Question 1

Which of the following will decrease U.S.net capital outflow?

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 2

The imposition of an import quota shifts

Accepted Answer

A)  the supply of currency right,so the exchange rate falls.
B)  the supply of currency left,so the exchange rate rises.
C)  the demand for currency right,so the exchange rate rises.
D)  the demand for currency left,so the exchange rate falls.

Question 3

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 flight

Question 4

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.

Question 5

When a country experiences capital flight its interest rate

Accepted Answer

A)  and net capital outflow rise.
B)  rises and net capital outflow falls.
C)  falls and net capital outflow rises.
D)  interest rate and net capital outflow fall.

Question 6

A firm produces construction equipment,some of which it exports.Which of the following effects of an increase in the government budget deficit would likely reduce the quantity of equipment it sells?

Accepted Answer

A)  the change in the interest rate and the change in the exchange rate
B)  the change in the interest rate but not the change in the exchange rate
C)  the change in the exchange rate but not the change in the interest rate
D)  neither the change in the interest rate nor the change in the exchange rate

Question 7

A limit on the quantity of a good produced abroad that can be purchased domestically is called a(n)

Accepted Answer

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

Question 8

Which of the following leads to an increase in net exports in the long run?

Accepted Answer

A)  either a decrease in the budget deficit or imposing an import quota
B)  a decrease in the budget deficit but not imposing an import quota
C)  imposing an import quota but not a decrease in the budget deficit
D)  neither a decrease in the budget deficit nor imposing an import quota

Question 9

Which of the following is most likely to result if foreigners decide to withdraw the funds that they have loaned to the United States?

Accepted Answer

A)  U.S.net exports will fall
B)  U.S.net capital outflow will rise
C)  U.S.domestic investment will rise
D)  the dollar will appreciate

Question 10

If there is capital flight from the United States,then the demand for loanable funds

Accepted Answer

A)  and the supply of dollars in the foreign-exchange market shift right.
B)  and the supply of dollars in the foreign-exchange market shift left.
C)  shifts left while the supply of dollars in the foreign-exchange market shifts right.
D)  shifts right while the supply of dollars in the foreign-exchange market shifts left.

Question 11

If the Japanese government raised its budget deficit,then the yen would

Accepted Answer

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

Question 12

If a country experiences capital flight,which of the following curves shift right?

Accepted Answer

A)  only the demand for loanable funds.
B)  only the supply of dollars in the market for foreign-currency exchange.
C)  only the net capital outflow curve and the supply of dollars in the market for foreign currency exchange.
D)  the demand for loanable funds,the net capital outflow curve,and the supply of dollars in the market for foreign currency exchange.

Question 13

If the U.S.imposes an import quota on clothing,then the

Accepted Answer

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

Question 14

If a country's budget deficit decreases,then the exchange rate

Accepted Answer

A)  rises,which raises net exports.
B)  rises,which reduces net exports.
C)  falls,which raises net exports.
D)  falls,which reduces net exports.

Question 15

Figure 32-5
Refer to this diagram of the open-economy macroeconomic model to answer the questions below.

-Refer to Figure 32-5.In the market for foreign-currency exchange,the effects of an increase in the budget surplus can be illustrated as a move from j to

Accepted Answer

A)  g.
B)  h.
C)  i.
D)  k.

Question 16

If the United States imposes an import quota on clothing,then U.S.exports

Accepted Answer

A)  increase,U.S.imports increase,and U.S.net exports will not change.
B)  increase,U.S.imports decrease,and U.S.net exports increase.
C)  decrease,U.S.imports increase,and U.S.net exports decrease.
D)  decrease,U.S.imports decrease,and U.S.net exports will not change.

Question 17

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.

Question 18

If China experienced capital flight,the supply of Chinese yuan in the market for foreign-currency exchange would shift

Accepted Answer

A)  left,which would make the real exchange rate of the Chinese yuan appreciate.
B)  left,which would make the real exchange rate of the Chinese yuan depreciate.
C)  right,which would make the real exchange rate of the Chinese yuan appreciate.
D)  right,which would make the real exchange rate of the Chinese yuan depreciate.

Question 19

When a country imposes an import quota,its exchange rate

Accepted Answer

A)  rises because the supply of dollars in the market for foreign-currency exchange falls.
B)  falls because the supply of dollars in the market for foreign-currency exchange rises.
C)  rises because the demand for dollars in the market for foreign-currency exchange rises.
D)  falls because the demand for dollars in the market for foreign-currency exchange falls.

Question 20

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

Accepted Answer

A)  U.S.exports and U.S.imports both increase
B)  U.S.exports increase but U.S.imports are unchanged
C)  U.S.imports increase but U.S.exports are unchanged
D)  None of the above are correct

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

A firm produces construction equipment,some of which it exports.Which of the following effects of an increase in the government budget deficit would likely reduce the quantity of equipment it sells?

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Which of the following will decrease U.S.net capital outflow?

Correct AnswerverifiedShow Answer

The imposition of an import quota shifts

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If a country's budget deficit decreases,then the exchange rate

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If the U.S.imposes an import quota on clothing,then the

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Capital flight refers to

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If the United States imposes an import quota on clothing,then U.S.exports

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Which of the following leads to an increase in net exports in the long run?

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When a country's government budget deficit increases,

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When a country experiences capital flight its interest rate

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If there is capital flight from the United States,then the demand for loanable funds

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A limit on the quantity of a good produced abroad that can be purchased domestically is called a(n)

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If China experienced capital flight,the supply of Chinese yuan in the market for foreign-currency exchange would shift

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If a country experiences capital flight,which of the following curves shift right?

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

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Figure 32-5 Refer to this diagram of the open-economy macroeconomic model to answer the questions below. -Refer to Figure 32-5.In the market for foreign-currency exchange,the effects of an increase in the budget surplus can be illustrated as a move from j to

Correct AnswerverifiedShow Answer

When a country imposes an import quota,its exchange rate

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Which of the following is most likely to result if foreigners decide to withdraw the funds that they have loaned to the United States?

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

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If the Japanese government raised its budget deficit,then the yen would

Correct AnswerverifiedShow Answer

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