Exam 19: A Macroeconomic Theory of the Open Economy

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

If the U.S. imposes an import quota on clothing, then the

If a country raises its budget deficit, then its

In the open economy macroeconomic model, the price that balances supply and demand in the market for foreign- currency exchange model is the

If the U.S. government imposes a quota on imports of jet planes, then

Other things the same, as the real interest rate rises

Other things the same, a higher real exchange rate raises net exports.

Which of the following would cause the real exchange rate of the U.S. dollar to depreciate?

Refer to Budget in Recession. This change in the deficit causes the exchange rate to change. What does the change in the exchange rate do to net exports?

A government budget deficit

When a country suffers from capital flight, the demand for loanable funds in that country shifts

Figure 32-2 -Refer to Figure 32-2. At what real exchange rate is the quantity of dollars demanded equal to 500?

In an open economy, the source for the demand for loanable funds is

Figure 32-4 Refer to this diagram of the open-economy macroeconomic model to answer the questions below. -Refer to Figure 32-5. Starting from 3% and .75, an increase in the government budget surplus can be illustrated as a move to

Other things the same, in the open-economy macroeconomic model, if the exchange rate rises,

Imposing an import quota causes the domestic real exchange rate to

A country has I = $200 billion, S = $400 billion, and purchased $600 billion of foreign assets, how many of its assets did foreigners purchase?

Refer to U.S. Investment Tax Credit. What happens to the exchange rate, U.S. net exports, and the net exports of foreign countries?

If the exchange rate falls, domestic goods become relatively expensive. This change in the affordability of domestic goods makes domestic goods attractive to domestic residents. So, _______ ______.

Suppose a presidential candidate promises to increase the government budget surplus and claims that doing so will stop U.S. citizens from investing in foreign companies and increase the value of the dollar. Evaluate this candidate's promise.