Question 1

When the U.S.real interest rate falls,purchasing U.S.assets becomes

Accepted Answer

A)  less attractive and so U.S.net capital outflow rises.
B)  less attractive and so U.S.net capital outflow falls.
C)  more attractive and so U.S.net capital outflow rises.
D)  more attractive and so U.S.net capital outflow falls.E) None of the above
F) B) and D)

Question 2

Other things the same,if the Japanese real interest rate were to increase,Japanese net capital outflow

Accepted Answer

A)  and net capital outflow of other countries would rise.
B)  and net capital outflow of other countries would fall.
C)  would rise,while net capital outflow of other countries would fall.
D)  would fall,while net capital outflow of other countries would rise.E) None of the above
F) B) and D)

Question 3

If U.S.residents chose to travel overseas less due to concerns about the safety of foreign travel,then in the open-economy macroeconomic model

Accepted Answer

A)  the demand for dollars in the market for foreign-currency exchange shifts right.
B)  the demand for dollars in the market for foreign-currency exchange shifts 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) B) and C)
F) B) and D)

Question 4

In the open-economy macroeconomic model,if investment demand increases,then

Accepted Answer

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

Question 5

Other things the same,in the open-economy macroeconomic model,which of the following would make China's net capital outflow increase?

Accepted Answer

A)  an increase in U.S.interest rates
B)  an increase in Chinese interest rates
C)  an appreciation of the Chinese yuan
D)  None of the above is correct.E) A) and C)
F) A) and B)

Question 6

Which of the following is correct concerning the open-economy macroeconomic model?

Accepted Answer

A)  The net-capital-outflow curve slopes upward.
B)  The key determinant of net capital outflow is the real exchange rate.
C)  The supply of dollars in the market for foreign-currency exchange is vertical.
D)  None of the above is correct.E) A) and D)
F) None of the above

Question 7

In the open-economy macroeconomic model,if a country's interest rate rises,its net capital outflow

Accepted Answer

A)  rises and the real exchange rate rises.
B)  falls and the real exchange rate falls.
C)  rises and the real exchange rate falls.
D)  falls and the real exchange rate rises.E) C) and D)
F) A) and B)

Question 8

Other things the same,an increase in the U.S.interest rate causes U.S.net capital outflow to

Accepted Answer

A)  rise,so supply in the market for foreign-currency exchange shifts right.
B)  rise,so demand in the market for foreign-currency exchange shifts right.
C)  fall,so supply in the market for foreign-currency exchange shifts left.
D)  fall,so demand in the market for foreign-currency exchange shifts left.E) All of the above
F) C) and D)

Question 9

In the open-economy macroeconomic model,the key determinant of net capital outflow is the

Accepted Answer

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

Question 10

In the open-economy macroeconomic model,net capital outflow rises if

Accepted Answer

A)  either the exchange rate rises or the real interest rate falls.
B)  either the exchange rate falls or the real interest rate rises.
C)  the real interest rate rises.Net capital outflow does not depend on the exchange rate.
D)  the real interest rate falls.Net capital outflow does not depend on the exchange rate.E) C) and D)
F) B) and C)

Question 11

In the open-economy macroeconomic model,the key determinant of net capital outflow is

Accepted Answer

A)  the real exchange rate.When the real exchange rate rises,net capital outflow rises.
B)  the real exchange rate.When the real exchange rate rises,net capital outflow falls.
C)  the real interest rate.When the real interest rate rises,net capital outflow rises.
D)  the real interest rate.When the real interest rate rises,net capital outflow falls.E) B) and C)
F) None of the above

Question 12

Which of the following is always correct in an open economy?

