Question 1

In the open-economy macroeconomic model, the purchase of a capital asset by domestic residents adds to the demand for loanable funds

Accepted Answer

A)  only if the asset is located at home.
B)  only if the asset is located abroad.
C)  whether the asset is located at home or abroad.
D)  None of the above is correct.E) C) and D)
F) None of the above

Question 2

In an open economy, national saving equals

Accepted Answer

A)  domestic investment plus net capital outflow.
B)  domestic investment minus net capital outflow.
C)  domestic investment.
D)  net capital outflow.E) C) and D)
F) All of the above

Question 3

If the supply of loanable funds shifts right, then the equilibrium

Accepted Answer

A)  interest rate falls, so domestic residents will want to purchase more foreign assets.
B)  interest rate falls, so domestic residents will want to purchase fewer foreign assets.
C)  interest rate rises, so domestic residents will want to purchase more foreign assets.
D)  interest rate rises, so domestic residents will want to purchase fewer foreign assets.E) A) and D)
F) C) and D)

Question 4

Which of the following would make the equilibrium real interest rate increase and the equilibrium quantity of funds decrease?

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.E) A) and B)
F) C) and D)

Question 5

At the equilibrium real interest rate in the open-economy macroeconomic model, the amount that people want to save equals the desired quantity of

Accepted Answer

A)  net capital outflow.
B)  domestic investment.
C)  net capital outflow plus domestic investment.
D)  foreign currency supplied.E) A) and B)
F) A) and C)

Question 6

If people in the U.S. choose to save a smaller percentage of income, what will happen to the interest rate, net capital outflow, the exchange rate, and net exports?

Accepted Answer

The interest rate will rise, n...

Question 7

In the open-economy macroeconomic model, the quantity of dollars demanded in the market for foreign-currency exchange

Accepted Answer

A)  depends on the real exchange rate. The quantity of dollars supplied in the foreign-exchange market depends on the real interest rate.
B)  depends on the real interest rate. The quantity of dollars supplied in the foreign-exchange market depends on the real exchange rate.
C)  and the quantity of dollars supplied in the market for foreign-currency exchange depend on the real exchange rate.
D)  and the quantity of dollars supplied in the market for foreign-currency exchange depend on the real interest rate.E) A) and C)
F) B) and D)

Question 8

If the supply of loanable funds curve shifts right, then the equilibrium

Accepted Answer

A)  interest rate and level of net capital outflows rise.
B)  interest rate rises and the equilibrium level of net capital outflow falls.
C)  interest rate falls and the equilibrium level of net capital outflow rises.
D)  interest rate and level of net capital outflows fall.E) A) and D)
F) All of the above

Question 9

In an open economy,

Accepted Answer

A)  net capital outflow = imports.
B)  net capital outflow = net exports.
C)  net capital outflow = exports.
D)  None of the above is correct.E) B) and D)
F) A) and D)

Question 10

The variable that links the market for loanable funds and the market for foreign-currency exchange is

Accepted Answer

A)  net capital outflow.
B)  national saving.
C)  exports.
D)  domestic investment.E) C) and D)
F) A) and B)

Question 11

From 2001 to 2004 the U.S. budget went from surplus to deficit. According to the open economy macroeconomic model, this change should have

Accepted Answer

A)  increased U.S. interest rates and increased the real exchange rate of the dollar.
B)  increased U.S. interest rates and decreased the real exchange rate of the dollar.
C)  decreased U.S. interest rates and increased the real exchange rate of the dollar.
D)  decreased U.S. interest rates and decreased the real exchange rate of the dollar.E) All of the above
F) A) and B)

Question 12

Other things the same, if the U.S. real exchange rate depreciated, then U.S. net exports would

Accepted Answer

A)  fall and the quantity of dollars demanded in the market for foreign-currency exchange would fall.
B)  fall and the quantity of dollars demanded in the market for foreign-currency exchange would rise.
C)  rise and the quantity of dollars demanded in the market for foreign-currency exchange would fall.
D)  rise and the quantity of dollars demanded in the market for foreign-currency exchange would rise.E) None of the above
F) A) and C)

Question 13

The imposition of an import quota shifts

Accepted Answer

A)  the supply of currency right, so the exchange rate falls.
B)  the supply of currency left, so the exchange rate rises.
C)  the demand for currency right, so the exchange rate rises.
D)  the demand for currency left, so the exchange rate falls.E) All of the above
F) A) and D)

Question 14

Other things the same, in the open-economy macroeconomic model, which of the following would make China's net capital outflow increase?

