Exam 18: Balance of Payments II: Output, Exchange Rates, and Macroeconomic Policies in the Short Run

If we start from long-run general equilibrium of goods, forex, and the money markets, and there is a temporary expansion of the money supply, what will be the outcome?

In 2002, $1 = 1 euro, and in 2006, $1 = 0.6 euro. If the price of a Ferrari was $125,000 in 2006, then:

If consumption has fallen, which of the following could be true?

Changing the rate at which the central bank makes loans counts as:

What are the ultimate impacts of temporary expansionary monetary policy under fixed exchange rates on Y, i, E and the TB? Briefly explain.

The larger the percentage of U.S. imports already priced in dollars, the less likely depreciation in the U.S. dollar will be to:

If a nation trades with another nation in a foreign currency (such as some commodities sold that are priced in U.S. dollars), then, when nominal exchange rates change, the real effective exchange rate will:

When analyzing the impact of government consumption and taxes in an open economy, we assume that:

Because of international time lags between ordering and the receipt of goods, a depreciation of a currency:

The goods market adjusts to an equilibrium right at the point of the Keynesian cross. Why?

When analyzing the impact of government consumption and taxes in an open economy, we exclude transfer payments because:

The devaluation of a currency results in a(n):

When income levels in the rest of the world increase, what is the effect on the home TB?

The marginal propensity to consume goods and services can be broken out into the:

Every point on an open-economy IS curve represents:

Sometimes a change in the real effective multilateral exchange rate has the opposite result from what one would expect. One explanation may be that:

What are the possible constraints on the decision to conduct an expansionary economic policy?

If the interest rate rises and government spending falls, what will happen to output, ceteris paribus?

If domestic income falls, what must happen to keep the trade balance the same?

All else being equal, an increase in government spending would shift the ______ line to the ______, causing interest rates to _______ and the trade balance to _______.