Question 1

What happens to the quantity of loanable funds supplied when the interest rate rises? Explain why this change happens.

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Question 2

What is the source of the supply of dollars in the market for foreign-currency exchange?

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Question 3

What is the source of the demand for loanable funds in the open-economy macroeconomic model ?

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Question 4

What happens to net capital outflow as the real interest rate falls? Explain your answer.

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Question 5

If the exchange rate rises, foreign residents want to purchase ______ domestic goods and domestic residents want to purchase _____ foreign goods. In the market for foreign-currency exchange, these changes are shown as a _______ in the quantity of dollars ______.

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Question 6

Other things the same, which of the following would a rise in the real interest rate raise: desired investment spending, desired national saving, desired net capital outflow?

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Question 7

Other things the same, if the U.S. interest rate rises, what happens to the net capital outflow of other countries?

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Question 8

Define net capital outflow.

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Question 9

If the exchange rate rises, domestic goods become relatively ______ expensive. This change in the affordability of domestic goods makes domestic goods _____ attractive to foreigners. So, _______ ______.

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Question 10

A country recently had 500 billion euros of national saving and 200 billion euros of domestic investment. What was its net capital outflow? What was its quantity of loanable funds demanded?

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Question 11

If there is a shortage in the market for foreign-currency exchange, what happens to the exchange rate and to net exports?

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Question 12

A country recently had 500 billion euros of national saving and -200 billion euros of net capital outflow. What was its domestic investment? What was its quantity of loanable funds supplied?

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Question 13

In the market for foreign-currency exchange, the source of the supply of dollars is _________. The supply curve is _________ because _____________.

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Question 14

If the exchange rate falls, domestic goods become relatively expensive. This change in the affordability of domestic goods makes domestic goods attractive to domestic residents. So, _______ ______.

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Question 15

What happens to domestic investment as the real interest rate rises? Explain your answer.

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Question 16

If a country's exchange rate rises, what happens to its exports and what happens to its imports?

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Question 17

What are the sources of the demand for loanable funds? What happens to the quantity of loanable funds demanded when the interest rate rises?

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Question 18

An economy recently had 800 billion euros of saving and 600 billion euros of net capital outflow. What was its investment? What was its quantity of loanable funds supplied?

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Question 19

What is the source of the demand for dollars in the market for foreign-currency exchange?

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