Question 1

Which of the following best defines a trade policy?

Accepted Answer

A)  It is a government policy directed toward the goal of improving the tradeoff between equity and efficiency.
B)  It is a government policy that directly influences the quantity of goods and services that a country imports or exports.
C)  It is a government policy directed toward the goal of increasing domestic trade.
D)  It is a government policy toward trade unions.E) A) and B)
F) A) and C)

Question 2

Suppose that the Turkish government budget deficit increases.What curves in the open-economy macroeconomic model shift? Explain why each curve shifts the direction it does.

Accepted Answer

The supply of Turkish loanable funds cur...

Question 3

What changes will a shortage of loanable funds induce in a savings-investment diagram in a closed economy?

Accepted Answer

A)  The demand for loanable funds curve will shift right, so the interest rate will rise.
B)  The supply of loanable funds curve will shift left, so the interest rate will fall.
C)  There will be no shifts of the curves, but the interest rate will rise.
D)  There will be no shifts of the curves, but the interest rate will fall.E) A) and B)
F) A) and D)

Question 4

Following an increase in the Canadian budget deficit,it has been observed that the trade deficit has increased,the Canadian real exchange rate has appreciated,the net capital outflow has decreased,and the interest rate has decreased.Which one of these events is contrary to what the open-economy macroeconomic model predicts concerning the effects of an increase in the budget deficit?

Accepted Answer

A)  The trade deficit has increased.
B)  The real exchange rate has appreciated.
C)  The net capital outflow has decreased.
D)  The interest rate has decreased.E) All of the above
F) A) and B)

Question 5

The 1998 default by the Russian government had results that were predictable using the textbook model.Which of the following best describes what happened?

Accepted Answer

A)  The event increased Russian interest rates and net exports.
B)  The event reduced Russian interest rates and net exports.
C)  The event increased Russian interest rates and reduced Russian net exports.
D)  The event reduced Russian interest rates and increased Russian net exports.E) C) and D)
F) A) and C)

Question 6

Other things the same,when the real exchange rate of the dollar appreciates,Canadian goods become more attractive to Canadian residents,but less attractive to foreign residents.

Accepted Answer

A) True 
 B)False

Question 7

When a country suffers from capital flight,which of the following best explains the effects?

Accepted Answer

A)  The supply for loanable funds shifts right, and the interest rate increases.
B)  The supply for loanable funds shifts right, and the interest rate decreases.
C)  The supply for loanable funds shifts left, and the interest rate increases.
D)  The supply for loanable funds shifts left, and the interest rate decreases.E) B) and C)
F) None of the above

Question 8

Suppose Canada imposes an import quota on steel.Which of the following describes the most likely effects of this quota?

Accepted Answer

A)  Canadian exports increase, and the dollar appreciates.
B)  Canadian exports increase, and the dollar depreciates.
C)  Canadian exports decrease, and the dollar appreciates.
D)  Canadian exports decrease, and the dollar depreciates.E) C) and D)
F) A) and C)

Question 9

What macroeconomic measures are considered fixed in our open-economy model?

Accepted Answer

A)  the exchange rate, GDP, and the world real interest rate
B)  the exchange rate, net capital outflow, and the inflation rate
C)  net capital outflow, the inflation rate, and the price level
D)  GDP, the price level, and the world real interest rateE) None of the above
F) B) and C)

Question 10

How does the supply or demand for loanable funds shift when a country increases its budget deficit?

Accepted Answer

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

Question 11

Which of the following are the main elements of our open-economy macroeconomic model?

Accepted Answer

A)  the market for loanable funds, the foreign-currency market, and the price level
B)  the market for goods and services, the price level, and GDP
C)  the market for goods and services, net capital outflow, and GDP
D)  the market for loanable funds, net capital outflow, and the foreign-currency marketE) B) and C)
F) None of the above

Question 12

State what,if anything,each of the following does to the supply or demand of loanable funds.
a.Net capital outflow increases at each interest rate.
b.Domestic investment increases at each interest rate.
c.The government deficit increases.
d.Private saving increases.

