchange rate

A rise in the government budget deficit

Figure 32-6 Refer to this diagram of the open-economy macroeconomic model to answer the questions below. -Refer to Figure 32-6. Which of the following shifts show the effects of an import quota?

Other things the same, a decrease in the interest rate

A U.S.-imposed quota on automobiles would shift

When a country experiences capital flight, the interest rate

In which cases) doesdo) a country's demand for loanable funds shift right?

In 2009 Greece's budget deficit rose and people became worried about the ability of the Greek government to make payments on its debt. Which of the these events reduces a country's real exchange rate?

If the demand for loanable funds shifts right, then

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

Refer to Shoe Quota. What is a quota? What is a tariff?

Which of the following would shift the demand for dollars in the market for foreign currency exchange to the right?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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