1、Chapter 32A Macroeconomic Theory of the Open EconomyTRUE/FALSE1.Over the past two decades, the United States has persistently exported more goods and services than it has imported.ANS:FDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:U.S. tradeMSC:Analytical2.Over the past two decades
2、 the U.S. has persistently had trade deficits.ANS:TDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:U.S. tradeMSC:Definitional3.The primary focus of the open-economy macroeconomic model is the determination of GDP and the price level.ANS:FDIF:1REF:32-1NAT:AnalyticLOC:International tra
3、de and financeTOP:Open-economy macroeconomic modelMSC:Definitional4.In an open economy, the supply of loanable funds comes from national saving.ANS:TDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for loanable fundsMSC:Definitional5.In an open economy, the demand for loanable
4、funds comes from both domestic investment and net capital outflow.ANS:TDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for loanable fundsMSC:Definitional6.The purchase of a capital asset adds to the demand for loanable funds only if that asset is a domestic one.ANS:FDIF:1REF:3
5、2-1NAT:AnalyticLOC:International trade and financeTOP:Market for loanable fundsMSC:Definitional7.A drop in the French real interest rate reduces French net capital outflow.ANS:FDIF:2REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Net capital outflowMSC:Applicative8.In the open-economy mac
6、roeconomic model, at the equilibrium real interest rate, the amount that people (including government) want to save exactly balances desired domestic investment.ANS:FDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for loanable fundsMSC:Definitional9.In the open-economy macroec
7、onomic model, a higher domestic interest rate reduces the quantity of loanable funds demandedANS:TDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for loanable fundsMSC:Applicative10.If the real interest rate were above the equilibrium rate, there would be a shortage of loanabl
8、e funds.ANS:FDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for loanable fundsMSC:Applicative11.Net capital outflow represents the quantity of dollars supplied in the foreign-currency exchange market.ANS:TDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market
9、for foreign-currency exchangeMSC:Definitional12.In the open-economy macroeconomic model, net exports equal the quantity of dollars demanded in the foreign-currency exchange market.ANS:TDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for foreign-currency exchangeMSC:Definitiona
10、l13.Other things the same, when the real exchange rate of the dollar appreciates, U.S. goods become more attractive to U.S. residents, but less attractive to foreign residents.ANS:FDIF:2REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for foreign-currency exchangeMSC:Analytical14.Ot
11、her things the same, a higher real exchange rate raises net exports.ANS:FDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Demand for foreign-currency exchange | Net exports | Real exchange rateMSC:Applicative15.In the open-economy macroeconomic model, the supply of dollars in the mark
12、et for foreign-currency exchange is upward sloping.ANS:FDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for foreign-currency exchangeMSC:Definitional16.In the open-economy macroeconomic model, the supply curve of currency is vertical because the quantity of currency supplied d
13、oes not depend on the real exchange rate.ANS:TDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for foreign-currency exchangeMSC:Applicative17.If the real exchange rate of the U.S. dollar were above its equilibrium level, the real exchange rate of the U.S. dollar would appreciat
14、e.ANS:FDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for foreign-currency exchangeMSC:Analytical18.In the open-economy macroeconomic model, other things the same, when a U.S. resident imports a foreign good, our model treats this as a decrease in the demand for dollars in th
15、e foreign-currency exchange market.ANS:TDIF:2REF:32-2NAT:AnalyticLOC:International trade and financeTOP:Market for foreign-currency exchangeMSC:Applicative19.The key determinant of net capital outflow is the real interest rate.ANS:TDIF:2REF:32-2NAT:AnalyticLOC:International trade and financeTOP:Net
16、capital outflowMSC:Applicative20.A higher U.S. interest rate discourages Americans from buying foreign assets and encourages foreigners to buy U.S. assets.ANS:TDIF:1REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Net capital outflowMSC:Applicative21.As the interest rate rises, it is possi