Accepted Answer

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

Question 13

A U.S.bank wants to buy euros in order to buy German bonds.In the open-economy macroeconomic model,this transaction would be part of

Accepted Answer

A)  the supply of currency in the foreign exchange market,and part of the supply of loanable funds.
B)  the demand for currency in the foreign exchange market,and part of the supply of loanable funds.
C)  the supply of currency in the foreign exchange market,and part of the demand for loanable funds.
D)  the demand for currency in the foreign exchange market,and part of the demand for loanable funds.E) A) and B)
F) B) and D)

Question 14

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) B) and C)

Question 15

The quantity of U.S.bonds foreigners want to buy is taken into account

Accepted Answer

A)  in the U.S.supply of loanable funds and the supply of dollars in the market for foreign-currency exchange.
B)  in the U.S.supply of loanable funds and the demand for dollars in the market for foreign-currency exchange.
C)  in the U.S.demand for loanable funds and the supply of dollars in the market for foreign-currency exchange.
D)  in the U.S.demand for loanable funds and the demand for dollars in the market for foreign-currency exchange.E) B) and C)
F) A) and D)

Question 16

If imports = 500 billion euros,exports = 700 billion euros,purchases of domestic assets by foreign residents = 600 billion euros,and purchases of foreign assets by domestic residents = 800 billion euros,what is the quantity of euros demanded in the market for foreign-currency exchange?

Accepted Answer

A)  1,100 billion euros
B)  600 billion euros
C)  500 billion euros
D)  200 billion eurosE) None of the above
F) All of the above

Question 17

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

Accepted Answer

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

Question 18

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

Accepted Answer

A)  the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts right.
B)  the interest rate rises and the supply of dollars in the market for foreign currency exchange shifts left.
C)  the interest rate falls and the demand for dollars in the market for foreign currency exchange shifts right.
D)  the interest rate falls and the demand for dollars in the market for foreign currency exchange shifts left.E) A) and C)
F) B) and D)

Question 19

In the open-economy macroeconomic model,a decrease in the domestic interest rate shifts

Accepted Answer

A)  demand in the market for foreign-currency exchange to the right.
B)  demand in the market for foreign-currency exchange to the left.
C)  supply in the market for foreign-currency exchange to the right.
D)  supply in the market for foreign-currency exchange to the left.E) A) and C)
F) All of the above

Question 20

Other things the same,an increase in the U.S.interest rate causes

Accepted Answer

A)  demand in the market for foreign-currency exchange to increase so the exchange rate increases.
B)  demand in the market for foreign-currency exchange to decrease so the exchange rate decreases.
C)  supply in the market for foreign-currency exchange to increase so the exchange rate decreases.
D)  supply in the market for foreign-currency exchange to decrease so the exchange rate increases.E) None of the above
F) All of the above

Exam 19: A Macroeconomic Theory of the Open Economy: Equilibrium in the Open Economy

If imports = 500 billion euros,exports = 700 billion euros,purchases of domestic assets by foreign residents = 600 billion euros,and purchases of foreign assets by domestic residents = 800 billion euros,what is the quantity of euros demanded in the market for foreign-currency exchange?

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If U.S.residents chose to travel overseas less due to concerns about the safety of foreign travel,then in the open-economy macroeconomic model

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Which of the following is correct concerning the open-economy macroeconomic model?

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In the open-economy macroeconomic model,the key determinant of net capital outflow is

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In the open-economy macroeconomic model,if a country's interest rate rises,its net capital outflow

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,if investment demand increases,then

Correct AnswerverifiedShow Answer

Other things the same,an increase in the U.S.interest rate causes U.S.net capital outflow to

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,the key determinant of net capital outflow is the

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In the open-economy macroeconomic model,a decrease in the domestic interest rate shifts

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Other things the same,an increase in the U.S.interest rate causes

Correct AnswerverifiedShow Answer

In the open-economy macroeconomic model,net capital outflow rises if

Correct AnswerverifiedShow Answer

When the U.S.real interest rate falls,purchasing U.S.assets becomes

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A U.S.bank wants to buy euros in order to buy German bonds.In the open-economy macroeconomic model,this transaction would be part of

Correct AnswerverifiedShow Answer

Which of the following is always correct in an open economy?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Other things the same,in the open-economy macroeconomic model,which of the following would make China's net capital outflow increase?

Correct AnswerverifiedShow Answer

The quantity of U.S.bonds foreigners want to buy is taken into account

Correct AnswerverifiedShow Answer

Other things the same,if the Japanese real interest rate were to increase,Japanese net capital outflow

Correct AnswerverifiedShow Answer

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