Exam 19: A Macroeconomic Theory of the Open Economy

If after a country experiences capital flight, people become more confident about the safety of its assets, then in that country

In the open-economy macroeconomic model which of the following falls if there is an increase in the budget deficit?

Because depreciation of the real exchange rate of the dollar increases U.S. net exports, the demand curve for dollars in the foreign-currency exchange market is downward sloping.

Which of the following is most likely to result if foreigners decide to withdraw the funds that they have loaned to the United States?

Figure 32-4 Refer to this diagram of the open-economy macroeconomic model to answer the questions below. -Refer to Figure 32-4. Suppose that the government goes from a budget surplus to a budget deficit. The effects of the change could be illustrated by

Figure 32-6 Refer to this diagram of the open-economy macroeconomic model to answer the questions below. -Refer to Figure 32-6. If equilibrium were at point j and the government imposed import quotas the equilibrium moves to

A German company wants to buy dollars to purchase U.S. bonds. In the open-economy macroeconomic model of the U.S., this transaction would be accounted for in

If a country removed an import quota on cotton, then overall that country's

If the risk of buying U.S. assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds, then

If the people thought that many banks in a certain country were at or near the point of bankruptcy, then that country's real exchange rate

In the open-economy macroeconomic model, at the equilibrium real interest rate, the amount that people including government) want to save equals desired quantities of domestic investment and net capital outflow.

In the open-economy macroeconomic model, if the supply of loanable funds shifts right, then

A country recently had 500 billion euros of national saving and 200 billion euros of domestic investment. What was its net capital outflow? What was its quantity of loanable funds demanded?

If a country makes political reforms so that people now believe this country's assets are less risky, what happens to its interest rate, its exchange rate, and its net exports?

A country produces two goods, soda and chips. It currently exports soda and imports chips. If it were to impose a tariff on chips,

In the open-economy macroeconomic model, if the supply of loanable funds shifts right, then

Refer to Shoe Quota. At a given exchange rate what does a quota do to desired net exports? As a result of this change which curve in the open-economy model shifts and which direction does it shift?

According to the open-economy macroeconomic model, if the United States moved from a government budget deficit to a government budget surplus, U.S. real interest rates would increase and the real exchange rate of the U.S. dollar would appreciate.

An increase in the budget deficit

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