Question 1

When Mexico suffered from capital flight in 1994,U.S.demand for loanable funds

Accepted Answer

A)   and U.S.net capital outflow rose.
B)   and U.S.net capital outflow fell.
C)   fell and U.S.net capital outflow rose.
D)   rose and U.S.net capital outflow fell.E) A) and D)
F) C) and D)

Question 2

An increase in the government budget deficit shifts the demand for loanable funds to the right.

Accepted Answer

A) True 
 B)False

Question 3

In the open-economy macroeconomic model,net exports equal the quantity of dollars demanded in the foreign-currency exchange market.

Accepted Answer

A) True 
 B)False

Question 4

In the open-economy macroeconomic model,the key determinant of net capital outflow is

Accepted Answer

A)   the real exchange rate.When the real exchange rate rises,net capital outflow rises.
B)   the real exchange rate.When the real exchange rate rises,net capital outflow falls.
C)   the real interest rate.When the real interest rate rises,net capital outflow rises.
D)   the real interest rate.When the real interest rate rises,net capital outflow falls.E) B) and D)
F) A) and D)

Question 5

If the government of Kenya implemented a policy that decreased national saving,its real exchange rate would

Accepted Answer

A)   depreciate and Kenyan net exports would rise.
B)   depreciate and Kenyan net exports would fall.
C)   appreciate and Kenyan net exports would rise.
D)   appreciate and Kenyan net exports would fall.E) All of the above
F) C) and D)

Question 6

If the exchange rate rises,domestic goods become relatively ______ expensive.This change in the affordability of domestic goods makes domestic goods _____ attractive to foreigners.So,_______ ______.

Accepted Answer

more,less,...

Question 7

How are the identities S = NCO + I and NCO = NX related to the foreign currency exchange market and the loanable funds market?

Accepted Answer

S is national saving,which is the source...

Question 8

If the quantity of loanable funds supplied is greater than the quantity demanded,then

Accepted Answer

A)   there is a shortage of loanable funds and the interest rate will fall.
B)   there is a shortage of loanable funds and the interest rate will rise.
C)   there is a surplus of loanable funds and the interest rate will fall.
D)   there is a surplus of loanable funds and the interest rate will rise.E) B) and D)
F) None of the above

Question 9

Which of the following will not change the U.S.real interest rate?

Accepted Answer

A)   capital flight from the United States
B)   the government budget deficit increases
C)   the U.S.imposes import quotas
D)   None of the above is correct.E) C) and D)
F) A) and C)

Question 10

In the open-economy macroeconomic model,the key determinant of net capital outflow is the

Accepted Answer

A)   nominal exchange rate.
B)   nominal interest rate.
C)   real exchange rate.
D)   real interest rate.E) A) and B)
F) A) and C)

Question 11

Suppose the U.S.government institutes a "Buy American" campaign,in order to encourage spending on domestic goods.What effect will this have on the U.S.trade balance?

Accepted Answer

Such a campaign will increase the demand...

Question 12

Other things the same,if the real interest rate in a country falls,domestic residents will desire to purchase

Accepted Answer

A)   more capital goods and more foreign bonds.
B)   more capital goods but fewer foreign bonds.
C)   more foreign bonds but fewer capital goods.
D)   fewer capital goods and fewer foreign bonds.E) All of the above
F) A) and B)

Question 13

If Argentina suffers from capital flight,Argentinean domestic investment and Argentinean net exports will both decline.

Accepted Answer

A) True 
 B)False

Question 14

In the open-economy macroeconomic model,other things the same,an increase in the exchange rate raises the quantity of dollars supplied in the market for foreign-currency exchange.

