Question 1

If the U.S. were to impose import quotas

Accepted Answer

A)  the demand for loanable funds and the demand for dollars in the market for foreign-currency exchange would both increase.
B)  nether the demand for loanable funds nor the demand for dollars in the market for foreign-currency exchange would increase.
C)  the demand for loanable funds would increase, but the demand for dollars in the market for foreign-currency exchange would not.
D)  the demand for dollars in the market for foreign-currency exchange would increase, but the demand for loanable funds would not.E) B) and C)
F) A) and B)

Question 2

Why do higher real interest rates lead to lower net capital outflow?

Accepted Answer

Higher U.S. interest rates make U.S. ass...

Question 3

Although trade policies do not affect a country's overall trade balance, they do affect specific firms and industries.

Accepted Answer

A) True 
 B)False

Question 4

Explain how an increase in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate.

Accepted Answer

An increase in demand for capital goods ...

Question 5

If interest rates rose more in Germany than in the U.S., then other things the same

Accepted Answer

A)  U.S. citizens would buy more German bonds and German citizens would buy more U.S. bonds.
B)  U.S. citizens would buy more German bonds and German citizens would buy fewer U.S. bonds.
C)  U.S. citizens would buy fewer German bonds and German citizens would buy more U.S. bonds.
D)  U.S. citizens would buy fewer German bonds and German citizens would buy fewer U.S. bonds.E) B) and D)
F) All of the above

Question 6

Figure 19-1 
-Refer to Figure 19-1. In the Figure shown, if the real interest rate is 6 percent, the quantity of loanable funds demanded is

Accepted Answer

A)  $20 billion, and the quantity supplied is $40 billion.
B)  $20 billion, and the quantity supplied is $60 billion.
C)  $60 billion, and the quantity supplied is $20 billion.
D)  $60 billion, and the quantity supplied is $40 billion.E) A) and B)
F) A) and C)

Question 7

Which of the following would not be a consequence of an increase in the U.S. government budget deficit?

Accepted Answer

A)  The U.S. trade balance rises.
B)  The U.S. interest rate rises.
C)  Domestic investment in the U.S. falls.
D)  The real exchange rate of the U.S. dollar appreciates.E) B) and C)
F) All of the above

Question 8

Over the past three decades, the United States has

Accepted Answer

A)  generally had, or been very near to a trade balance.
B)  had trade deficits in about as many years as it has trade surpluses.
C)  persistently had a trade deficit.
D)  persistently had a trade surplus.E) All of the above
F) A) and B)

Question 9

If a country's budget deficit decreases, then the exchange rate

Accepted Answer

A)  rises, which raises net exports.
B)  rises, which reduces net exports.
C)  falls, which raises net exports.
D)  falls, which reduces net exports.E) B) and D)
F) A) and D)

Question 10

During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would

Accepted Answer

A)  shift both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange right
B)  shift the demand for loanable funds right and shift the supply of dollars in the market for foreign-currency exchange left
C)  shift the demand for loanable funds left and shift the supply of dollars in the market for foreign-currency exchange right
D)  shift both the demand for loanable funds and the supply of dollars in the market for foreign-currency exchange leftE) C) and D)
F) A) and C)

Question 11

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) All of the above

Question 12

When a country suffers from capital flight, the demand for loanable funds in that country shifts

Accepted Answer

A)  right, which increases interest rates in that country.
B)  right, which decreases interest rates in that country.
C)  left, which increases interest rates in that country.
D)  left, which decreases interest rates in that country.E) All of the above
F) B) and D)

Question 13

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) B) and C)
F) C) and D)

Question 14

If fear of default on bonds issued by U.S. corporations rise, then

Accepted Answer

A)  net capital outflow and the exchange rate both rise.
B)  net capital outflow rises and the exchange rate falls.
C)  net capital outflow falls and the exchange rate rises.
D)  net capital outflow and the exchange rate both fall.E) C) and D)
F) B) and C)

Exam 19: A Macroeconomic Theory of the Open Economy

When a country suffers from capital flight, the demand for loanable funds in that country shifts

Correct Answer
verified

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

Correct Answer
verified

If a country's budget deficit decreases, then the exchange rate

Correct Answer
verified

If fear of default on bonds issued by U.S. corporations rise, then

Correct Answer
verified

If the U.S. were to impose import quotas

Correct Answer
verified

When a country experiences capital flight its currency

Correct Answer
verified

Explain how an increase in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate.

Correct Answer
verified
An increase in demand for capital goods ...
View Answer

Figure 19-1 -Refer to Figure 19-1. In the Figure shown, if the real interest rate is 6 percent, the quantity of loanable funds demanded is

Correct Answer
verified

Why do higher real interest rates lead to lower net capital outflow?

Correct Answer
verified
Higher U.S. interest rates make U.S. ass...
View Answer

During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would

Correct Answer
verified

Although trade policies do not affect a country's overall trade balance, they do affect specific firms and industries.

Correct Answer
verified

If interest rates rose more in Germany than in the U.S., then other things the same

Correct Answer
verified

Which of the following would not be a consequence of an increase in the U.S. government budget deficit?

Correct Answer
verified

Over the past three decades, the United States has

Correct Answer
verified

Exam 19: A Macroeconomic Theory of the Open Economy

When a country suffers from capital flight, the demand for loanable funds in that country shifts

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a country's budget deficit decreases, then the exchange rate

Correct AnswerverifiedShow Answer

If fear of default on bonds issued by U.S. corporations rise, then

Correct AnswerverifiedShow Answer

If the U.S. were to impose import quotas

Correct AnswerverifiedShow Answer

When a country experiences capital flight its currency

Correct AnswerverifiedShow Answer

Explain how an increase in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate.

Correct AnswerverifiedAn increase in demand for capital goods ...View AnswerShow Answer

Figure 19-1 -Refer to Figure 19-1. In the Figure shown, if the real interest rate is 6 percent, the quantity of loanable funds demanded is

Correct AnswerverifiedShow Answer

Why do higher real interest rates lead to lower net capital outflow?

Correct AnswerverifiedHigher U.S. interest rates make U.S. ass...View AnswerShow Answer

During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would

Correct AnswerverifiedShow Answer

Although trade policies do not affect a country's overall trade balance, they do affect specific firms and industries.

Correct AnswerverifiedShow Answer

If interest rates rose more in Germany than in the U.S., then other things the same

Correct AnswerverifiedShow Answer

Which of the following would not be a consequence of an increase in the U.S. government budget deficit?

Correct AnswerverifiedShow Answer

Over the past three decades, the United States has

Correct AnswerverifiedShow Answer

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An increase in demand for capital goods ...
View Answer

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Higher U.S. interest rates make U.S. ass...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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