Question 1

The value of net exports equals the value of

Accepted Answer

A)   national saving.
B)   public saving.
C)   national saving - net capital outflow.
D)   national saving - domestic investment.E) None of the above
F) A) and D)

Question 2

If the demand for net exports rises, which of the following happens in the open-economy macroeconomic model?

Accepted Answer

A)   the exchange rate rises
B)   the interest rate falls
C)   net capital outflow rises
D)   All of the above are correct.E) None of the above
F) B) and C)

Question 3

If the U.S. government imposes a quota on imports of jet planes, then

Accepted Answer

A)   net capital outflow rises.
B)   net exports rise.
C)   the exchange rate rises.
D)   All of the above are correct.E) B) and D)
F) B) and C)

Question 4

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 C)
F) B) and D)

Question 5

An increase in the U.S. government budget deficit shifts the

Accepted Answer

A)   demand for loanable funds right and decreases investment spending.
B)   supply of loanable funds right and increases investment spending.
C)   supply of loanable funds left and decreases investment spending.
D)   None of the above is correct.E) A) and C)
F) C) and D)

Question 6

Other things the same, a higher real interest rate raises the quantity of

Accepted Answer

A)   domestic investment.
B)   net capital outflow.
C)   loanable funds demanded.
D)   loanable funds supplied.E) B) and D)
F) A) and C)

Question 7

Other things the same, as the real interest rate rises

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) None of the above
F) A) and D)

Question 8

If after a country experiences capital flight, people become more confident about the safety of its assets, then in that country

Accepted Answer

A)   the real exchange rate and the real interest rate will rise.
B)   the real exchange rate will rise and the real interest rate will fall.
C)   the real exchange rate will fall and the real interest rate will rise.
D)   the real exchange rate and the real interest rate will fall.E) All of the above
F) A) and C)

Question 9

An increase in a country's budget surplus shifts its

Accepted Answer

A)   demand for loanable funds right and decreases investment spending.
B)   supply of loanable funds right and increases investment spending.
C)   supply of loanable funds left and decreases investment spending.
D)   None of the above is correct.E) C) and D)
F) None of the above

Question 10

Suppose that U.S. savers decide that holding Brazilian assets has become riskier. What happens to U.S. net capital outflow? What happens to the U.S. real interest rate?

Accepted Answer

U.S. net capital outflow decre...

Question 11

In the market for foreign-currency exchange, the source of the supply of dollars is _________. The supply curve is _________ because _____________.

Accepted Answer

net capital outflow,...

Question 12

In an open economy, the demand for loanable funds comes from

Accepted Answer

A)   only those who want to buy domestic capital goods.
B)   only those who want to buy foreign assets.
C)   those who want to buy either domestic capital goods or foreign assets.
D)   None of the above is correct.E) A) and D)
F) A) and C)

Question 13

Figure 32-5
Refer to this diagram of the open-economy macroeconomic model to answer the questions below. 
-Refer to Figure 32-4. Suppose that the government goes from a budget surplus to a budget deficit. The effects of the change 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 left 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 right.
D)   shifting the supply curve in panel a to the left and the supply curve in panel c to the left.E) C) and D)
F) A) and D)

Question 14

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 15

The slope of the supply of loanable funds is based on an increase in

Accepted Answer

A)   only national saving when the interest rate rises.
B)   both national saving and net capital outflow when the interest rate rises.
C)   only national saving when the interest rate falls.
D)   both national saving and net capital outflow when the interest rate falls.E) C) and D)
F) B) and C)

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

If at a given exchange rate U.S. citizens wanted to buy more foreign bonds

Accepted Answer

A)   the demand for dollars in the market for foreign-currency exchange would shift right.
B)   the demand for dollars in the market for foreign-currency exchange would shift left.
C)   the supply of dollars in the market for foreign-currency exchange shifts right.
D)   the supply of dollars in the market for foreign-currency exchange shifts left.E) All of the above
F) None of the above

Question 18

Depositors Move Funds out of Greek Banks.
In 2011 Greek citizens were concerned about the size of government debt. Fearful that the government might be unable to fulfill its promise to insure depositors in Greek banks against losses created by bank failures, depositors moved funds out of Greek banks.
-Refer to Depositors Move Funds Out of Greek Banks. Because of depositors reactions what happened to net capital outflow?

Accepted Answer

Greece's n...

Question 19

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

Accepted Answer

A)   national saving.
B)   private saving.
C)   domestic investment.
D)   the sum of domestic investment and net capital outflow.E) A) and D)
F) None of the above

Question 20

A country has domestic investment of $200 billion. Its citizens purchase $600 of foreign assets and foreign citizens purchase $300 of its assets. What is national saving?

