Question 1

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

Accepted Answer

The answer of In the market for foreign-currency exchange, the...

Question 2

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 ______.

Accepted Answer

The answer of If the exchange rate rises, foreign residents...

Question 3

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?

Accepted Answer

The answer of An economy recently had 800 billion euros...

Question 4

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

Accepted Answer

The answer of Other things the same, if the U.S....

Question 5

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

Accepted Answer

The answer of What is the source of the demand...

Question 6

If the government budget deficit rises, what happens to the interest rate? What does this change in the interest rate do to net capital outflow? Provide a detailed explanation of why this change in the interest rate changes net capital outflow.

Accepted Answer

The answer of If the government budget deficit rises, what...

Question 7

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, _______ ______.

Accepted Answer

The answer of If the exchange rate rises, domestic goods...

Question 8

Other things the same, which curve in the market for foreign-currency exchange shifts and which direction does it shift if net capital outflow rises?

Accepted Answer

The answer of Other things the same, which curve in...

Question 9

If a country's government moves from a budget deficit to a budget surplus, which curve in the market for loanable funds shifts and which direction does it shift? What happens to the interest rate?

Accepted Answer

The answer of If a country's government moves from a...

Question 10

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?

Accepted Answer

The answer of A country recently had 500 billion euros...

Question 11

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, _______ ______.

Accepted Answer

The answer of If the exchange rate falls, domestic goods...

Question 12

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?

Accepted Answer

The answer of Other things the same, which of the...

Question 13

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

Accepted Answer

The answer of What happens to net capital outflow as...

Question 14

Other things the same, if the U.S. interest rate rises, U.S. assets become ____ attractive. So, desired net capital outflow _____. This change in net capital outflow, shifts the __________ curve in the market for foreign-currency exchange to the ______.

Accepted Answer

The answer of Other things the same, if the U.S....

Question 15

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

Accepted Answer

The answer of If a country's exchange rate rises, what...

Question 16

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

Accepted Answer

The answer of What is the source of the supply...

Question 17

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

Accepted Answer

The answer of What happens to domestic investment as the...

Question 18

Define net capital outflow.

Accepted Answer

The answer of Define net capital outflow....

Question 19

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?

Accepted Answer

The answer of A country recently had 500 billion euros...

Question 20

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

Accepted Answer

The answer of If there is a shortage in the...

Quiz 32: A Macroeconomic Theory of the Open Economy

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

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 __.