1. If the demand for loanable funds shifts left, then (Points : 1) the real interest rate and the equilibrium quantity of loanable funds both fall. the real interest rate falls and the equilibrium quantity of loanable funds rises. the real interest rate and the equilibrium quantity of loanable funds both rise. the real interest rate rises and the equilibrium quantity of loanable funds falls. 2. The theory of liquidity preference is most helpful in understanding (Points : 1) the wealth effect. the exchange-rate effect. the interest-rate effect. misperceptions theory. 3. If a country experiences capital flight, which of the following curves shift right? (Points : 1) only the demand for loanable funds. only the supply of dollars in the market for foreign-currency exchange. only the net capital outflow curve and the supply of dollars in the market for foreign currency exchange. the demand for loanable funds, the net capital outflow curve, and the supply of dollars in the market for foreign currency exchange. 4. If the U.S. imposed an import quota on apples, then which of the following would rise? (Points : 1) the U.S. real exchange rate and U.S. net exports the U.S. real exchange rate but not U.S. net exports U.S. net exports but not the U.S. real exchange rate neither the U.S. real exchange rate nor U.S. net exports 5. Figure 32-1 View Full Image Refer to Figure 32-1. The loanable funds market is in equilibrium at (Points : 1) 2 percent, $20 billion. 4 percent, $40 billion. 6 percent, $60 billion. None of the above is correct. 6. From 2001 to 2004, the U.S. government went from a budget surplus to a budget deficit. According to the open-economy macroeconomic model, this should have decreased (Points : 1) both the supply of loanable funds and the supply of dollars in the market for foreign-currency exchange. neither the supply of loanable funds nor the supply of dollars in the market for foreign-currency exchange. the supply of loanable funds but not the supply of dollars in the market for foreign-currency exchange. the supply of dollars in the market for foreign-currency exchange, but not the supply of loanable funds. 7. The sticky-wage theory of the short-run aggregate supply curve says that when the price level rises more than expected, (Points : 1) production is more profitable and employment rises. production is more profitable and employment falls. production is less profitable and employment rises. production is less profitable and employment falls. 8. Which of the following is a consistent response to an increase in the U.S. real interest rate? (Points : 1) a London bank purchases a U.S. bond instead of a Japanese bond it had considered purchasing. U.S. firms decide to buy more capital goods a U.S. citizen decides to put less money in his savings account than he had planned. All of the above are consistent. 9. According to liquidity preference theory, equilibrium in the money market is achieved by adjustments in (Points : 1) the price level. the interest rate. the exchange rate. real wealth. 10. If there is capital flight from the United States, then the demand for loanable funds (Points : 1) and the supply of dollars in the foreign-exchange market shift right. and the supply of dollars in the foreign-exchange market shift left. shifts left while the supply of dollars in the foreign-exchange market shifts right. shifts right while the supply of dollars in the foreign-exchange market shifts left. 11. If at a given real interest rate desired national saving would be $50 billion, domestic investment would be $40 billion, and net capital outflow would be $20 billion, then at that real interest rate in the loanable funds market there would be a (Points : 1) surplus. The real interest rate would rise. surplus. The real interest rate would fall. shortage. The real interest rate would rise. shortage. The interest rate would fall. 12. In recent years, the Federal Reserve has conducted policy by setting a target for the (Points : 1) size of the money supply. growth rate of the money supply. federal funds rate. discount rate. 13. If the supply of loanable funds shifts right, then (Points : 1) the real interest rate and the equilibrium quantity of loanable funds both fall. the real interest rate falls and the equilibrium quantity of loanable funds rises. the real interest rate and the equilibrium quantity of loanable funds both rise. the real interest rate rises and the equilibrium quantity of loanable funds falls. 14. Which of the following is included in the supply of U.S. dollars in the market for foreign-currency exchange in the open-economy macroeconomic model? (Points : 1) A retail outlet in Canada wants to buy handbags from a U.S. manufacturer. A U.S. bank loans dollars to Karen, a U.S. resident, who wants to purchase a car in the U.S. A U.S. based law firm wants to build a new office in Japan. All of the above are correct. 15. In the open-economy macroeconomic model, if there is a surplus in the market for foreign-currency exchange, which of the following will move the market to equilibrium? (Points : 1) the real exchange rate depreciates and net exports fall. the real exchange rate depreciates and net exports rise. the real exchange rate appreciates and net exports fall. the real exchange rate appreciates and net exports rise. 16. Which of the following is included in the demand for dollars in the market for foreign-currency exchange in the open-economy macroeconomic model? (Points : 1) A firm in Mexico wants to buy corn from a U.S. firm. A Japanese bank desires to purchase U.S. Treasury securities. An U.S. citizen wants to buy a bond issued by a Mexican corporation. All of the above are correct. 17. If a government increases its budget deficit, then domestic interest rates (Points : 1) and net exports rise. rise and net exports fall. fall and net exports rise. and net exports fall. 18. Suppose that the United States imposes an import quota on televisions. In the open-economy macroeconomic model this quota shifts the (Points : 1) U.S. supply of loanable funds left. U.S. demand for loanable funds left. demand for U.S. dollars in the market for foreign-currency exchange right. supply of U.S. dollars in the market for foreign-currency exchange left. 19. In the open-economy macroeconomic model, if a country's interest rate rises, then its (Points : 1) net capital outflow and net exports rise. net capital outflow rises and its net exports fall. net capital outflow falls and its net exports rise. net capital outflow and net exports fall. 20. Which of the following contains a list only of things that decrease when the budget deficit of the U.S. increases? (Points : 1) U.S. net exports, U.S. domestic investment, U.S. net capital outflow U.S. supply of loanable funds, U.S. interest rates, U.S. domestic investment U.S. imports, U.S. interest rates, the real exchange rate of the dollar None of the above is correct.  |