Accepted Answer

A) True 
 B)False

Question 15

Other things the same,a lower real interest rate decreases the quantity of

Accepted Answer

A)   loanable funds demanded.
B)   loanable funds supplied.
C)   domestic investment.
D)   net capital outflow.E) A) and C)
F) C) and D)

Question 16

A limit on the quantity of a good produced abroad that can be purchased domestically is called a(n)

Accepted Answer

A)   tariff.
B)   excise tax.
C)   import quota.
D)   None of the above is correct.E) A) and B)
F) A) and D)

Question 17

When the U.S.real interest rate falls,owning U.S.assets becomes

Accepted Answer

A)   less attractive and so U.S.net capital outflow rises.
B)   less attractive and so U.S.net capital outflow falls.
C)   more attractive and so U.S.net capital outflow rises.
D)   more attractive and so U.S.net capital outflow falls.E) A) and D)
F) B) and C)

Question 18

Many U.S.business leaders argue that the current state of U.S.net exports is the result of

Accepted Answer

A)   U.S.export subsidies.
B)   free trade policies of foreign governments.
C)   unproductive U.S.workers.
D)   unfair foreign competition.E) A) and D)
F) All of the above

Question 19

Other things the same,an increase in the U.S.real interest rate induces

Accepted Answer

A)   Americans to buy more foreign assets,which increases U.S.net capital outflow.
B)   Americans to buy more foreign assets,which reduces U.S.net capital outflow.
C)   foreigners to buy more U.S.assets,which reduces U.S.net capital outflow.
D)   foreigners to buy more U.S.assets,which increases U.S.net capital outflow.E) None of the above
F) C) and D)

Question 20

According to the open-economy macroeconomic model,import quotas increase which of the following

Accepted Answer

A)   net exports and net capital outflow
B)   net exports but not net capital outflow.
C)   net capital outflow but not net exports.
D)   neither net exports nor net capital outflow.E) None of the above
F) A) and B)

Exam 32: A Macroeconomic Theory of the Open Economy

Other things the same,if the real interest rate in a country falls,domestic residents will desire to purchase

Correct AnswerverifiedShow Answer

If the government of Kenya implemented a policy that decreased national saving,its real exchange rate would

Correct AnswerverifiedShow Answer

An increase in the government budget deficit shifts the demand for loanable funds to the right.

Correct AnswerverifiedShow Answer

When Mexico suffered from capital flight in 1994,U.S.demand for loanable funds

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,the key determinant of net capital outflow is the

Correct AnswerverifiedShow Answer

When the U.S.real interest rate falls,owning U.S.assets becomes

Correct AnswerverifiedShow Answer

If the exchange rate rises,domestic goods become relatively ______ expensive.This change in the affordability of domestic goods makes domestic goods _____ attractive to foreigners.So,_______ ______.

Correct Answerverifiedmore,less,...View AnswerShow Answer

Many U.S.business leaders argue that the current state of U.S.net exports is the result of

Correct AnswerverifiedShow Answer

If the quantity of loanable funds supplied is greater than the quantity demanded,then

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,the key determinant of net capital outflow is

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,other things the same,an increase in the exchange rate raises the quantity of dollars supplied in the market for foreign-currency exchange.

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,net exports equal the quantity of dollars demanded in the foreign-currency exchange market.

Correct AnswerverifiedShow Answer

Which of the following will not change the U.S.real interest rate?

Correct AnswerverifiedShow Answer

A limit on the quantity of a good produced abroad that can be purchased domestically is called a(n)

Correct AnswerverifiedShow Answer

How are the identities S = NCO + I and NCO = NX related to the foreign currency exchange market and the loanable funds market?

Correct AnswerverifiedS is national saving,which is the source...View AnswerShow Answer

Other things the same,a lower real interest rate decreases the quantity of

Correct AnswerverifiedShow Answer

According to the open-economy macroeconomic model,import quotas increase which of the following

Correct AnswerverifiedShow Answer

If Argentina suffers from capital flight,Argentinean domestic investment and Argentinean net exports will both decline.

Correct AnswerverifiedShow Answer

Other things the same,an increase in the U.S.real interest rate induces

Correct AnswerverifiedShow Answer

Suppose the U.S.government institutes a "Buy American" campaign,in order to encourage spending on domestic goods.What effect will this have on the U.S.trade balance?

Correct AnswerverifiedSuch a campaign will increase the demand...View AnswerShow Answer

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If the exchange rate rises,domestic goods become relatively ____ expensive.This change in the affordability of domestic goods makes domestic goods _ attractive to foreigners.So,_ __.

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more,less,...
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S is national saving,which is the source...
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Such a campaign will increase the demand...
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