Question 1

If there is a surplus in the U.S. loanable funds market, then the interest rate

Accepted Answer

A)  rises, which increases quantity of loanable funds demanded.
B)  rises, which decreases the quantity of loanable funds demanded.
C)  falls, which increases the quantity of loanable funds demanded.
D)  falls, which decreases the quantity of loanable funds demanded.E) All of the above
F) A) and D)

Question 2

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.E) All of the above
F) A) and B)

Question 3

Which of the following would make the equilibrium real interest rate decrease 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) A) and C)
F) A) and D)

Question 4

If the exchange rate falls, U.S. residents pay

Accepted Answer

A)  more dollars for foreign bonds and get more dollars from interest payments.
B)  more dollars for foreign bonds but get fewer dollars from interest payments.
C)  fewer dollars for foreign bonds and also get fewer dollars from interest payments.
D)  fewer dollars for foreign bonds but get more dollars from interest payments.E) B) and C)
F) All of the above

Question 5

Many U.S. business leaders argue that the current state of U.S. net exports is the result of

Accepted Answer

A)  U.S. export subsidies.
B)  free trade policies of foreign governments.
C)  unproductive U.S. workers.
D)  unfair foreign competition.E) None of the above
F) All of the above

Question 6

In the open-economy macroeconomic model, the supply of loanable funds comes from

Accepted Answer

A)  national saving. Demand comes from only domestic investment.
B)  national saving. Demand comes from domestic investment and net capital outflow.
C)  Only net capital outflow. Demand for loanable funds comes from national saving.
D)  domestic investment and net capital outflow. Demand for loanable funds comes from national saving.E) C) and D)
F) None of the above

Question 7

Other things the same, if the U.S. interest rate falls, then U.S. residents will want to purchase

Accepted Answer

A)  more foreign assets, which increases the quantity of loanable funds demanded.
B)  fewer foreign assets, which decreases the quantity of loanable funds demanded.
C)  more foreign assets, which increase the quantity of loanable funds supplied.
D)  fewer foreign assets, which decreases the quantity of loanable funds supplied.E) A) and B)
F) A) and C)

Question 8

Which of the following is the most accurate statement?

Accepted Answer

A)  Trade policy has neither microeconomic nor macroeconomic effects.
B)  Trade policy has similar microeconomic and macroeconomic effects.
C)  The effects of trade policy are more macroeconomic than microeconomic.
D)  The effects of trade policy are more microeconomic than macroeconomic.E) All of the above
F) A) and C)

Question 9

As the interest rate rises, it is possible that net capital outflow could move from a positive to a negative value.

Accepted Answer

A) True 
 B)False

Question 10

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 11

What is the source of the supply of dollars in the market for foreign-currency exchange?

Accepted Answer

The answer of What is the source of the supply...

Question 12

If a government started with a budget deficit and moved to a surplus, domestic investment

Accepted Answer

A)  and the real exchange rate would rise.
B)  and the real exchange rate would fall.
C)  would rise and the real exchange rate would fall.
D)  would fall and the real exchange rate would rise.E) B) and C)
F) None of the above

Question 13

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)  demand shifts right.E) A) and C)
F) B) and C)

Question 14

When a government reduces its budget deficit, then that country's

Accepted Answer

A)  supply of loanable funds shifts right.
B)  supply of loanable funds shifts left.
C)  demand for loanable funds shifts right.
D)  demand for loanable funds shifts left.E) A) and B)
F) A) and C)

Question 15

In the open-economy macroeconomic model, if there is a surplus in the market for foreign-currency exchange, which of the following will move the market to equilibrium?

Accepted Answer

A)  the real exchange rate depreciates and net exports fall.
B)  the real exchange rate depreciates and net exports rise.
C)  the real exchange rate appreciates and net exports fall.
D)  the real exchange rate appreciates and net exports rise.E) C) and D)
F) A) and B)

Question 16

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.E) All of the above
F) None of the above

Question 17

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

Accepted Answer

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

Question 18

In the open-economy macroeconomic model, the market for loanable funds identity can be written as

Accepted Answer

A)  S = I
B)  S = NCO
C)  S = I + NCO
D)  S + I = NCOE) None of the above
F) A) and B)

Question 19

What is the source of the supply of loanable funds in the open-economy macroeconomic model?

Accepted Answer

The answer of What is the source of the supply...

Question 20

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

Accepted Answer

A) True 
 B)False

Exam 32: A Macroeconomic Theory of the Open Economy

As the interest rate rises, it is possible that net capital outflow could move from a positive to a negative value.

Correct AnswerverifiedShow Answer

If a government started with a budget deficit and moved to a surplus, domestic investment

Correct AnswerverifiedShow Answer

Many U.S. business leaders argue that the current state of U.S. net exports is the result of

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model, the market for loanable funds identity can be written as

Correct AnswerverifiedShow Answer

What is the source of the supply of loanable funds in the open-economy macroeconomic model?

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What is the source of the supply of dollars in the market for foreign-currency exchange?

Correct AnswerverifiedShow Answer

When a government reduces its budget deficit, then that country's

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model, the supply of loanable funds comes from

Correct AnswerverifiedShow Answer

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

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Which of the following is the most accurate statement?

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

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

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

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If there is a surplus in the U.S. loanable funds market, then the interest rate

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model, if there is a surplus in the market for foreign-currency exchange, which of the following will move the market to equilibrium?

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Other things the same, if the U.S. interest rate falls, then U.S. residents will want to purchase

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If the exchange rate falls, U.S. residents pay

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