Exam 4: Saving and Investment in Closed and Open Economies

Saving-Investment Diagram -Based on the Saving-Investment Diagram, the difference between values H and E could measure the net capital inflow, if ________.

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(Multiple Choice)

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Question 1

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A small open economy would typically enjoy a higher trade balance if, in the domestic economy, ________.

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Question 2

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Why is it important, for an open economy, that investment not be consistently higher than saving?

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(Essay)

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Question 3

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When investment is higher than saving, the difference is a net capital inflow. The extra investment that is financed by foreigners is an addition to their wealth, rather than an increase in the wealth of domestic citizens. The income from such investment must be paid to the foreign owners, thus is not available to contribute to domestic income and saving. The source of the capital inflow is a continual excess of imports over exports (negative trade balance). Imports are being financed through the sale of assets to foreigners. It is not so much investment but consumption that is unsustainably high; saving is unsustainably low.

In the model for desired saving, autonomous is roughly synonymous with ________.

(Multiple Choice)

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Question 4

If we observe an economy in which desired saving has changed, but there has been no change in actual investment, we may infer that ________.

(Multiple Choice)

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Question 5

If we observe an economy in which desired saving has changed, but there has been no change in actual investment, we may infer that ________.

(Multiple Choice)

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Question 6

An increase in autonomous investment in a small open economy will cause ________.

(Multiple Choice)

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Question 7

Saving-Investment Diagram -Based on the Saving-Investment Diagram, if the world real interest rate is indicated by C, then ________.

(Multiple Choice)

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Question 8

A small open economy would typically enjoy a higher trade balance if, in the domestic economy, ________.

(Multiple Choice)

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Question 9

An increase in autonomous investment in a small open economy will cause ________.

(Multiple Choice)

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Question 10

If the world real interest rate were to fall below the rate at which domestic saving and investment would be equal ________.

(Multiple Choice)

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Question 11

Saving-Investment Diagram -Based on the Saving-Investment Diagram, if the difference between values G and E measures the net capital outflow, then ________.

(Multiple Choice)

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Question 12

Consumption expenditures are a function of ________.

(Multiple Choice)

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Question 13

Private saving refers to ________.

(Multiple Choice)

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Question 14

In the model of the open economy with perfect capital mobility, ________ is an exogenous variable.

(Multiple Choice)

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Question 15

How can the U.S. federal government induce increases in the national saving rate?

(Multiple Choice)

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Question 16

In a large open economy, an increase in leads to .

(Multiple Choice)

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Question 17

Saving-Investment Diagram -Based on the Saving-Investment Diagram, if the world real interest rate declines from A to C, then the change in net exports is measured by the difference between values ________.

(Multiple Choice)

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Question 18

Which of the following would lead domestic investment to rise?

(Multiple Choice)

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Question 19

If there is a decline in world autonomous consumption ________.

(Multiple Choice)

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Question 20

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Exam 4: Saving and Investment in Closed and Open Economies

Saving-Investment Diagram -Based on the Saving-Investment Diagram, the difference between values H and E could measure the net capital inflow, if ________.

A small open economy would typically enjoy a higher trade balance if, in the domestic economy, ________.

Why is it important, for an open economy, that investment not be consistently higher than saving?

In the model for desired saving, autonomous is roughly synonymous with ________.

If we observe an economy in which desired saving has changed, but there has been no change in actual investment, we may infer that ________.

If we observe an economy in which desired saving has changed, but there has been no change in actual investment, we may infer that ________.

An increase in autonomous investment in a small open economy will cause ________.

Saving-Investment Diagram -Based on the Saving-Investment Diagram, if the world real interest rate is indicated by C, then ________.

A small open economy would typically enjoy a higher trade balance if, in the domestic economy, ________.

An increase in autonomous investment in a small open economy will cause ________.

If the world real interest rate were to fall below the rate at which domestic saving and investment would be equal ________.

Saving-Investment Diagram -Based on the Saving-Investment Diagram, if the difference between values G and E measures the net capital outflow, then ________.

Consumption expenditures are a function of ________.

Private saving refers to ________.

In the model of the open economy with perfect capital mobility, ________ is an exogenous variable.

How can the U.S. federal government induce increases in the national saving rate?

In a large open economy, an increase in ________ leads to ________.

Saving-Investment Diagram -Based on the Saving-Investment Diagram, if the world real interest rate declines from A to C, then the change in net exports is measured by the difference between values ________.

Which of the following would lead domestic investment to rise?

If there is a decline in world autonomous consumption ________.

The Policy and Practice of Macroeconomics

Measuring Macroeconomic Data

Aggregate Production and Productivity

Money and Inflation

The Sources of Growth and the Solow Model

Drivers of Growth: Technology, Policy, and Institutions

Business Cycles: an Introduction

The Is Curve

Monetary Policy and Aggregate Demand

Aggregate Supply and the Phillips Curve

The Aggregate Demand and Supply Model

Macroeconomic Policy and Aggregate Demand and Supply Analysis

The Financial System and Economic Growth

Financial Crises and the Economy

Fiscal Policy and the Government Budget

Exchange Rates and International Economic Policy

Consumption and Saving

Investment

The Labor Market, Employment, and Unemployment

The Role of Expectations in Macroeconomic Policy

Modern Business Cycle Theory

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In a large open economy, an increase in leads to .