Question 1

If the government has a $100 million budget deficit,private saving is equal to $500 million,private investment is equal to $300 million,what is the value of the current account in equilibrium?

Accepted Answer

A) $100 million surplus 
B) $700 million surplus 
C) $100 million deficit 
D) $700 million deficit

Question 2

Describe the policies a nation would follow to correct a current account deficit.What are the primary purposes of each type of policy?

Accepted Answer

The answer of Describe the policies a nation would follow...

Question 3

Coordination of macroeconomic policies between nation is uncommon.

Accepted Answer

A) True 
 B)False

Question 4

It is more certain how expansionary monetary policy will affect the current account than how expansionary fiscal policy will affect it.

Accepted Answer

A) True 
 B)False

Question 5

Describe the difficult choices in macroeconomic policy that Argentina faced in the late 1990s.

Accepted Answer

The answer of Describe the difficult choices in macroeconomic policy...

Question 6

The J-curve effect that results from currency depreciation results is due to

Accepted Answer

A) the initial effect having positive effects on the current account balance. 
B) the value of imports increasing by more than the value of exports at the time of devaluation. 
C) exports and imports being totally unresponsive to changes in exchange rates. 
D) decreases in the dollar price of imports.

Question 7

Contractionary fiscal policy attempts to shift aggregate demand to the right.

Accepted Answer

A) True 
 B)False

Question 8

What typically happens to imports as income and spending rise?

Accepted Answer

The answer of What typically happens to imports as income...

Question 9

The recent trend internationally has been for the executive and legislative branches of elected governments to get more control over monetary policy,as has been the case in countries such as the United States.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would cause an increase in aggregate supply?

Accepted Answer

A) An increase in factors of production 
B) An increase in foreign demand for goods 
C) A decrease in productivity 
D) An increase in government spending

Question 11

Which of the following would NOT be a reason why developed nations would try to coordinate their macroeconomic policies?

Accepted Answer

A) To achieve a desirable level of world economic growth 
B) To avoid imposing a disproportionate burden on one major country in its attempt to help other world economies 
C) To stimulate production in other countries using the higher incomes generated by policy coordination 
D) To coordinate retaliatory policies on developing countries' trade barriers

Question 12

Fiscal policy can be implemented more quickly than monetary policy.

Accepted Answer

A) True 
 B)False

Question 13

The gold standard was helpful in stabilizing economies during the Great Depression.

Accepted Answer

A) True 
 B)False

Question 14

Expansionary monetary policy is likely to lead to a depreciation of the nation's currency.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following correctly shows the relationship between savings,the government budget balance,and the current account?

Accepted Answer

A) S + CA = I + (T -G) 
B) S + CA = I + (T + G) 
C) S + (T - G)= I + CA 
D) S + (T + G)= I + CA

Question 16

A common response to stop a depreciation of a currency is to use contractionary monetary policy,which could lead to a recession.

Accepted Answer

A) True 
 B)False

Question 17

Used alone,an expenditure-switching policy that turns spending from foreign goods to domestic goods

Accepted Answer

A) will not reduce the current account deficit. 
B) is likely to cause a recession. 
C) will be likely to increase the current account deficit. 
D) is likely to increase domestic inflation.

Question 18

Describe some of the potential problems with using expansionary fiscal policy.

Accepted Answer

The answer of Describe some of the potential problems with...

Question 19

During the worldwide recession of 2007-2009,

Accepted Answer

A) the Fed and the European Central Bank worked together. 
B) all countries coordinated macroeconomic policies. 
C) nations sacrificed some sovereignty. 
D) the IMF coordinated world economic policies.

Question 20

In most cases,expenditure-switching policies must be accompanied by expenditure-reducing policies because

Accepted Answer

A) expenditure-switching policies are completely ineffective without expenditure-reducing policies. 
B) inflation ensues as home country domestic expenditures switch away from foreign goods to domestic goods unless overall expenditures are reduced. 
C) inflation abroad may increase the demand for domestic goods, causing inflation to rise. 
D) the depreciation in the exchange rate may decrease the domestic price of foreign goods, causing an increase in the current account deficit.

Exam 11: An Introduction to Open Economy Macroeconomics

If the government has a $100 million budget deficit,private saving is equal to $500 million,private investment is equal to $300 million,what is the value of the current account in equilibrium?

Describe the policies a nation would follow to correct a current account deficit.What are the primary purposes of each type of policy?

Coordination of macroeconomic policies between nation is uncommon.

It is more certain how expansionary monetary policy will affect the current account than how expansionary fiscal policy will affect it.

Describe the difficult choices in macroeconomic policy that Argentina faced in the late 1990s.

The J-curve effect that results from currency depreciation results is due to

Contractionary fiscal policy attempts to shift aggregate demand to the right.

What typically happens to imports as income and spending rise?

The recent trend internationally has been for the executive and legislative branches of elected governments to get more control over monetary policy,as has been the case in countries such as the United States.

Which of the following would cause an increase in aggregate supply?

Which of the following would NOT be a reason why developed nations would try to coordinate their macroeconomic policies?

Fiscal policy can be implemented more quickly than monetary policy.

The gold standard was helpful in stabilizing economies during the Great Depression.

Expansionary monetary policy is likely to lead to a depreciation of the nation's currency.

Which of the following correctly shows the relationship between savings,the government budget balance,and the current account?

A common response to stop a depreciation of a currency is to use contractionary monetary policy,which could lead to a recession.

Used alone,an expenditure-switching policy that turns spending from foreign goods to domestic goods

Describe some of the potential problems with using expansionary fiscal policy.

During the worldwide recession of 2007-2009,

In most cases,expenditure-switching policies must be accompanied by expenditure-reducing policies because