Question 1

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) A) and B)
F) B) and D)

Question 2

In the open-economy macroeconomic model, other things the same, which of the following both make the exchange rate fall?

Accepted Answer

A)  U.S. investment demand falls and foreign demand for U.S. goods falls
B)  U.S. investment demand falls and foreign demand for U.S. goods rises
C)  U.S. investment demand rises and foreign demand for U.S. goods falls
D)  U.S. investment demand rises and foreign demand for U.S. goods risesE) C) and D)
F) B) and C)

Question 3

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

Question 4

An increase in the real interest rate in the United States changes the quantity of loanable funds demanded because

Accepted Answer

A)  U.S. residents will want to buy more foreign assets.
B)  Foreign residents will want to buy more U.S. goods and services.
C)  U.S. firms will want to purchase fewer U.S. capital goods.
D)  All of the above are correct.E) C) and D)
F) All of the above

Question 5

If the people thought that many banks in a certain country were at or near the point of bankruptcy, then that country's real exchange rate

Accepted Answer

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

Question 6

The quantity of U.S. bonds foreigners want to buy is taken into account

Accepted Answer

A)  in the U.S. supply of loanable funds and the supply of dollars in the market for foreign-currency exchange.
B)  in the U.S. supply of loanable funds and the demand for dollars in the market for foreign-currency exchange.
C)  in the U.S. demand for loanable funds and the supply of dollars in the market for foreign-currency exchange.
D)  in the U.S. demand for loanable funds and the demand for dollars in the market for foreign-currency exchange.E) C) and D)
F) B) and C)

Question 7

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

Accepted Answer

A)  both the supply of loanable funds and the supply of dollars in the market for foreign-currency exchange.
B)  neither the supply of loanable funds nor the supply of dollars in the market for foreign-currency exchange.
C)  the supply of loanable funds but not the supply of dollars in the market for foreign-currency exchange.
D)  the supply of dollars in the market for foreign-currency exchange, but not the supply of loanable funds.E) B) and D)
F) C) and D)

Question 8

Figure 32-1 
-Refer to Figure 32-1. If the real interest rate is 6 percent, there will be pressure for

Accepted Answer

A)  the real interest rate to fall.
B)  the demand for loanable funds curve to shift left.
C)  the supply for loanable funds curve to shift right.
D)  All of the above are correct.E) B) and C)
F) A) and D)

Question 9

A tax on imported goods is called a(n)

Accepted Answer

A)  excise tax.
B)  tariff.
C)  import quota.
D)  None of the above is correct.E) C) and D)
F) B) and D)

Question 10

What happens to the quantity of loanable funds supplied when the interest rate rises? Explain why this change happens.

Accepted Answer

The quantity of loanable funds...

Question 11

In the 1980s, both the U.S. government budget and U.S. trade deficits increased.

Accepted Answer

A) True 
 B)False

Question 12

If the real interest rate were above the equilibrium rate, there would be a shortage of loanable funds.

Accepted Answer

A) True 
 B)False

Question 13

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

Question 14

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)  the sum of national consumption and government spending.
D)  the sum of domestic investment and net capital outflow.E) A) and B)
F) B) and D)

Question 15

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 appreciatesE) None of the above
F) A) and B)

Question 16

A country has national saving of $80 billion, government expenditures of $40 billion, domestic investment of $50 billion, and net capital outflow of $30 billion. What is its supply of loanable funds?

Accepted Answer

A)  $30 billion
B)  $40 billion
C)  $50 billion
D)  $80 billionE) A) and B)
F) None of the above

Question 17

Other things the same, if the Japanese real interest rate were to increase, Japanese net capital outflow

Accepted Answer

A)  and net capital outflow of other countries would rise.
B)  and net capital outflow of other countries would fall.
C)  would rise, while net capital outflow of other countries would fall.
D)  would fall, while net capital outflow of other countries would rise.E) B) and C)
F) A) and D)

Question 18

In which case(s)  does(do)  a country's supply of loanable funds shift right?

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

Question 19

Which of the following decreases if the U.S. removes an import quota on computer components?

