Question 1

Which of the following is the correct way to show the effects of a newly imposed import quota?

Accepted Answer

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

Question 2

Which of the following happens in the market for loanable funds when there is capital flight?

Accepted Answer

A)  the demand curve shifts right.
B)  the demand curve shifts left.
C)  the supply curve shifts right.
D)  the supply curve shifts left.

Question 3

If the risk of buying U.S.assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds,then

Accepted Answer

A)  the real exchange rate and the interest rate will rise.
B)  the real exchange rate will rise and the interest rate will fall.
C)  the real exchange rate will fall and the interest rate will rise.
D)  the real exchange rate and the interest rate will fall.

Question 4

Which of the following would both make a country's real exchange rate rise?

Accepted Answer

A)  its budget deficit increases and bonds issued in the country become riskier
B)  bonds issued in that country become riskier and it imposes an import quota
C)  it imposes an import quota and the budget deficit increases
D)  None of the above are correct.

Question 5

Which of the following will not change the U.S.real interest rate?

Accepted Answer

A)  capital flight from the United States
B)  the government budget deficit increases
C)  the U.S.imposes import quotas
D)  None of the above is correct.

Question 6

If the budget deficit increases,then

Accepted Answer

A)  an increase in the interest rate increases net capital outflow.
B)  an increase in the interest rate decreases net capital outflow.
C)  a decrease in the interest rate increases net capital outflow.
D)  a decrease in the interest rate decreases net capital outflow.

Question 7

Which of the following is correct?

Accepted Answer

A)  capital flight from the United States decreases net capital outflow
B)  an increase in the government budget deficit creates no change in net capital outflow
C)  if the U.S.imposes a restriction on imports,net capital outflow increases
D)  None of the above is correct.

Question 8

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 left.

Question 9

If a country imposes a tariff on some good,then which of the following curves shifts right?

Accepted Answer

A)  both the demand for loanable funds and demand in the market for foreign-currency exchange.
B)  the demand for loanable funds and demand in the market for foreign-currency exchange.
C)  demand in the market for foreign-currency exchange but not the demand for loanable funds.
D)  neither the demand for loanable funds nor demand in the market for foreign-currency exchange.

Question 10

In 2002,the United States imposed restrictions on the importation of steel into the United States.The open-economy macroeconomic model shows that such a policy would

Accepted Answer

A)  lower the real exchange rate and increase net exports.
B)  lower the real exchange rate and have no effect on net exports.
C)  raise the real exchange rate and decrease net exports.
D)  raise the real exchange rate and have no effect on net exports.

Question 11

A U.S.-imposed quota on automobiles would shift

Accepted Answer

A)  both the demand and supply curves in the market for foreign-currency exchange right.
B)  both the demand and supply curves in the market for foreign-currency exchange right
C)  only the demand curve in the market for foreign-currency exchange right
D)  only the supply curve in the market for foreign-currency exchange right

Question 12

An increase in the budget deficit causes net capital outflow to

Accepted Answer

A)  rise,because the supply of loanable funds shifts right.
B)  rise,because the demand for loanable funds shifts right.
C)  fall,because the supply of loanable funds shifts left.
D)  fall,because the demand for loanable funds shifts right.

Question 13

If the U.S.government imposed quotas on imports of clothing,then U.S.

Accepted Answer

A)  imports and exports would both fall.
B)  imports would fall and exports would rise.
C)  imports would rise and exports would fall.
D)  None of the above is correct.

Question 14

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.

Question 15

If a country places tariffs on imported goods,then

Accepted Answer

A)  its currency appreciates which reduces exports.
B)  its currency appreciates which increases exports.
C)  its currency depreciates which reduces exports.
D)  its currency depreciates which increases exports.

Question 16

If the government of Venezuela made policy changes that increased national saving,the real exchange rate of the peso would

Accepted Answer

A)  depreciate and Venezuelan net exports would rise.
B)  depreciate and Venezuelan net exports would fall.
C)  appreciate and Venezuelan net exports would rise.
D)  appreciate and Venezuelan net exports would fall.

Question 17

If a government of a country with a zero trade balance increases its budget deficit,then the real exchange rate

Accepted Answer

A)  appreciates and there is a trade surplus.
B)  appreciates and there is a trade deficit.
C)  depreciates and there is a trade surplus.
D)  depreciates and there is a trade deficit.

Question 18

If the U.S.government went from a budget deficit to a budget surplus then

Accepted Answer

A)  the interest rate and the real exchange rate would increase.
B)  the interest rate and the real exchange rate would decrease.
C)  the interest rate would increase and the real exchange rate would decrease.
D)  the interest rate would decrease and the real exchange rate would increase.

Question 19

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.

Question 20

In 2009 Greece's budget deficit rose and people became worried about the ability of the Greek government to continue to make payments on its debt.Which of these events raise a country's interest rates?

Accepted Answer

A)  an increase in the budget deficit and increased concerns about the ability of the government to pay back its debt
B)  an increase in the budget deficit,but not increased concerns about the ability of the government to pay back its debt
C)  increased concerns about the ability of the government to pay back its debt,but not an increase in the budget deficit
D)  neither an increase in the budget deficit nor increased concerns about the ability of the government to pay back its debt

Exam 19: A Macroeconomic Theory of the Open Economy: How Policies and Events Affect an Open Economy

A U.S.-imposed quota on automobiles would shift

Correct AnswerverifiedShow Answer

If the budget deficit increases,then

Correct AnswerverifiedShow Answer

In 2009 Greece's budget deficit rose and people became worried about the ability of the Greek government to continue to make payments on its debt.Which of these events raise a country's interest rates?

Correct AnswerverifiedShow Answer

If a government of a country with a zero trade balance increases its budget deficit,then the real exchange rate

Correct AnswerverifiedShow Answer

Which of the following would both make a country's real exchange rate rise?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is the correct way to show the effects of a newly imposed import quota?

Correct AnswerverifiedShow Answer

In 2002,the United States imposed restrictions on the importation of steel into the United States.The open-economy macroeconomic model shows that such a policy would

Correct AnswerverifiedShow Answer

Which of the following is correct?

Correct AnswerverifiedShow Answer

If a country places tariffs on imported goods,then

Correct AnswerverifiedShow 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

If the U.S.government imposed quotas on imports of clothing,then U.S.

Correct AnswerverifiedShow Answer

An increase in the budget deficit causes net capital outflow to

Correct AnswerverifiedShow Answer

If the U.S.were to impose import quotas

Correct AnswerverifiedShow Answer

If the risk of buying U.S.assets rises because it is discovered that lending institutions had not carefully evaluated borrowers prior to lending them funds,then

Correct AnswerverifiedShow Answer

If the government of Venezuela made policy changes that increased national saving,the real exchange rate of the peso would

Correct AnswerverifiedShow Answer

Which of the following will not change the U.S.real interest rate?

Correct AnswerverifiedShow Answer

If the U.S.government went from a budget deficit to a budget surplus then

Correct AnswerverifiedShow Answer

Which of the following happens in the market for loanable funds when there is capital flight?

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If a country imposes a tariff on some good,then which of the following curves shifts right?

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