Question 1

If the U.S. government imposes a quota on leather shoes, then net exports of U.S. shoes would

Accepted Answer

A)  rise.
B)  not change.
C)  fall.
D)  rise, not change, or fall depending on what happened to the exchange rate.E) C) and D)
F) B) and D)

Question 2

If a country raises its budget deficit, then its

Accepted Answer

A)  net capital outflow and net exports rise.
B)  net capital outflow rises and net exports fall.
C)  net capital outflow falls and net exports rise.
D)  net capital outflow and net exports fall.E) A) and B)
F) A) and C)

Question 3

In the open-economy macroeconomic model, the supply of dollars in the market for foreign-currency exchange is upward sloping.

Accepted Answer

A) True 
 B)False

Question 4

An increase in the government budget deficit shifts the supply of domestic currency in the market for foreign exchange to the right.

Accepted Answer

A) True 
 B)False

Question 5

If the demand for net exports rises, which of the following happens in the open-economy macroeconomic model?

Accepted Answer

A)  the exchange rate rises
B)  the interest rate falls
C)  net capital outflow rises
D)  All of the above are correct.E) None of the above
F) A) and B)

Question 6

In the open-economy macroeconomic model, the market for loanable funds equates national saving with

Accepted Answer

A)  domestic investment.
B)  net capital outflow.
C)  national consumption minus domestic investment.
D)  None of the above is correct.E) None of the above
F) A) and B)

Question 7

If a tariff on beef were implemented, which of the following would rise?

Accepted Answer

A)  exports and net exports
B)  exports but not net exports
C)  net exports but not exports
D)  neither exports nor net exportsE) B) and D)
F) B) and C)

Question 8

When a country's government budget deficit increases,

Accepted Answer

A)  the real exchange rate of its currency and its net exports increase.
B)  the real exchange rate of its currency and its net exports decrease.
C)  the real exchange rate of its currency increases and its net exports decrease.
D)  the real exchange rate of its currency decreases and its net exports increase.E) A) and B)
F) A) and C)

Question 9

When Mexico suffered from capital flight in 1994, the U.S. real interest rate

Accepted Answer

A)  rose and the real exchange rate of the dollar appreciated.
B)  rose and the real exchange rate of the dollar depreciated.
C)  fell and the real exchange rate of the dollar appreciated.
D)  fell and the real exchange rate of the dollar depreciated.E) None of the above
F) C) and D)

Question 10

An increase in the U.S. government budget deficit shifts the

Accepted Answer

A)  demand for loanable funds right and decreases investment spending.
B)  supply of loanable funds right and increases investment spending.
C)  supply of loanable funds left and decreases investment spending.
D)  None of the above is correct.E) B) and C)
F) B) and D)

Question 11

Other things the same, if U.S. residents choose to buy more Chinese goods and services

Accepted Answer

A)  the demand for dollars in the market for foreign-currency exchange shifts right.
B)  the demand for dollars in the market for foreign-currency exchange shifts left.
C)  the supply of dollars in the market for foreign-currency exchange shifts right.
D)  the supply of dollars in the market for foreign-currency exchange shifts left.E) A) and C)
F) B) and C)

Question 12

Fill in the table below with the direction of the variables that change in response to the events in the first column.

Accepted Answer

The answer of Fill in the table below with the...

Question 13

If the U.S. imposed an import quota on furniture, U.S. net exports of furniture

Accepted Answer

A)  and net exports of other U.S. goods and services would rise.
B)  would rise but net exports of other goods and services would fall.
C)  would fall but net exports of other goods and services would rise.
D)  and net exports of other U.S. goods and services would fall.E) A) and B)
F) A) and C)

Question 14

Refer to Budget in Recession. In the market for loanable funds which curve(s) does this change in the deficit shift? Which direction does it shift?

Accepted Answer

Since the budget def...

Question 15

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 16

When a country experiences capital flight, its net capital outflow,

Accepted Answer

A)  which is part of the demand for loanable funds, increases.
B)  which is part of the supply of loanable funds, increases.
C)  which is part of the demand for loanable funds, decreases.
D)  which is part of the supply of loanable funds, decreases.E) A) and B)
F) A) and C)

Question 17

Other things the same, which of the following would shift the supply of dollars in the market for foreign exchange to the right?

Accepted Answer

A)  foreigners want to buy more U.S. bonds
B)  foreigners want to buy fewer U.S. bonds
C)  foreigners want to buy more U.S. goods and services.
D)  foreigners want to buy fewer U.S. goods and services.E) All of the above
F) B) and D)

Question 18

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 19

In 2002, the United States placed higher tariffs on imports of steel. According to the open-economy macroeconomic model this policy should have

Accepted Answer

A)  reduced imports into the United States and made U.S. net exports rise.
B)  reduced imports into the United States and made the net supply of dollars in the foreign exchange market shift right.
C)  reduced imports of steel into the United States, but reduced U.S. exports of other goods by an equal amount.
D)  reduced imports of steel into the United States and increased U.S. exports of other goods by an equal amount.E) All of the above
F) A) and C)

Question 20

Refer to Shoe Quota. Overall as a result of this change in policy, what happens to exports, imports, and net exports?

Accepted Answer

Exports and imports ...

Exam 32: A Macroeconomic Theory of the Open Economy

Other things the same, if U.S. residents choose to buy more Chinese goods and services

Correct AnswerverifiedShow Answer

If a tariff on beef were implemented, which of the following would rise?

Correct AnswerverifiedShow Answer

In 2002, the United States placed higher tariffs on imports of steel. According to the open-economy macroeconomic model this policy should have

Correct AnswerverifiedShow Answer

If the U.S. imposed an import quota on furniture, U.S. net exports of furniture

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

In the open-economy macroeconomic model, the supply of dollars in the market for foreign-currency exchange is upward sloping.

Correct AnswerverifiedShow Answer

If a country raises its budget deficit, then its

Correct AnswerverifiedShow Answer

An increase in the U.S. government budget deficit shifts the

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

Refer to Budget in Recession. In the market for loanable funds which curve(s) does this change in the deficit shift? Which direction does it shift?

Correct AnswerverifiedSince the budget def...View AnswerShow Answer

An increase in the government budget deficit shifts the supply of domestic currency in the market for foreign exchange to the right.

Correct AnswerverifiedShow Answer

Other things the same, which of the following would shift the supply of dollars in the market for foreign exchange to the right?

Correct AnswerverifiedShow Answer

When a country's government budget deficit increases,

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model, the market for loanable funds equates national saving with

Correct AnswerverifiedShow Answer

When Mexico suffered from capital flight in 1994, the U.S. real interest rate

Correct AnswerverifiedShow Answer

If the U.S. government imposes a quota on leather shoes, then net exports of U.S. shoes would

Correct AnswerverifiedShow Answer

Fill in the table below with the direction of the variables that change in response to the events in the first column.

Correct AnswerverifiedShow Answer

When a country experiences capital flight, its net capital outflow,

Correct AnswerverifiedShow Answer

If the demand for net exports rises, which of the following happens in the open-economy macroeconomic model?

Correct AnswerverifiedShow Answer

Refer to Shoe Quota. Overall as a result of this change in policy, what happens to exports, imports, and net exports?

Correct AnswerverifiedExports and imports ...View AnswerShow Answer

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Since the budget def...
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Exports and imports ...
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