Accepted Answer

A)  U.S. imports and U.S. exports.
B)  U.S. imports but not U.S. exports.
C)  U.S. exports but not U.S. imports.
D)  Neither U.S. exports nor U.S. imports.E) None of the above
F) C) and D)

Question 20

An economy recently had 800 billion euros of saving and 600 billion euros of net capital outflow. What was its investment? What was its quantity of loanable funds supplied?

Accepted Answer

200 billio...

Exam 32: A Macroeconomic Theory of the Open Economy

Over the past three decades, the United States has

Correct Answer
verified

Correct Answer
verified

The quantity of U.S. bonds foreigners want to buy is taken into account

Correct Answer
verified

Other things the same, if the Japanese real interest rate were to increase, Japanese net capital outflow

Correct Answer
verified

A tax on imported goods is called a(n)

Correct Answer
verified

If the U.S. were to impose import quotas

Correct Answer
verified

What happens to the quantity of loanable funds supplied when the interest rate rises? Explain why this change happens.

Correct Answer
verified
The quantity of loanable funds...
View Answer

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

Correct Answer
verified

In which case(s) does(do) a country's supply of loanable funds shift right?

Correct Answer
verified

Which of the following decreases if the U.S. removes an import quota on computer components?

Correct Answer
verified

If the real interest rate were above the equilibrium rate, there would be a shortage of loanable funds.

Correct Answer
verified

In the 1980s, both the U.S. government budget and U.S. trade deficits increased.

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

If the people thought that many banks in a certain country were at or near the point of bankruptcy, then that country's real exchange rate

Correct Answer
verified

Figure 32-1 -Refer to Figure 32-1. If the real interest rate is 6 percent, there will be pressure for

Correct Answer
verified

In the open-economy macroeconomic model, other things the same, which of the following both make the exchange rate fall?

Correct Answer
verified

An economy recently had 800 billion euros of saving and 600 billion euros of net capital outflow. What was its investment? What was its quantity of loanable funds supplied?

Correct Answer
verified
200 billio...
View Answer

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

Correct Answer
verified

A country has national saving of $80 billion, government expenditures of $40 billion, domestic investment of $50 billion, and net capital outflow of $30 billion. What is its supply of loanable funds?

Correct Answer
verified

An increase in the real interest rate in the United States changes the quantity of loanable funds demanded because

Correct Answer
verified

Exam 32: A Macroeconomic Theory of the Open Economy

Over the past three decades, the United States has

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The quantity of U.S. bonds foreigners want to buy is taken into account

Correct AnswerverifiedShow Answer

Other things the same, if the Japanese real interest rate were to increase, Japanese net capital outflow

Correct AnswerverifiedShow Answer

A tax on imported goods is called a(n)

Correct AnswerverifiedShow Answer

If the U.S. were to impose import quotas

Correct AnswerverifiedShow Answer

What happens to the quantity of loanable funds supplied when the interest rate rises? Explain why this change happens.

Correct AnswerverifiedThe quantity of loanable funds...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

In which case(s) does(do) a country's supply of loanable funds shift right?

Correct AnswerverifiedShow Answer

Which of the following decreases if the U.S. removes an import quota on computer components?

Correct AnswerverifiedShow Answer

If the real interest rate were above the equilibrium rate, there would be a shortage of loanable funds.

Correct AnswerverifiedShow Answer

In the 1980s, both the U.S. government budget and U.S. trade deficits increased.

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

If the people thought that many banks in a certain country were at or near the point of bankruptcy, then that country's real exchange rate

Correct AnswerverifiedShow Answer

Figure 32-1 -Refer to Figure 32-1. If the real interest rate is 6 percent, there will be pressure for

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model, other things the same, which of the following both make the exchange rate fall?

Correct AnswerverifiedShow Answer

An economy recently had 800 billion euros of saving and 600 billion euros of net capital outflow. What was its investment? What was its quantity of loanable funds supplied?

Correct Answerverified200 billio...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

A country has national saving of $80 billion, government expenditures of $40 billion, domestic investment of $50 billion, and net capital outflow of $30 billion. What is its supply of loanable funds?

Correct AnswerverifiedShow Answer

An increase in the real interest rate in the United States changes the quantity of loanable funds demanded because

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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The quantity of loanable funds...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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200 billio...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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