Question 1

Suppose that the U.S.imposed an import quota on beef.Sales of U.S.beef producers would

Accepted Answer

A) rise and exports of other industries would increase. 
B) rise and exports of other industries would decrease. 
C) not change,exports of other industries would increase. 
D) not change,exports of other industries would decrease.

Question 2

In 2009 Greece's budget deficit rose and people became worried about the ability of the Greek government to make payments on its debt.Which of the these events reduces a country's real exchange rate?

Accepted Answer

A) an increase in the budget deficit,and increased concerns about the ability of the government to pay back its debt 
B) an increase in the budget deficit,but not increased concerns about the ability of the government to pay back its debt 
C) increased concerns about the ability of the government to pay back its debt,but not an increase in the budget deficit 
D) neither an increase in the budget deficit,nor increased concerns about the ability of the government to pay back its debt

Question 3

If the U.S.imposed import quotas on cotton,then which of the following would rise?

Accepted Answer

A) the U.S.real exchange rate and U.S.net exports 
B) the U.S.real exchange rate but not U.S.net exports 
C) U.S.net exports but not the U.S.real exchange rate 
D) neither the U.S.real exchange rate nor U.S.net exports

Question 4

If the risk of buying U.S.assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds,then

Accepted Answer

A) net capital outflow and the real exchange rate will rise. 
B) net capital outflow will rise and the real exchange rate will fall. 
C) net capital outflow will fall and the real exchange rate will rise. 
D) net capital outflow and the exchange rate will fall.

Question 5

Figure 32-5
Refer to this diagram of the open-economy macroeconomic model to answer the questions below.

-Refer to Figure 32-4.Suppose that U.S.firms desire to purchase more equipment and build more factories and stores in the U.S.The effects of this are illustrated by

Accepted Answer

A) shifting the demand curve in panel a to the right and the demand curve in panel c to the left. 
B) shifting the demand curve in panel a to the right and the supply curve in panel c to the left. 
C) shifting the supply curve in panel a to the right and the demand curve in panel c to the left. 
D) shifting the supply curve in panel a to the right and the supply curve in panel c to the right.

Question 6

Which of the following contains a list only of things that increase when the budget deficit of the U.S.increases?

Accepted Answer

A) U.S.supply of loanable funds,U.S.interest rates,U.S.domestic investment 
B) U.S.imports,U.S.interest rates,the real exchange rate of the dollar 
C) U.S.interest rates,the real exchange rate of the dollar,U.S.domestic investment 
D) the real exchange rate of the dollar,U.S.net capital outflow,U.S.net exports

Question 7

An increase in the budget deficit

Accepted Answer

A) reduces investment because the interest rate rises. 
B) reduces investment because the interest rate falls. 
C) raises investment because the interest rate rises. 
D) raises investment because the interest rate falls.

Question 8

A country produces two goods,soda and chips.It currently exports soda and imports chips.If it were to impose a tariff on chips,

Accepted Answer

A) both imports of chips and exports of sodas would rise. 
B) imports of chips would rise,but exports of sodas would fall. 
C) imports of chips would fall,but exports of sodas would rise. 
D) both imports of chips and exports of sodas would fall.

Question 9

If the U.S.government increased its deficit,then

Accepted Answer

A) U.S.bonds would pay higher interest but a dollar would purchase fewer foreign goods. 
B) U.S.bonds would pay higher interest and a dollar would purchase more foreign goods. 
C) U.S.bonds would pay lower interest and a dollar would purchase fewer foreign goods. 
D) U.S.bonds would pay lower interest but a dollar would purchase more foreign goods.

Question 10

Which of the following decrease if the U.S.imposes an import quota on computer components?

Accepted Answer

A) U.S.exports and U.S.imports 
B) U.S.exports but not U.S.imports 
C) U.S.imports but not U.S.exports 
D) neither U.S.exports nor U.S.imports

Question 11

Which of the following contains a list only of things that increase when the budget deficit of the U.S.decreases?

Accepted Answer

A) U.S.supply of loanable funds,U.S.net capital outflow,U.S.domestic investment 
B) U.S.supply of loanable funds,U.S.exports,the real exchange rate of the dollar 
C) U.S.interest rates,the real exchange rate of the dollar,U.S.domestic investment 
D) the real exchange rate of the dollar,U.S.net capital outflow,U.S.net exports

Question 12

At the original exchange rate an import quota

Accepted Answer

A) creates a surplus in the market for foreign-currency exchange,so the exchange rate rises. 
B) creates a surplus in the market for foreign-currency exchange,so the exchange rate falls. 
C) creates a shortage in the market for foreign-currency exchange,so the exchange rate rises. 
D) creates a shortage in the market for foreign-currency exchange,so the exchange rate falls.

Question 13

If a government started with a budget deficit and moved to a surplus,domestic investment

Accepted Answer

A) and the real exchange rate would rise. 
B) and the real exchange rate would fall. 
C) would rise and the real exchange rate would fall. 
D) would fall and the real exchange rate would rise.

Question 14

If U.S.citizens decide to save a smaller fraction of their incomes,U.S.domestic investment

Accepted Answer

A) increases,and U.S.net capital outflow increases. 
B) increases,and U.S.net capital outflow decreases. 
C) decreases,and U.S.net capital outflow increases. 
D) decreases,and U.S.net capital outflow decreases.

Question 15

When Mexico suffered from capital flight in 1994,Mexico's net exports

Accepted Answer

A) decreased. 
B) did not change. 
C) increased. 
D) decreased until the peso appreciated,then increased.

Question 16

Suppose that the U.S.imposes an import quota on lumber.The quota makes the real exchange rate of the U.S.dollar

Accepted Answer

A) appreciate but does not change the real interest rate in the United States. 
B) appreciate and the real interest rate in the United States increase. 
C) depreciate and the real interest rate in the United States decrease. 
D) depreciate but does not change the real interest rate in the United States.

Question 17

Suppose that the United States imposes an import quota on televisions.In the open-economy macroeconomic model this quota shifts the

Accepted Answer

A) U.S.supply of loanable funds left. 
B) U.S.demand for loanable funds left. 
C) demand for U.S.dollars in the market for foreign-currency exchange right. 
D) supply of U.S.dollars in the market for foreign-currency exchange left.

Question 18

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

Accepted Answer

A) net capital outflow rises. 
B) net exports rise. 
C) the exchange rate rises. 
D) All of the above are correct.

Question 19

If U.S.citizens decide to save a larger fraction of their incomes,the real interest rate

Accepted Answer

A) decreases,the real exchange rate of the dollar depreciates,and U.S.net capital outflow increases. 
B) decreases,the real exchange rate of the dollar appreciates,and U.S.net capital outflow decreases. 
C) increases,the real exchange rate of the dollar appreciates,and U.S.net capital outflow decreases. 
D) increases,the real exchange rate of the dollar depreciates,and U.S.net capital outflow increases.

Question 20

A trade policy is a government policy

Accepted Answer

A) directed toward the goal of improving the tradeoff between equity and efficiency. 
B) that directly influences the quantity of goods and services that a country imports or exports. 
C) intended to exploit the tradeoff between inflation and unemployment by altering the budget deficit. 
D) concerning employment laws.

Exam 19: A Macroeconomic Theory of the Open Economy: How Policies and Events Affect an Open Economy