FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 32: A Macroeconomic Theory of the Open Economy

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

A U.S. grocery chain borrows money to buy a warehouse in Ohio and another in Italy. Borrowing for which warehouse(s) is included in the demand for loanable funds in the United States?

A) Both the one in Ohio and the one in Italy.
B) Only the one in Ohio.
C) Only the one in Italy.
D) Neither the one in Ohio nor the one in Italy.

E) None of the above
F) B) and C)

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

In the open-economy macroeconomic model, the price that balances supply and demand in the market for foreign-currency exchange is the

A) nominal exchange rate.
B) nominal interest rate.
C) real exchange rate.
D) real interest rate.

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

Correct Answer

verified

Show Answer

Question 33

Essay

Review LaterAdd Note

What happens to domestic investment as the real interest rate rises? Explain your answer.

An increase in a country's real interest rate reduces that country's net capital outflow.

In the open-economy macroeconomic model, other things the same, an increase in the exchange rate raises the quantity of dollars supplied in the market for foreign-currency exchange.

At the equilibrium real interest rate in the open-economy macroeconomic model,

Other things the same, in the open-economy macroeconomic model, if the real exchange rate rises, the

In the open economy model, the supply of loanable funds comes from national saving and net capital outflow.

Other things the same, a decrease in the U.K. real interest rate induces

Explain how a decrease in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate.

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

Over the past two decades, the U.S. has persistently exported more goods and services than it has imported.

In the open-economy macroeconomic model, at the equilibrium real interest rate, the amount that people (including government) want to save exactly balances desired domestic investment.

Scenario 32-4 ​ 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 Scenario 32-4. Because of depositors reactions what happened to net capital outflow?

In an open economy, the source for the demand for loanable funds is

A large and sudden movement of funds out of a country is called

An import quota imposed by the U.S. would reduce U.S. imports, but have no impact on U.S. exports.

If people in the U.S. choose to save a smaller percentage of income, what will happen to the interest rate, net capital outflow, the exchange rate, and net exports?

An increase in the government budget deficit shifts the supply of domestic currency in the market for foreign exchange to the right.

In the open-economy macroeconomic model, the market for loanable funds equates national saving with