Accepted Answer

a.The demand for loanable fund...

Question 13

Which of the following will decrease Canadian net capital outflow?

Accepted Answer

A)  capital flight from Canada
B)  an increase in the government budget deficit
C)  the imposition of Canadian government import quotas
D)  a decrease in the tax on capital gainsE) A) and B)
F) A) and C)

Question 14

Which of the following best predicts the effects of an increase in the supply of loanable funds?

Accepted Answer

A)  The interest rate and the real exchange rate both increase.
B)  The interest rate and the real exchange rate both decrease.
C)  The interest rate increases, and the real exchange rate decreases.
D)  The interest rate decreases, and the real exchange rate increases.E) All of the above
F) C) and D)

Question 15

If Argentina suffers from capital flight,Argentinean domestic investment will fall and Argentinean net exports will increase.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following does the open-economy macroeconomic model take as given?

Accepted Answer

A)  GDP, but not the price level
B)  the price level, but not GDP
C)  both the price level and GDP
D)  the exchange rateE) All of the above
F) None of the above

Question 17

The law of one price assumes that trade take place at no cost,so that prices across borders equalize.The result of this assumption is that the real interest rate is always constant.
a)Draw a graph to show the demand for dollars in the foreign-currency exchange market under the assumption that purchasing-power parity holds.
b)On the other hand,our model of real exchange rate determination shows a downward sloping demand-for-dollars curve.What could determine how steep or flat the demand for dollars is?

Accepted Answer

a) The demand for dollars,which coincide...

Question 18

If Canadian citizens decide to save a larger fraction of their incomes,which of the following best identifies the effects?

Accepted Answer

A)  The real interest rate decreases, the real exchange rate of the dollar depreciates, and Canadian net capital outflow increases.
B)  The real interest rate decreases, the real exchange rate of the dollar appreciates, and Canadian net capital outflow decreases.
C)  The real interest rate increases, the real exchange rate of the dollar appreciates, and Canadian net capital outflow decreases.
D)  The real interest rate increases, the real exchange rate of the dollar depreciates, and Canadian net capital outflow increases.E) A) and B)
F) A) and C)

Question 19

Figure 13-2
 
-Refer to the FigurE₁3-2.Suppose that these diagrams refer to Canada.Which of the following shifts show the effect of a voluntary export restriction by the government of China?

Accepted Answer

A)  a shift from D₁ to D₂
B)  a shift from D₀ to D₁
C)  a shift from D₀ to D₂
D)  a shift from D₁ to D₀E) B) and C)
F) A) and D)

Question 20

When the government increases the government budget deficit,national saving decreases.

Accepted Answer

A) True 
 B)False

Exam 13: A Macroeconomic Theory of the Small Open Economy

How does the supply or demand for loanable funds shift when a country increases its budget deficit?

Correct Answer
verified

Suppose that the Turkish government budget deficit increases.What curves in the open-economy macroeconomic model shift? Explain why each curve shifts the direction it does.

Correct Answer
verified
The supply of Turkish loanable funds cur...
View Answer

Correct Answer
verified
a) The demand for dollars,which coincide...
View Answer

Correct Answer
verified

Which of the following will decrease Canadian net capital outflow?

Correct Answer
verified

Which of the following best predicts the effects of an increase in the supply of loanable funds?

Correct Answer
verified

What macroeconomic measures are considered fixed in our open-economy model?

Correct Answer
verified

Suppose Canada imposes an import quota on steel.Which of the following describes the most likely effects of this quota?

Correct Answer
verified

State what,if anything,each of the following does to the supply or demand of loanable funds. a.Net capital outflow increases at each interest rate. b.Domestic investment increases at each interest rate. c.The government deficit increases. d.Private saving increases.

Correct Answer
verified
a.The demand for loanable fund...
View Answer

Figure 13-2 -Refer to the FigurE₁3-2.Suppose that these diagrams refer to Canada.Which of the following shifts show the effect of a voluntary export restriction by the government of China?