17、ble that net capital outflow could move from a positive to a negative value.ANS:TDIF:1REF:32-2NAT:AnalyticLOC:International trade and financeTOP:Net capital outflowMSC:Definitional22.In the open-economy macroeconomic model, net capital outflow links the markets for loanable funds and foreign-currenc
18、y exchange.ANS:TDIF:1REF:32-2NAT:AnalyticLOC:International trade and financeTOP:Open-economy macroeconomic modelMSC:Definitional23.In the open-economy macroeconomic model, the real exchange rate does not affect net capital outflow.ANS:TDIF:2REF:32-2NAT:AnalyticLOC:International trade and financeTOP:
19、Net capital outflowMSC:Definitional24.Because depreciation of the real exchange rate of the dollar increases U.S. net exports, the demand curve for dollars in the foreign-currency exchange market is downward sloping.ANS:TDIF:2REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for fore
20、ign-currency exchangeMSC:Interpretive25.Other things the same, when a Greek company imports bicycles from the U.S., the open-economy macroeconomic model treats this transaction as an increase in the quantity of dollars demanded in the U.S. foreign-currency exchange market.ANS:TDIF:2REF:32-2NAT:Analy
21、ticLOC:International trade and financeTOP:Market for foreign-currency exchangeMSC:Interpretive26.When the government budget deficit increases, national saving increases.ANS:FDIF:1REF:32-3NAT:AnalyticLOC:International trade and financeTOP:Budget deficit | Market for loanable fundsMSC:Definitional27.A
22、ccording to the open-economy macroeconomic model, if the U.S. government budget deficit increases, then both U.S. domestic investment and U.S. net capital outflow would decrease.ANS:TDIF:2REF:32-3NAT:AnalyticLOC:International trade and financeTOP:Budget deficit | Open-economy macroeconomic modelMSC:
23、Analytical28.According to the open-economy macroeconomic model, a decrease in the U.S. government budget deficit increases U.S. net capital outflow, causes the real exchange rate of the dollar to depreciate, and increases U.S. net exports.ANS:TDIF:2REF:32-3NAT:AnalyticLOC:International trade and fin
24、anceTOP:Budget surplus | Open-economy macroeconomic modelMSC:Analytical29.According to the open-economy macroeconomic model, if the United States moved from a government budget deficit to a government budget surplus, U.S. real interest rates would increase and the real exchange rate of the U.S. doll
25、ar would appreciate.ANS:FDIF:2REF:32-3NAT:AnalyticLOC:International trade and financeTOP:Open-economy macroeconomic modelMSC:Analytical30.In the 1980s, both the U.S. government budget and U.S. trade deficits increased.ANS:TDIF:1REF:32-3NAT:AnalyticLOC:International trade and financeTOP:U.S. tradeMSC
26、:Definitional31.When a country imposes a trade restriction, the real exchange rate of that countrys currency appreciates.ANS:TDIF:1REF:32-3NAT:AnalyticLOC:International trade and financeTOP:Trade policy | Open-economy macroeconomic modelMSC:Applicative32.In the long run, import quotas increase net e
27、xports.ANS:FDIF:2REF:32-3NAT:AnalyticLOC:International trade and financeTOP:Import quotasMSC:Analytic33.In the long run import quotas do not affect the size of net exports.ANS:TDIF:2REF:32-3NAT:AnalyticLOC:International trade and financeTOP:Trade policy, Open-economy macroeconomic modelMSC:Definitio
28、nal34.An import quota imposed by Egypt would reduce Egyptian imports, but have no impact on Egyptian exports.ANS:FDIF:2REF:32-3NAT:AnalyticLOC:International trade and financeTOP:Trade policy | Open-economy macroeconomic modelMSC:Analytical35.Although trade policies do not affect a countrys overall t
29、rade balance, they do affect specific firms and industries.ANS:TDIF:2REF:32-3NAT:AnalyticLOC:International trade and financeTOP:Microeconomic effects of trade policies | Import quotasMSC:Applicative36.If policymakers impose import restrictions on clothing, the U.S. trade deficit will shrink.ANS:FDIF
30、:2REF:32-3NAT:AnalyticLOC:International trade and financeTOP:Import quotasMSC:Applicative37.Capital flight reduces a countrys real exchange rate.ANS:TDIF:2REF:32-3NAT:AnalyticLOC:International trade and financeTOP:Capital flight | Real exchange rateMSC:Analytic38.If Argentina suffers from capital fl
31、ight, Argentinean domestic investment and Argentinean net exports will both decline.ANS:FDIF:2REF:32-3NAT:AnalyticLOC:International trade and financeTOP:Capital flight | Net exportsMSC:AnalyticalSHORT ANSWER1.Why do higher real interest rates lead to lower net capital outflow?ANS:Higher U.S. interes
32、t rates make U.S. assets look more attractive than foreign assets. Investors in the United States and other countries are likely to move funds into the United States, reducing U.S. net capital outflow.DIF:2REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Net capital outflowMSC:Analytical2.
