Exam 19: A Macroeconomic Theory of the Open Economy

In the open-economy macroeconomic model, other things the same, an increase in the exchange rate raises the quantity of dollars supplied in the market for foreign-currency exchange.

Political events convince people that the assets of country x are now riskier. As a result of this change which curves in the open-economy macroeconomic model shift and which direction do they shift for country x?

Which of the following would both make a country's real exchange rate rise?

In the open-economy macroeconomic model, other things the same, which of the following both make the exchange rate fall?

A country has private saving of $100 billion, public saving of -$30 billion, domestic investment of $50 billion, and net capital outflow of $20 billion. What is its supply of loanable funds?

If the government of Canada increased its budget deficit, then domestic investment

An increase in the budget deficit causes domestic interest rates

If a country went from a government budget deficit to a surplus, national saving would

If the real exchange rate for the dollar is below the equilibrium level, the quantity of dollars supplied in the market for foreign-currency exchange is

If the budget deficit increases, then

The open-economy macroeconomic model includes

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

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

When Mexico suffered from capital flight in 1994, Mexico's net capital outflow

The imposition of an import quota shifts

U.S. net capital outflow

If C+I+G>Y, then net exports and net capital outflow are both greater than zero.

Which of the following happens in the market for loanable funds when there is capital flight?

Net capital outflow represents the quantity of dollars supplied in the foreign-currency exchange market.

Many U.S. business leaders argue that the current state of U.S. net exports is the result of