27 Cards in this Set
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c. S = I + NCO
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51. In the open-economy macroeconomic model, the market for loanable funds identity can be written as
a. S = I
b. S = NCO
c. S = I + NCO
d. S + I = NCO
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national saving. domestic investment + net capital outflow.
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52. In the open-economy macroeconomic model, the supply of loanable funds equals
a. _________ ______. The demand for loanable funds comes from ________ __________ + ______ _______ _______ .
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firms will want to borrow more, which increases the quantity of loanable funds demanded.
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53. Other things the same, if the interest rate falls, then
a. firms will want to borrow ______ , which _______ the quantity of loanable funds ________.
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encourages both
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54. An increase in real interest rates in the United States
b. _____________ _______ U.S. and foreign residents to buy U.S. assets.
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b. the real interest rate falls and the equilibrium quantity of loanable funds rises.
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55. If the supply of loanable funds shifts right, then
b. the real interest rate _____ and the equilibrium quantity of loanable funds _______.
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b. The demand for loanable funds shifts left.
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56. Which of the following would make both the equilibrium real interest rate and the equilibrium quantity of loanable funds decrease?
b. The demand for loanable funds shifts _____.
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a. net capital outflow is positive, so foreign assets bought by Americans are greater than American assets bought by foreigners.
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57. If net exports are positive, then
a. net capital outflow is ______ , so foreign assets bought by Americans are _____ than American assets bought by foreigners.
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b. 1, 200
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58. Refer to Figure 19-2. What are the equilibrium values of the real exchange rate and net exports?
a. 1.4, 100
b. 1, 200
c.
6, 300
d. None of the above are correct.
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d. shortage of 100 so the real exchange rate will rise.
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59. Refer to Figure 19-2. If the real exchange rate is .6, then there is a
d. _____ of 100 so the real exchange rate will ____ .
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c. supply curve in panel a.
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60. Refer to Figure 19-3. National saving is represented by the
a. demand curve in panel a.
b. demand curve in panel c.
c. supply curve in panel a.
d. supply curve in panel c.
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a. demand curve in panel a.
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61. Refer to Figure 19-3. Domestic investment plus net capital outflow is represented by the
a. demand curve in panel a.
b. demand curve in panel c.
c. supply curve in panel a.
d. None of the above is correct.
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c. net capital outflow + domestic investment = national saving.
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62. Refer to Figure 19-3. At an interest rate of 3 percent, the diagram indicates that
c. net capital outflow + domestic investment = ______ _______
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b. net capital outflow declines.
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63. Refer to Figure 19-3. The curve in panel b shows that as the interest rate rises,
a. domestic investment declines.
b. net capital outflow declines.
c. net capital outflow and domestic investment decline.
d. None of the above is correct.
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d. the supply curve in panel c.
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64. Refer to Figure 19-3. Which curve is determined by net capital outflow only?
a. the demand curve in panel a.
b. the demand curve in panel c.
c. the supply curve in panel a.
d. the supply curve in panel c.
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b. the demand curve in panel c.
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65. Refer to Figure 19-3. Which curve shows the relation between the exchange rate and net exports?
a. the demand curve in panel a.
b. the demand curve in panel c.
c.the supply curve in panel a.
d. the supply curve in panel c.
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c. c to b.
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66. Refer to Figure 19-5. The initial effect of an increase in the budget deficit in the loanable funds market is illustrated as a move from
a. a to b.
b. a to c.
c. c to b.
d. c to d.
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d. i.
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67. Refer to Figure 19-5. In the market for foreign-currency exchange, the effects of an increase in the budget surplus is illustrated as a move from g to
a. e.
b. f.
c. h.
d. i.
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c. r3 and E4.
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68. Refer to Figure 19-5. Starting from r2 and E3, an increase in the budget deficit can be illustrated as a move to
a. r1 and E4.
b. r1 and E2.
c. r3 and E4.
d. r3 and E2.
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d. r1 and E2.
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69. Refer to Figure 19-5. Starting from r2 and E3, an increase in the budget surplus can be illustrated as a move to
a. r3 and E4.
b. r3 and E2.
c. r1 and E4.
d. r1 and E2.
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c. shifting the demand curve from the left to the right in panel c.
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70. Refer to Figure 19-6. Which of the following shifts show the effects of an import quota?
a. shifting the middle supply curve in panel c to the one to its left.
b. shifting the demand curve from the right to the left in panel c.
c. shifting the demand curve from the left to the ri…
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a. stay at r2.
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71. Refer to Figure 19-6. If the interest rate were initially at r2 and an import quota were imposed, the interest rate would
a. stay at r2.
b. decrease because supply would shift right.
c. increase because supply would shift left.
d. decrease because demand would shift left.
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d. depreciate to E2.
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72. Refer to Figure 19-6. If the economy were initially in equilibrium at r2 and E3 and the government removed import quotas, the exchange rate would
a. appreciate to E4.
b. appreciate to E2.
c. depreciate to E1.
d. depreciate to E2.
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b. g
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73. Refer to Figure 19-6. If equilibrium were at point h and the government imposed quotas on imports of toys and textiles the equilibrium would move to
a. e
b. g
c. i
d. j
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d. None of the above is correct
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74. Refer to Figure 19-6. If the economy were originally in equilibrium at a and g and the government removed import quotas on toys and textiles the economy would move to
a. b and e.
b. c and h.
c. d and i.
d. None of the above is correct.
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d. All of the above shifts are consistent with the effects of capital flight.
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75. Refer to Figure 19-7. Supposing that the Mexican economy starts at r0 and E1. Which of the following is consistent with the effects of capital flight?
a. the shift from D0 to D1 in Panel A
b. the shift from NCO0 to NCO1 in Panel B
c. the shift from S0 to S1 in Panel C
d. All of …
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d. The real exchange rate of the peso depreciates from E1 to E0.
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76. Refer to Figure 19-7. Which of the following is consistent with capital flight from Mexico?
d. The real exchange rate of the peso ________ from E__ to E___
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b. r1 and E0
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77. Refer to Figure 19-7. Suppose the Mexican economy starts at r0 and E1. Which of the following new equilibrium is consistent with capital flight?
a. ro and E0
b. r1 and E0
c. r1 and E1
d. None of the above is correct
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EC 111: Exam 3