Filters
Question type
Study Flashcards

What is the supply and demand for loanable funds equation in an open economy?


A) S = I
B) S = NX + NCO
C) S = NCO
D) S = I + NCO

Correct Answer

verifed

verified

Which of the following is included in the demand for dollars in the market for foreign-currency exchange in the open-market macroeconomic model?


A) A firm in Kenya wants to buy furniture from a Canadian firm.
B) A Japanese bank desires to purchase Canadian government securities.
C) A Canadian citizen wants to buy a bond issued by a Moroccan corporation.
D) A Canadian citizen exchanges dollars for euros.

Correct Answer

verifed

verified

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 event is contrary to what the open-economy macroeconomic model predicts concerning the effects of an increase in the budget deficit?


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.

Correct Answer

verifed

verified

If Canadian firms decide to invest more domestically at each interest rate, which statement would best describe the results?


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

Correct Answer

verifed

verified

Explain how the relation between the real exchange rate and net exports explains the downward slope of the demand curve for foreign-currency exchange.

Correct Answer

verifed

verified

When the Canadian real exchange rate app...

View Answer

Mexico suffered from capital flight in 1994. What happened to Mexico's net exports?


A) They decreased.
B) They did not change.
C) They increased.
D) They decreased until the peso appreciated; then they increased.

Correct Answer

verifed

verified

Mexico suffered from capital flight in 1994. What happened to Mexico's net capital outflow and net exports?


A) The net capital outflow and net exports decreased.
B) The net capital outflow and net exports increased.
C) The net capital outflow increased while net exports decreased.
D) The net capital outflow decreased while net exports increased.

Correct Answer

verifed

verified

Suppose we measure Canada's net capital outflow by what Statistics Canada calls "net international investment position," and we approximate the real exchange rate of the dollar by the price of the Canadian dollar in terms of U.S. dollars. The following table gives some fictitious data on these two variables. a. What does our open-economy macroeconomic model predict with regard to the relationship between net capital outflow and the real exchange rate? b. Do you find evidence in the data to support the theory? c. If you find discrepancies between the data and the theory, what could cause them? Suppose we measure Canada's net capital outflow by what Statistics Canada calls net international investment position, and we approximate the real exchange rate of the dollar by the price of the Canadian dollar in terms of U.S. dollars. The following table gives some fictitious data on these two variables. a. What does our open-economy macroeconomic model predict with regard to the relationship between net capital outflow and the real exchange rate? b. Do you find evidence in the data to support the theory? c. If you find discrepancies between the data and the theory, what could cause them?

Correct Answer

verifed

verified

a. Our macro model predicts an inverse r...

View Answer

Suppose that Canada places higher tariffs on imports of ice cream. What would be the most likely result?


A) The tariffs would reduce imports into Canada, which would cause Canadian net exports to rise.
B) The tariffs would reduce imports into Canada, which would cause the net supply of dollars in the foreign exchange market to rise.
C) The tariffs would reduce imports of ice cream into Canada, but would reduce Canadian exports of other goods by an equal amount.
D) The tariffs would reduce imports of ice cream into Canada, but would increase Canadian exports of other goods by an equal amount.

Correct Answer

verifed

verified

How does an increase in the Canadian government budget deficit change the graph representing the Canadian market for loanable funds?


A) The supply of loanable funds curve shifts to the right.
B) The supply of loanable funds curve shifts to the left.
C) The demand for loanable funds shifts to the right.
D) The demand for loanable funds shifts to the left.

Correct Answer

verifed

verified

Which statement is the most accurate description of trade policy?


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.

Correct Answer

verifed

verified

If the government started with a budget deficit and moved to a surplus, which statement would best describe the effects of these changes?


A) Domestic investment would rise, and the trade balance would move towards surplus.
B) Domestic investment would rise, and the trade balance would move towards deficit.
C) Domestic investment would fall, and the trade balance would move towards surplus.
D) Domestic investment would fall, and the trade balance would move towards deficit.

Correct Answer

verifed

verified

Suppose a foreign real estate company wants to build a number of new resort condominiums in Canada. How does this affect the Canadian market for loanable funds?


A) The supply of loanable funds increases.
B) The demand for loanable funds increases.
C) The supply of loanable funds decreases.
D) The demand for loanable funds decreases.

Correct Answer

verifed

verified

What term refers to a large and sudden reduction in the demand for assets located in a country?


A) purchasing-power parity
B) capital flight
C) crowding out
D) capital mobility

Correct Answer

verifed

verified

If a government increases its budget deficit, which statement would best describe the consequences?


A) Interest rates and domestic investment rise.
B) Interest rates and domestic investment fall.
C) Interest rates rise, and domestic investment falls.
D) Interest rates fall, and domestic investment rises.

Correct Answer

verifed

verified

Figure 13-1 Figure 13-1 -Refer to the FigurE13-1. If the world interest rate equals 6 percent, what is the net capital outflow? A) -$4000 B) -$2000 C) $2000 D) $4000 -Refer to the FigurE13-1. If the world interest rate equals 6 percent, what is the net capital outflow?


A) -$4000
B) -$2000
C) $2000
D) $4000

Correct Answer

verifed

verified

What are the effects of an increase in the supply of loanable funds?


A) Net capital outflow and the real exchange rate both increase.
B) Net capital outflow and the real exchange rate both decrease.
C) Net capital outflow increases, and the real exchange rate decreases.
D) Net capital outflow decreases, and the real exchange rate increases.

Correct Answer

verifed

verified

In the open-economy macroeconomic model, what would make Panama's net capital outflow decrease?


A) a decrease in Canadian interest rates
B) a decrease in Panamanian interest rates
C) an appreciation of the Panamanian balboa
D) an increase in Panama's net exports

Correct Answer

verifed

verified

What happens in Canada when the Canadian government imposes an import quota on Gouda cheese?


A) the real interest rate increases
B) the real interest rate decreases
C) the real exchange rate increases
D) the real exchange rate decreases

Correct Answer

verifed

verified

What will decrease Canadian net capital outflow?


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 gains

Correct Answer

verifed

verified

Showing 141 - 160 of 195

Related Exams

Exam 1

Ten Principles of Economics

218 Questions

Exam 2

Thinking Like an Economist

239 Questions

Exam 3

Interdependence and the Gains From Trade

202 Questions

Exam 4

The Market Forces of Supply and Demand

347 Questions

Exam 5

Measuring a Nations Income

169 Questions

Exam 6

Measuring the Cost of Living

173 Questions

Exam 7

Production and Growth

182 Questions

Exam 8

Saving, Investment, and the Financial System

214 Questions

Exam 9

Unemployment and Its Natural Rate

194 Questions

Exam 10

The Monetary System

188 Questions

Exam 11

Money Growth and Inflation

196 Questions

Exam 12

Open-Economy Macroeconomics: Basic Concepts

218 Questions

Exam 14

Aggregate Demand and Aggregate Supply

256 Questions

Exam 15

The Influence of Monetary and Fiscal Policy on Aggregate Demand

223 Questions

Exam 16

The Short-Run Tradeoff Between Inflation and Unemployment

205 Questions

Exam 17

Five Debates Over Macroeconomic Policy

111 Questions

Show Answer