Accepted Answer

A)   $400 billion
B)   $500 billion
C)   $600 billion
D)   $800 billionE) A) and B)
F) B) and C)

Exam 14: A Macroeconomic Theory of the Open Economy

Suppose that U.S. savers decide that holding Brazilian assets has become riskier. What happens to U.S. net capital outflow? What happens to the U.S. real interest rate?

Correct Answer
verified
U.S. net capital outflow decre...
View Answer

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

Correct Answer
verified

In an open economy, the demand for loanable funds comes from

Correct Answer
verified

The slope of the supply of loanable funds is based on an increase in

Correct Answer
verified

If there is a shortage of loanable funds, then

Correct Answer
verified

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

Correct Answer
verified

Other things the same, a higher real interest rate raises the quantity of

Correct Answer
verified

Other things the same, as the real interest rate rises

Correct Answer
verified

An increase in a country's budget surplus shifts its

Correct Answer
verified

A country has domestic investment of $200 billion. Its citizens purchase $600 of foreign assets and foreign citizens purchase $300 of its assets. What is national saving?

Correct Answer
verified

If the demand for net exports rises, which of the following happens in the open-economy macroeconomic model?

Correct Answer
verified

In the market for foreign-currency exchange, the source of the supply of dollars is _____. The supply curve is _ because _________.

Correct Answer
verified
net capital outflow,...
View Answer

An increase in the U.S. government budget deficit shifts the

Correct Answer
verified

Figure 32-5 Refer to this diagram of the open-economy macroeconomic model to answer the questions below. -Refer to Figure 32-4. Suppose that the government goes from a budget surplus to a budget deficit. The effects of the change could be illustrated by

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified
Greece's n...
View Answer

If at a given exchange rate U.S. citizens wanted to buy more foreign bonds

Correct Answer
verified

If after a country experiences capital flight, people become more confident about the safety of its assets, then in that country

Correct Answer
verified

If the U.S. government imposes a quota on imports of jet planes, then

Correct Answer
verified

The value of net exports equals the value of

Correct Answer
verified

Exam 14: A Macroeconomic Theory of the Open Economy

Suppose that U.S. savers decide that holding Brazilian assets has become riskier. What happens to U.S. net capital outflow? What happens to the U.S. real interest rate?

Correct AnswerverifiedU.S. net capital outflow decre...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

In an open economy, the demand for loanable funds comes from

Correct AnswerverifiedShow Answer

The slope of the supply of loanable funds is based on an increase in

Correct AnswerverifiedShow Answer

If there is a shortage of loanable funds, then

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

Other things the same, a higher real interest rate raises the quantity of

Correct AnswerverifiedShow Answer

Other things the same, as the real interest rate rises

Correct AnswerverifiedShow Answer

An increase in a country's budget surplus shifts its

Correct AnswerverifiedShow Answer

A country has domestic investment of $200 billion. Its citizens purchase $600 of foreign assets and foreign citizens purchase $300 of its assets. What is national saving?

Correct AnswerverifiedShow Answer

If the demand for net exports rises, which of the following happens in the open-economy macroeconomic model?

Correct AnswerverifiedShow Answer

In the market for foreign-currency exchange, the source of the supply of dollars is _________. The supply curve is _________ because _____________.

Correct Answerverifiednet capital outflow,...View AnswerShow Answer

An increase in the U.S. government budget deficit shifts the

Correct AnswerverifiedShow Answer

Figure 32-5 Refer to this diagram of the open-economy macroeconomic model to answer the questions below. -Refer to Figure 32-4. Suppose that the government goes from a budget surplus to a budget deficit. The effects of the change could be illustrated by

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedGreece's n...View AnswerShow Answer

If at a given exchange rate U.S. citizens wanted to buy more foreign bonds

Correct AnswerverifiedShow Answer

If after a country experiences capital flight, people become more confident about the safety of its assets, then in that country

Correct AnswerverifiedShow Answer

If the U.S. government imposes a quota on imports of jet planes, then

Correct AnswerverifiedShow Answer

The value of net exports equals the value of

Correct AnswerverifiedShow Answer

Correct Answer
verified
U.S. net capital outflow decre...
View Answer

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verified

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Correct Answer
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Correct Answer
verified

In the market for foreign-currency exchange, the source of the supply of dollars is _____. The supply curve is _ because _________.

Correct Answer
verified
net capital outflow,...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Greece's n...
View Answer

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