Question 1

If there is a shortage of loanable funds,then

Accepted Answer

A)   the demand for loanable funds will shift right so the real interest rate rises.
B)   the supply of loanable funds will shift left so the real interest rate falls.
C)   there will be no shifts of the curves,but the real interest rate rises.
D)   there will be no shifts of the curves,but the real interest rate falls.E) A) and B)
F) B) and C)

Question 2

A country has national saving of $70 billion,government expenditures of $20 billion,domestic investment of $30 billion,and net capital outflow of $40 billion.What is its supply of loanable funds?

Accepted Answer

A)   $30 billion
B)   $40 billion
C)   $50 billion
D)   $70 billionE) A) and C)
F) A) and D)

Question 3

In the open-economy macroeconomic model,other things the same,when a U.S.resident imports a foreign good,our model treats this as a decrease in the demand for dollars in the foreign-currency exchange market.

Accepted Answer

A) True 
 B)False

Question 4

In an open economy,the demand for loanable funds comes from both domestic investment and net capital outflow.

Accepted Answer

A) True 
 B)False

Question 5

U.S.corporation Titan Bikes borrows funds to build a factory in the U.S.and a factory in Denmark.Borrowing for factories in which location(s) is included in the U.S.demand for loanable funds?

Accepted Answer

A)   The U.S.only.
B)   Denmark only.
C)   The U.S.and Denmark.
D)   Neither the U.S.nor Denmark.E) None of the above
F) All of the above

Question 6

An increase in the budget deficit

Accepted Answer

A)   reduces investment because the interest rate rises.
B)   reduces investment because the interest rate falls.
C)   raises investment because the interest rate rises.
D)   raises investment because the interest rate falls.E) All of the above
F) A) and B)

Question 7

If a government has a budget surplus,then public saving

Accepted Answer

A)   is positive and increases national saving.
B)   is positive but decreases national saving.
C)   is negative and decreases national saving.
D)   is negative but increases national saving.E) A) and D)
F) A) and C)

Question 8

In the open-economy macroeconomic model,if the supply of loanable funds shifts right,then

Accepted Answer

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

Question 9

If the U.S.government imposes an import quota on French wine,U.S.net exports will

Accepted Answer

A)   increase,the real exchange rate of the dollar will appreciate,and domestic sales of U.S.wine will increase.
B)   not change,the real exchange rate of the dollar will appreciate,and domestic sales of U.S.wine will increase.
C)   not change,the dollar will depreciate,and domestic sales of U.S.wine will not change.
D)   None of the above is correct.E) A) and B)
F) A) and C)

Question 10

Which of the following would make both the equilibrium real interest rate and the equilibrium quantity of loanable funds increase?

Accepted Answer

A)   The demand for loanable funds shifts right.
B)   The demand for loanable funds shifts left.
C)   The supply of loanable funds shifts right.
D)   The supply of loanable funds shifts left.E) None of the above
F) A) and B)

Question 11

If the U.S.government imposes a quota on toy imports,then net exports of U.S.toys 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) A) and B)
F) A) and C)

Question 12

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

Question 13

In the open economy macroeconomic model,the amount of dollars demanded in the market for foreign-currency exchange at a given real exchange rate increases if

Accepted Answer

A)   either U.S.imports or exports increase.
B)   either U.S.imports or exports decrease.
C)   either U.S.imports increase or U.S.exports decrease.
D)   either U.S.imports decrease or U.S.exports increase.E) A) and B)
F) None of the above

Question 14

If the U.S.imposed an import quota on apples,then which of the following would rise?

Accepted Answer

A)   the U.S.real exchange rate and U.S.net exports
B)   the U.S.real exchange rate but not U.S.net exports
C)   U.S.net exports but not the U.S.real exchange rate
D)   neither the U.S.real exchange rate nor U.S.net exportsE) A) and B)
F) A) and C)

Question 15

Over the past two decades the U.S.has persistently had trade deficits.