Accepted Answer

A)  an increase in U.S. interest rates
B)  an increase in Chinese interest rates
C)  an appreciation of the Chinese yuan
D)  None of the above is correct.E) B) and C)
F) A) and C)

Question 15

If U.S. net exports are positive, then net capital outflow is

Accepted Answer

A)  positive, so foreign assets bought by Americans are greater than American assets bought by foreigners.
B)  positive, so American assets bought by foreigners are greater than foreign assets bought by Americans.
C)  negative, so foreign assets bought by Americans are greater than American assets bought by foreigners.
D)  negative, so American assets bought by foreigners are greater than foreign assets bought by Americans.E) A) and B)
F) C) and D)

Question 16

Other things the same, if U.S. residents wanted to buy more foreign-made computers and foreign residents wanted to purchase more U.S. bonds then,

Accepted Answer

A)  U.S. net exports and the exchange rate would rise.
B)  U.S. net exports would rise, but what would happen to the exchange rate is uncertain.
C)  U.S. net exports would fall, but what would happen to the exchange rate is uncertain.
D)  U.S. net exports and the exchange rate would fall.E) A) and B)
F) C) and D)

Question 17

When a country experiences capital flight its currency

Accepted Answer

A)  appreciates and net exports rise.
B)  appreciates and net exports fall.
C)  depreciates and net exports rise.
D)  depreciates and net exports fall.E) None of the above
F) B) and C)

Question 18

In the open-economy macroeconomic model, if the supply of loanable funds increases, then the interest rate

Accepted Answer

A)  and the real exchange rate increase.
B)  and the real exchange rate decrease.
C)  increases and the real exchange rate decreases.
D)  decreases and the real exchange rate increases.E) A) and B)
F) All of the above

Question 19

If a country went from a government budget deficit to a surplus, national saving would

Accepted Answer

A)  increase, shifting the supply of loanable funds right.
B)  increase, shifting the supply of loanable funds left.
C)  decrease, shifting the demand for loanable funds right.
D)  decrease, shifting the demand for loanable funds left.E) B) and D)
F) B) and C)

Question 20

Other things the same, a decrease in the real interest rate

Accepted Answer

A)  increases the quantity of loanable funds demanded.
B)  shifts the demand for loanable funds curve to the right.
C)  decreases the quantity of loanable funds demanded.
D)  shifts the demand for loanable funds curve to the left.E) None of the above
F) B) and C)

Exam 32: A Macroeconomic Theory of the Open Economy

Other things the same, if the U.S. real exchange rate depreciated, then U.S. net exports would

Correct AnswerverifiedShow Answer

If the supply of loanable funds shifts right, then the equilibrium

Correct AnswerverifiedShow Answer

In an open economy, national saving equals

Correct AnswerverifiedShow Answer

If a country went from a government budget deficit to a surplus, national saving would

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model, the purchase of a capital asset by domestic residents adds to the demand for loanable funds

Correct AnswerverifiedShow Answer

In an open economy,

Correct AnswerverifiedShow Answer

If the supply of loanable funds curve shifts right, then the equilibrium

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model, the quantity of dollars demanded in the market for foreign-currency exchange

Correct AnswerverifiedShow Answer

At the equilibrium real interest rate in the open-economy macroeconomic model, the amount that people want to save equals the desired quantity of

Correct AnswerverifiedShow Answer

The imposition of an import quota shifts

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model, if the supply of loanable funds increases, then the interest rate

Correct AnswerverifiedShow Answer

Which of the following would make the equilibrium real interest rate increase and the equilibrium quantity of funds decrease?

Correct AnswerverifiedShow Answer

If U.S. net exports are positive, then net capital outflow is

Correct AnswerverifiedShow Answer

The variable that links the market for loanable funds and the market for foreign-currency exchange is

Correct AnswerverifiedShow Answer

When a country experiences capital flight its currency

Correct AnswerverifiedShow Answer

Other things the same, if U.S. residents wanted to buy more foreign-made computers and foreign residents wanted to purchase more U.S. bonds then,

Correct AnswerverifiedShow Answer

Other things the same, in the open-economy macroeconomic model, which of the following would make China's net capital outflow increase?

Correct AnswerverifiedShow Answer

From 2001 to 2004 the U.S. budget went from surplus to deficit. According to the open economy macroeconomic model, this change should have

Correct AnswerverifiedShow Answer

If people in the U.S. choose to save a smaller percentage of income, what will happen to the interest rate, net capital outflow, the exchange rate, and net exports?

Correct AnswerverifiedThe interest rate will rise, n...View AnswerShow Answer

Other things the same, a decrease in the real interest rate

Correct AnswerverifiedShow Answer

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The interest rate will rise, n...
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