33、State what, if anything, each of the following does to the supply or demand of loanable capital outflow increases at each interest rateb.domestic investment increases at each interest ratec.the government deficit increasesd.private saving increasesANS:a.the demand for loanable funds increasesb.the
34、demand for loanable funds increasesc.the supply of loanable funds decreasesd.the supply of loanable funds increasesDIF:2REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for loanable fundsMSC:Analytical3.Suppose that U.S. investors decide that investment opportunities in African coun
35、tries have improved. What happens to U.S. net capital outflow? What happens to the U.S. real interest rate?ANS:U.S. net capital outflow will increase. The increase in net capital outflow increases the U.S. demand for loanable funds, which increases U.S. interest rates.DIF:2REF:32-1NAT:AnalyticLOC:In
36、ternational trade and financeTOP:Net capital outflowMSC:Applicative4.Explain how the relation between the real exchange rate and net exports explains the downward slope of the demand for foreign-currency exchange curve.ANS:When the U.S. real exchange rate appreciates, U.S. goods become more expensiv
37、e relative to foreign goods. This induces U.S. citizens to buy more goods overseas, which increases U.S. imports. The appreciation also induces foreign citizens to buy fewer U.S. goods, so U.S. exports fall. The decline in exports and increase in imports decreases net exports, and so the demand for
38、U.S. dollars declines. The inverse relation between the exchange rate and the quantity of U.S. dollars demanded in the foreign-currency exchange market is represented by the downward-sloping demand curve.DIF:2REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Market for foreign-currency exch
39、angeMSC:Interpretive5.How are the identities S = NCO + I and NCO = NX related to the foreign currency exchange market and the loanable funds market?ANS:S is national saving, which is the source of loanable funds supply. NCO + I is net capital outflow plus domestic investment, which is the source of
40、demand in the loanable funds market. NCO is the source of supply in the foreign-currency exchange market. NX is net exports, which is the source of demand in the foreign-currency exchange market.DIF:2REF:32-1NAT:AnalyticLOC:International trade and financeTOP:Saving in an open economy | Open-economy
41、macroeconomic modelMSC:Interpretive6.Explain how an increase in the demand for capital goods in the U.S. can lead to a change in the U.S. exchange rate.ANS:An increase in demand for capital goods is an increase in investment demand. As investment demand increases, the demand for loanable funds shift
42、s right. This shift leads to an increase in the real interest rate. The increase in the interest rate reduces net capital outflow. The reduction in net capital outflow shifts the supply of currency in the foreign exchange market to the left, raising the real exchange rate.DIF:2REF:32-1NAT:AnalyticLO
43、C:International trade and financeTOP:Saving in an open economy | Open-economy macroeconomic modelMSC:Interpretive7.Suppose that U.S. citizens start saving more. What does this imply about the supply of loanable funds and the equilibrium real interest rate? What happens to the real exchange rate?ANS:
44、The supply of loanable funds increases, and the equilibrium real interest rate falls. Because of the lower interest rate, U.S. net capital outflow rises. This increase makes the supply of dollars shift to the right, and the real exchange rate of the dollar depreciates.DIF:2REF:32-3NAT:AnalyticLOC:In
45、ternational trade and financeTOP:Saving policyMSC:Analytical8.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.ANS:The supply of Turkish loanable funds curve shifts left becaus
46、e the government deficit decreases national saving. As the supply of loanable funds shifts left, the Turkish interest rate rises. This increase in the interest rate causes the quantity of Turkish net capital outflow to fall, which means that people will be supplying fewer Turkish dinar in order to purchase foreign assets. So the supply of dinar in the foreign-currency exchange market shifts left.DIF:2REF:32-3NAT:AnalyticLOC:International trade and financeTOP:Bud
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