Correct Answer
verified

The 1998 default by the Russian government had results that were predictable using the textbook model.Which of the following best describes what happened?

Correct Answer
verified

If Canadian citizens decide to save a larger fraction of their incomes,which of the following best identifies the effects?

Correct Answer
verified

Other things the same,when the real exchange rate of the dollar appreciates,Canadian goods become more attractive to Canadian residents,but less attractive to foreign residents.

Correct Answer
verified

When a country suffers from capital flight,which of the following best explains the effects?

Correct Answer
verified

Which of the following best defines a trade policy?

Correct Answer
verified

If Argentina suffers from capital flight,Argentinean domestic investment will fall and Argentinean net exports will increase.

Correct Answer
verified

Which of the following does the open-economy macroeconomic model take as given?

Correct Answer
verified

When the government increases the government budget deficit,national saving decreases.

Correct Answer
verified

Which of the following are the main elements of our open-economy macroeconomic model?

Correct Answer
verified

What changes will a shortage of loanable funds induce in a savings-investment diagram in a closed economy?

Correct Answer
verified

Exam 13: A Macroeconomic Theory of the Small Open Economy

How does the supply or demand for loanable funds shift when a country increases its budget deficit?

Correct AnswerverifiedShow Answer

Suppose that the Turkish government budget deficit increases.What curves in the open-economy macroeconomic model shift? Explain why each curve shifts the direction it does.

Correct AnswerverifiedThe supply of Turkish loanable funds cur...View AnswerShow Answer

Correct Answerverifieda) The demand for dollars,which coincide...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following will decrease Canadian net capital outflow?

Correct AnswerverifiedShow Answer

Which of the following best predicts the effects of an increase in the supply of loanable funds?

Correct AnswerverifiedShow Answer

What macroeconomic measures are considered fixed in our open-economy model?

Correct AnswerverifiedShow Answer

Suppose Canada imposes an import quota on steel.Which of the following describes the most likely effects of this quota?

Correct AnswerverifiedShow Answer

State what,if anything,each of the following does to the supply or demand of loanable funds. a.Net capital outflow increases at each interest rate. b.Domestic investment increases at each interest rate. c.The government deficit increases. d.Private saving increases.

Correct Answerverifieda.The demand for loanable fund...View AnswerShow Answer

Figure 13-2 -Refer to the FigurE₁3-2.Suppose that these diagrams refer to Canada.Which of the following shifts show the effect of a voluntary export restriction by the government of China?

Correct AnswerverifiedShow Answer

The 1998 default by the Russian government had results that were predictable using the textbook model.Which of the following best describes what happened?

Correct AnswerverifiedShow Answer

If Canadian citizens decide to save a larger fraction of their incomes,which of the following best identifies the effects?

Correct AnswerverifiedShow Answer

Other things the same,when the real exchange rate of the dollar appreciates,Canadian goods become more attractive to Canadian residents,but less attractive to foreign residents.

Correct AnswerverifiedShow Answer

When a country suffers from capital flight,which of the following best explains the effects?

Correct AnswerverifiedShow Answer

Which of the following best defines a trade policy?

Correct AnswerverifiedShow Answer

If Argentina suffers from capital flight,Argentinean domestic investment will fall and Argentinean net exports will increase.

Correct AnswerverifiedShow Answer

Which of the following does the open-economy macroeconomic model take as given?

Correct AnswerverifiedShow Answer

When the government increases the government budget deficit,national saving decreases.

Correct AnswerverifiedShow Answer

Which of the following are the main elements of our open-economy macroeconomic model?

Correct AnswerverifiedShow Answer

What changes will a shortage of loanable funds induce in a savings-investment diagram in a closed economy?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The supply of Turkish loanable funds cur...
View Answer

Correct Answer
verified
a) The demand for dollars,which coincide...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified
a.The demand for loanable fund...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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