Accepted Answer

A) True 
 B)False

Question 16

When a country suffers from capital flight,the exchange rate

Accepted Answer

A)   depreciates,because demand in the market for foreign-currency exchange shifts left.
B)   depreciates,because supply in the market for foreign-currency exchange shifts right.
C)   appreciates,because demand in the market for foreign-currency exchange shifts right.
D)   None of the above is correct.E) All of the above
F) None of the above

Question 17

Which of the following is correct concerning the open-economy macroeconomic model?

Accepted Answer

A)   The net-capital-outflow curve slopes downward.
B)   The key determinant of net capital outflow is the real exchange rate.
C)   The supply of dollars in the market for foreign-currency exchange is horizontal.
D)   None of the above is correct.E) None of the above
F) A) and C)

Question 18

Other things the same,as the real interest rate falls

Accepted Answer

A)   domestic investment and net capital outflow both rise.
B)   domestic investment and net capital outflow both fall.
C)   domestic investment rises and net capital outflow falls.
D)   domestic investment falls and net capital outflow rises.E) All of the above
F) B) and D)

Question 19

An increase in the budget deficit

Accepted Answer

A)   raises net exports and domestic investment.
B)   raises net exports and reduces domestic investment.
C)   reduces net exports and raises domestic investment.
D)   reduces net exports and domestic investment.E) All of the above
F) A) and B)

Question 20

Figure 32-4 
-Refer to Figure 32-4.Suppose that U.S.firms desire to purchase more capital in the U.S.The effects of this could be illustrated by

Accepted Answer

A)   shifting the demand curve in panel a to the right and the demand curve in panel c to the left.
B)   shifting the demand curve in panel a to the right and the supply curve in panel c to the left.
C)   shifting the supply curve in panel a to the right and the demand curve in panel c to the left.
D)   shifting the supply curve in panel a to the right and the supply curve in panel c to the right.E) None of the above
F) A) and B)

Exam 32: A Macroeconomic Theory of the Open Economy

In an open economy,the demand for loanable funds comes from both domestic investment and net capital outflow.

Correct AnswerverifiedShow Answer

Over the past two decades the U.S.has persistently had trade deficits.

Correct AnswerverifiedShow Answer

In the open economy macroeconomic model,the amount of dollars demanded in the market for foreign-currency exchange at a given real exchange rate increases if

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,other things the same,when a U.S.resident imports a foreign good,our model treats this as a decrease in the demand for dollars in the foreign-currency exchange market.

Correct AnswerverifiedShow Answer

Which of the following would make both the equilibrium real interest rate and the equilibrium quantity of loanable funds increase?

Correct AnswerverifiedShow Answer

If the U.S.imposed an import quota on apples,then which of the following would rise?

Correct AnswerverifiedShow Answer

A country has national saving of $70 billion,government expenditures of $20 billion,domestic investment of $30 billion,and net capital outflow of $40 billion.What is its supply of loanable funds?

Correct AnswerverifiedShow Answer

An increase in the budget deficit

Correct AnswerverifiedShow Answer

If the U.S.government imposes a quota on toy imports,then net exports of U.S.toys would

Correct AnswerverifiedShow Answer

Other things the same,as the real interest rate falls

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

An increase in the budget deficit

Correct AnswerverifiedShow Answer

U.S.corporation Titan Bikes borrows funds to build a factory in the U.S.and a factory in Denmark.Borrowing for factories in which location(s) is included in the U.S.demand for loanable funds?

Correct AnswerverifiedShow Answer

Which of the following is correct concerning the open-economy macroeconomic model?

Correct AnswerverifiedShow Answer

If the U.S.government imposes an import quota on French wine,U.S.net exports will

Correct AnswerverifiedShow Answer

If a government has a budget surplus,then public saving

Correct AnswerverifiedShow Answer

Figure 32-4 -Refer to Figure 32-4.Suppose that U.S.firms desire to purchase more capital in the U.S.The effects of this could be illustrated by

Correct AnswerverifiedShow Answer

When a country suffers from capital flight,the exchange rate

Correct AnswerverifiedShow Answer

If there is a shortage of loanable funds,then

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,if the supply of loanable funds shifts right,then

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified