Question 1

Other things the same,a higher real interest rate raises the quantity of

Accepted Answer

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

Question 2

The key determinant of net capital outflow is the real interest rate.

Accepted Answer

A) True 
 B)False

Question 3

The open-economy macroeconomic model examines the determination of

Accepted Answer

A)   the output growth rate and the real interest rate.
B)   unemployment and the exchange rate.
C)   the output growth rate and the inflation rate.
D)   the trade balance and the exchange rate.E) A) and C)
F) C) and D)

Question 4

Figure 19-2 
-Refer to Figure 19-2.If the real exchange rate is .6,then there is a

Accepted Answer

A)   surplus of 100 so the real exchange rate will fall.
B)   surplus of 100 so the real exchange rate will rise.
C)   shortage of 100 so the real exchange rate will fall.
D)   shortage of 100 so the real exchange rate will rise.E) None of the above
F) A) and B)

Question 5

Capital flight refers to

Accepted Answer

A)   the movement of workers across international borders in response to exchange rate changes.
B)   the movement of funds between financial intermediaries when interest rates change.
C)   the ability of foreign direct investment to lift a country out of poverty.
D)   a large and sudden movement of funds out of a country.E) None of the above
F) B) and D)

Question 6

If at a given real interest rate desired national saving were $50 billion,domestic investment were $40 billion,and net capital outflow were $20 billion,then at that real interest rate in the loanable funds market there would be a

Accepted Answer

A)   surplus;the real interest rate would rise.
B)   surplus;the real interest rate would fall.
C)   shortage;the real interest rate would rise.
D)   shortage;the real interest rate would fall.E) C) and D)
F) A) and C)

Question 7

When the U.S.real exchange rate appreciates,U.S.goods become

Accepted Answer

A)   more attractive to consumers in the U.S.and abroad.
B)   more attractive to consumers in the U.S.and less attractive to consumers abroad.
C)   less attractive to consumers in the U.S.and abroad.
D)   less attractive to consumers in the U.S.and more attractive to consumers abroad.E) None of the above
F) A) and B)

Question 8

If a country has a negative net capital outflow,then

Accepted Answer

A)   on net it is purchasing assets from abroad.This adds to its demand for domestically generated loanable funds.
B)   on net it is purchasing assets from abroad.This subtracts from its demand for domestically generated loanable funds.
C)   on net other countries are purchasing assets from it.This adds to its demand for domestically generated loanable funds.
D)   on net other countries are purchasing assets from it.This subtracts from its demand for domestically generated loanable funds.E) B) and C)
F) B) and D)

Question 9

In an open economy,the demand for loanable funds comes from

Accepted Answer

A)   only those who want to borrow funds to buy domestic capital goods.
B)   only those who want to borrow funds to buy foreign assets.
C)   those who want to borrow funds to buy either domestic capital goods or foreign assets.
D)   neither those who want to borrow funds to buy domestic capital goods nor those who want to borrow funds to buy foreign assets.E) A) and B)
F) None of the above

Question 10

In the open-economy macroeconomic model which of the following falls if there is an increase in the budget deficit?

Accepted Answer

A)   the interest rate
B)   net exports
C)   the exchange rate
D)   All of the above are correct.E) All of the above
F) A) and B)

Question 11

If the U.S.put an import quota on clothing,it would

Accepted Answer

A)   raise U.S.net exports of clothing and raise net exports of other U.S.goods.
B)   raise U.S.net exports of clothing and lower net exports of other U.S.goods.
C)   lower U.S.net exports of clothing and raise net exports of other U.S.goods.
D)   lower U.S.net exports of clothing and lower net exports of other U.S.goods.E) A) and B)
F) A) and C)

Question 12

Other things the same,if the interest rate falls,then

Accepted Answer

A)   firms will want to borrow more,which increases the quantity of loanable funds demanded.
B)   firms will want to borrow less,which decreases the quantity of loanable funds demanded.
C)   firms will want to borrow more,which increase the quantity of loanable funds supplied.
D)   firms will want to borrow less,which decreases the quantity of loanable funds supplied.E) None of the above
F) All of the above

Question 13

A country has I = $200 billion,S = $400 billion,and purchased $600 billion of foreign assets,how many of its assets did foreigners purchase?

Accepted Answer

A)   $0
B)   $200 billion
C)   $400 billion
D)   $800 billionE) B) and C)
F) A) and D)

Question 14

In which case(s) does(do) a country's demand for loanable funds shift left?

Accepted Answer

A)   both an increase in the budget deficit and capital flight
B)   an increase in the budget deficit,but not capital flight
C)   capital flight,but not an increase in the budget deficit
D)   neither an increase in the budget deficit nor capital flightE) C) and D)
F) A) and B)

Question 15

In the open-economy macroeconomic model,the demand for dollars shifts right if at any given exchange rate

Accepted Answer

A)   foreign residents want to buy more U.S.goods and services.
B)   U.S.residents want to buy fewer foreign goods and services.
C)   Both A and B are correct.
D)   None of the above is correct.E) C) and D)
F) A) and D)

Question 16

Which of the following is consistent with moving from a shortage to equilibrium in the market for foreign currency exchange?

Accepted Answer

A)   the exchange rate falls so foreign residents want to buy more U.S.goods and services
B)   the exchange rate falls so foreign residents want to buy fewer U.S.goods and services
C)   the exchange rate rises so foreign residents want to buy more U.S.goods and services
D)   the exchange rate rises so foreign residents want to buy fewer U.S.goods and servicesE) None of the above
F) All of the above

Question 17

If a country raises its budget deficit,then in the market for foreign-currency exchange

Accepted Answer

A)   supply shifts left
B)   supply shifts right .
C)   demand shifts left.
D)   supply shifts right.E) All of the above
F) B) and C)

Question 18

Which of the following is most likely to increase the exports of a country?

