Question 1

If there is a shortage in the market for foreign-currency exchange, what happens to the exchange rate and to net exports?

Accepted Answer

The exchange rate ri...

Question 2

If the real exchange rate for the dollar is above the equilibrium level, the quantity of dollars supplied in the market for foreign-currency exchange is

Accepted Answer

A)  greater than the quantity demanded and the dollar will appreciate.
B)  greater than the quantity demanded and the dollar will depreciate.
C)  less than the quantity demanded and the dollar will appreciate.
D)  less than the quantity demanded and the dollar will depreciate.E) All of the above
F) A) and B)

Question 3

An increase in the U.S. interest rate discourages Americans from buying foreign assets and encourages foreigners to buy U.S. assets.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  and net exports decreased.
B)  and net exports increased.
C)  increased while net exports decreased.
D)  decreased while net exports increased.E) B) and C)
F) A) and D)

Question 5

Scenario 32-3
​
Concerns raised about the declining U.S. shoe industry and unfair labor practices in foreign shoe factories lead the Congress and President to impose a quota on shoe imports.
-Refer to Scenario 32-3. At a given exchange rate what does a quota do to desired net exports? As a result of this change which curve in the open-economy model shifts and which direction does it shift?

Accepted Answer

Desired net exports rise. The ...

Question 6

Suppose that U.S. citizens start saving more. What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate?

Accepted Answer

The supply of loanable funds increases, ...

Question 7

In the market for foreign-currency exchange, the source of the supply of dollars is _________. The supply curve is _________ because _____________.

Accepted Answer

net capital outflow,...

Question 8

Scenario 32-1
​
During a recession government revenues from the income tax fall and government transfers rise as the reduction in income and the rise in unemployment raise the number of people who qualify for benefits.
-Refer to Scenario 32-1. What does this change in the budget deficit do to the equilibrium values of the interest rate and the quantity of loanable funds?

Accepted Answer

Since the supply of loanable f...

Exam 32: A Macroeconomic Theory of the Open Economy

If the real exchange rate for the dollar is above the equilibrium level, the quantity of dollars supplied in the market for foreign-currency exchange is

Correct Answer
verified

In the market for foreign-currency exchange, the source of the supply of dollars is _____. The supply curve is _ because _________.

Correct Answer
verified
net capital outflow,...
View Answer

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

Correct Answer
verified

Suppose that U.S. citizens start saving more. What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate?

Correct Answer
verified
The supply of loanable funds increases, ...
View Answer

Correct Answer
verified
Desired net exports rise. The ...
View Answer

If there is a shortage in the market for foreign-currency exchange, what happens to the exchange rate and to net exports?

Correct Answer
verified
The exchange rate ri...
View Answer

Correct Answer
verified
Since the supply of loanable f...
View Answer

An increase in the U.S. interest rate discourages Americans from buying foreign assets and encourages foreigners to buy U.S. assets.

Correct Answer
verified

Exam 32: A Macroeconomic Theory of the Open Economy

If the real exchange rate for the dollar is above the equilibrium level, the quantity of dollars supplied in the market for foreign-currency exchange is

Correct AnswerverifiedShow Answer

In the market for foreign-currency exchange, the source of the supply of dollars is _________. The supply curve is _________ because _____________.

Correct Answerverifiednet capital outflow,...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Suppose that U.S. citizens start saving more. What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate?

Correct AnswerverifiedThe supply of loanable funds increases, ...View AnswerShow Answer

Correct AnswerverifiedDesired net exports rise. The ...View AnswerShow Answer

If there is a shortage in the market for foreign-currency exchange, what happens to the exchange rate and to net exports?

Correct AnswerverifiedThe exchange rate ri...View AnswerShow Answer

Correct AnswerverifiedSince the supply of loanable f...View AnswerShow Answer

An increase in the U.S. interest rate discourages Americans from buying foreign assets and encourages foreigners to buy U.S. assets.

Correct AnswerverifiedShow Answer

Correct Answer
verified

In the market for foreign-currency exchange, the source of the supply of dollars is _____. The supply curve is _ because _________.

Correct Answer
verified
net capital outflow,...
View Answer

Correct Answer
verified

Correct Answer
verified
The supply of loanable funds increases, ...
View Answer

Correct Answer
verified
Desired net exports rise. The ...
View Answer

Correct Answer
verified
The exchange rate ri...
View Answer

Correct Answer
verified
Since the supply of loanable f...
View Answer

Correct Answer
verified