Exam 19: A Macroeconomic Theory of the Open Economy

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

In the open-economy macroeconomic model, the supply of dollars in the market for foreign-currency exchange comes from

If a government started with a budget deficit and moved to a surplus, domestic investment

When the U.S. real interest rate falls, purchasing U.S. assets becomes

In 2002, the United States placed higher tariffs on imports of steel. According to the open-economy macroeconomic model this policy should have

In the open-economy macroeconomic model, if the supply of loanable funds increases, net capital outflow

In the open-economy macroeconomic model, if there were a surplus in the market for foreign-currency exchange, the real exchange rate would appreciate.

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

The open-economy macroeconomic model takes

When a country's government budget deficit decreases,

If imports = 500 billion euros, exports = 700 billion euros, purchases of domestic assets by foreign residents = 600 billion euros, and purchases of foreign assets by domestic residents = 800 billion euros, what is the quantity of euros demanded in the market for foreign-currency exchange?

Refer to Depositors Move Funds Out of Greek Banks. Because of depositors reactions what happened to net capital outflow?

Figure 32-1 -Refer to Figure 32-1. If the real interest rate is 6 percent, there will be pressure for

If at a given exchange rate U.S. citizens wanted to buy more foreign bonds

An increase in the budget deficit

When a country imposes an import quota, its

The quantity of U.S. bonds foreigners want to buy is taken into account

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 interest rate were initially at r2 and an import quota were imposed, the interest rate would

Why do higher real interest rates lead to lower net capital outflow?

If the quantity of loanable funds supplied is greater than the quantity demanded, then there is a