Accepted Answer

A)   The government gives subsidies to firms that export goods or services.
B)   The government reduces the size of the budget surplus.
C)   Political instability within the country increases modestly.
D)   None of the above will increase exports.E) B) and D)
F) B) and C)

Question 19

State what,if anything,each of the following does to the supply or demand of loanable funds.
a.net capital outflow increases at each interest rate
b.domestic investment increases at each interest rate
c.the government deficit increases
d.private saving increases

Accepted Answer

a.the demand for loanable fund...

Question 20

In the 1980s,the U.S.government budget deficit rose.At the same time the U.S.trade deficit grew larger,the real exchange rate of the dollar appreciated,and U.S.net capital outflow decreased.Which of these events is contrary to what the open-economy macroeconomic model predicts concerning the effects of an increase in the budget deficit?

Accepted Answer

A)   The U.S.trade deficit grew.
B)   The real exchange rate of the dollar appreciated.
C)   U.S.net capital outflow fell.
D)   None of the above is contrary to the predictions of the model.E) All of the above
F) A) and C)

Exam 32: A Macroeconomic Theory of the Open Economy

If the U.S.put an import quota on clothing,it would

Correct Answer
verified

In an open economy,the demand for loanable funds comes from

Correct Answer
verified

Which of the following is most likely to increase the exports of a country?

Correct Answer
verified

In the open-economy macroeconomic model which of the following falls if there is an increase in the budget deficit?

Correct Answer
verified

Other things the same,if the interest rate falls,then

Correct Answer
verified

Other things the same,a higher real interest rate raises the quantity of

Correct Answer
verified

In which case(s) does(do) a country's demand for loanable funds shift left?

Correct Answer
verified

A country has I = $200 billion,S = $400 billion,and purchased $600 billion of foreign assets,how many of its assets did foreigners purchase?

Correct Answer
verified

If at a given real interest rate desired national saving were $50 billion,domestic investment were $40 billion,and net capital outflow were $20 billion,then at that real interest rate in the loanable funds market there would be a

Correct Answer
verified

If a country has a negative net capital outflow,then

Correct Answer
verified

Correct Answer
verified

Capital flight refers to

Correct Answer
verified

In the open-economy macroeconomic model,the demand for dollars shifts right if at any given exchange rate

Correct Answer
verified

The key determinant of net capital outflow is the real interest rate.

Correct Answer
verified

The open-economy macroeconomic model examines the determination of

Correct Answer
verified

If a country raises its budget deficit,then in the market for foreign-currency exchange

Correct Answer
verified

When the U.S.real exchange rate appreciates,U.S.goods become

Correct Answer
verified

State what,if anything,each of the following does to the supply or demand of loanable funds. a.net capital outflow increases at each interest rate b.domestic investment increases at each interest rate c.the government deficit increases d.private saving increases

Correct Answer
verified
a.the demand for loanable fund...
View Answer

Figure 19-2 -Refer to Figure 19-2.If the real exchange rate is .6,then there is a

Correct Answer
verified

Which of the following is consistent with moving from a shortage to equilibrium in the market for foreign currency exchange?

Correct Answer
verified

Exam 32: A Macroeconomic Theory of the Open Economy

If the U.S.put an import quota on clothing,it would

Correct AnswerverifiedShow Answer

In an open economy,the demand for loanable funds comes from

Correct AnswerverifiedShow Answer

Which of the following is most likely to increase the exports of a country?

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model which of the following falls if there is an increase in the budget deficit?

Correct AnswerverifiedShow Answer

Other things the same,if the interest rate falls,then

Correct AnswerverifiedShow Answer

Other things the same,a higher real interest rate raises the quantity of

Correct AnswerverifiedShow Answer

In which case(s) does(do) a country's demand for loanable funds shift left?

Correct AnswerverifiedShow Answer

A country has I = $200 billion,S = $400 billion,and purchased $600 billion of foreign assets,how many of its assets did foreigners purchase?

Correct AnswerverifiedShow Answer

If at a given real interest rate desired national saving were $50 billion,domestic investment were $40 billion,and net capital outflow were $20 billion,then at that real interest rate in the loanable funds market there would be a

Correct AnswerverifiedShow Answer

If a country has a negative net capital outflow,then

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Capital flight refers to

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,the demand for dollars shifts right if at any given exchange rate

Correct AnswerverifiedShow Answer

The key determinant of net capital outflow is the real interest rate.

Correct AnswerverifiedShow Answer

The open-economy macroeconomic model examines the determination of

Correct AnswerverifiedShow Answer

If a country raises its budget deficit,then in the market for foreign-currency exchange

Correct AnswerverifiedShow Answer

When the U.S.real exchange rate appreciates,U.S.goods become

Correct AnswerverifiedShow Answer

State what,if anything,each of the following does to the supply or demand of loanable funds. a.net capital outflow increases at each interest rate b.domestic investment increases at each interest rate c.the government deficit increases d.private saving increases

Correct Answerverifieda.the demand for loanable fund...View AnswerShow Answer

Figure 19-2 -Refer to Figure 19-2.If the real exchange rate is .6,then there is a

Correct AnswerverifiedShow Answer

Which of the following is consistent with moving from a shortage to equilibrium in the market for foreign currency exchange?

Correct AnswerverifiedShow Answer

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a.the demand for loanable fund...
View Answer

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