Question 1

If Morocco experienced capital flight,which statement would best explain the effects?

Accepted Answer

A)  The supply of Moroccan dirham curve would shift left,which would make the real exchange rate of the Moroccan dirham appreciate. 
B)  The supply of Moroccan dirham curve would shift left,which would make the real exchange rate of the Moroccan dirham depreciate. 
C)  The supply of Moroccan dirham curve would shift right,which would make the real exchange rate of the Moroccan dirham appreciate. 
D)  The supply of Moroccan dirham curve would shift right,which would make the real exchange rate of the Moroccan dirham depreciate.

Question 2

Which statement is consistent with negative net exports?

Accepted Answer

A)  Net capital outflow is positive,so foreign assets bought by Canadians are greater than Canadian assets bought by foreigners. 
B)  Net capital outflow is positive,so Canadian assets bought by foreigners are greater than foreign assets bought by Canadians. 
C)  Net capital outflow is negative,so foreign assets bought by Canadians are greater than Canadian assets bought by foreigners. 
D)  Net capital outflow is negative,so Canadian assets bought by foreigners are greater than foreign assets bought by Canadians.

Question 3

Fill in the table below with the direction of the variables that change in response to the events in the first column.

Accepted Answer

The answer of Fill in the table below with the...

Question 4

Which statement best predicts the effects of an increase in the Canadian real interest rate?

Accepted Answer

A)  Canadian net capital outflow and net capital outflow of other countries would rise. 
B)  Canadian net capital outflow and net capital outflow of other countries would fall. 
C)  Canadian net capital outflow would rise,while net capital outflow of other countries would fall. 
D)  Canadian net capital outflow would fall,while net capital outflow of other countries would rise.

Question 5

In an open economy,the demand for loanable funds comes from both domestic investment and net capital outflow.

Accepted Answer

A) True 
 B)False

Question 6

If Canadian citizens decide to save a smaller fraction of their incomes,which statement would best describe the effects?

Accepted Answer

A)  Canadian domestic investment increases,and Canadian net capital outflow increases. 
B)  Canadian domestic investment increases,and Canadian net capital outflow decreases. 
C)  Canadian domestic investment decreases,and Canadian net capital outflow increases. 
D)  Canadian domestic investment decreases,and Canadian net capital outflow decreases.

Question 7

The key determinant of net capital outflow is the real exchange rate.

Accepted Answer

A) True 
 B)False

Question 8

How does the supply or demand for loanable funds shift when a country increases its budget deficit?

Accepted Answer

A)  The supply of loanable funds shifts right. 
B)  The supply of loanable funds shifts left. 
C)  The demand for loanable funds shifts right. 
D)  The demand for loanable funds shifts left.

Question 9

What would make both the equilibrium interest rate and the equilibrium quantity of loanable funds increase?

Accepted Answer

A)  The demand for loanable funds shifts right. 
B)  The demand for loanable funds shifts left. 
C)  The supply of loanable funds shifts right. 
D)  The supply of loanable funds shifts left.

Question 10

Suppose that the government of Jordan raises its budget deficit.Which statement best predicts the effects of this action?

Accepted Answer

A)  The real exchange rate of the Jordanian dinar would depreciate,and Jordanian net exports would rise. 
B)  The real exchange rate of the Jordanian dinar would depreciate,and Jordanian net exports would fall. 
C)  The real exchange rate of the Jordanian dinar would appreciate,and Jordanian net exports would rise. 
D)  The real exchange rate of the Jordanian dinar would appreciate,and Jordanian net exports would fall.

Question 11

Which statement best predicts the effects of an increase in the supply of loanable funds?

Accepted Answer

A)  The interest rate and the real exchange rate both increase. 
B)  The interest rate and the real exchange rate both decrease. 
C)  The interest rate increases,and the real exchange rate decreases. 
D)  The interest rate decreases,and the real exchange rate increases.

Question 12

In the open-economy macroeconomic model,how can the market for loanable funds identity be written?

Accepted Answer

A)  S = I 
B)  S = NCO - I 
C)  S = I + NCO 
D)  S + I = NCO

Question 13

Which of the following is included in the demand for dollars in the market for foreign-currency exchange in the open-market macroeconomic model?

Accepted Answer

A)  A firm in Kenya wants to buy furniture from a Canadian firm. 
B)  A Japanese bank desires to purchase Canadian government securities. 
C)  A Canadian citizen wants to buy a bond issued by a Moroccan corporation. 
D)  A Canadian citizen exchanges dollars for euros.

Question 14

If there is a surplus of loanable funds,what best describes the difference?

Accepted Answer

A)  The quantity demanded is less than the quantity supplied,and the interest rate will rise. 
B)  The quantity demanded is greater than the quantity supplied,and the interest rate will fall. 
C)  The quantity demanded is less than the quantity supplied,and the excess is the net capital outflow 
D)  The quantity demanded is less than the quantity supplied,and the shortage is the net capital inflow.

Question 15

Which of the following would tend to shift the supply of dollars in the foreign-currency exchange market model to the left?

Accepted Answer

A)  The exchange rate rises. 
B)  The exchange rate falls. 
C)  The expected rate of return on Canadian assets rises. 
D)  The expected rate of return on Canadian assets falls.

Question 16

In the open-economy macroeconomic model,at the equilibrium real interest rate,the amount that people (including government)want to save exactly balances desired domestic investment.

Accepted Answer

A) True 
 B)False

Exam 13: A Macroeconomic Theory of the Small Open Economy

If Morocco experienced capital flight,which statement would best explain the effects?

Which statement is consistent with negative net exports?

Fill in the table below with the direction of the variables that change in response to the events in the first column.

Which statement best predicts the effects of an increase in the Canadian real interest rate?

In an open economy,the demand for loanable funds comes from both domestic investment and net capital outflow.

If Canadian citizens decide to save a smaller fraction of their incomes,which statement would best describe the effects?

The key determinant of net capital outflow is the real exchange rate.

How does the supply or demand for loanable funds shift when a country increases its budget deficit?

What would make both the equilibrium interest rate and the equilibrium quantity of loanable funds increase?

Suppose that the government of Jordan raises its budget deficit.Which statement best predicts the effects of this action?

Which statement best predicts the effects of an increase in the supply of loanable funds?

In the open-economy macroeconomic model,how can the market for loanable funds identity be written?

Which of the following is included in the demand for dollars in the market for foreign-currency exchange in the open-market macroeconomic model?

If there is a surplus of loanable funds,what best describes the difference?

Which of the following would tend to shift the supply of dollars in the foreign-currency exchange market model to the left?

In the open-economy macroeconomic model,at the equilibrium real interest rate,the amount that people (including government)want to save exactly balances desired domestic investment.