Question 1

Suppose the real exchange rate is such that the market for foreign-currency exchange has a surplus.This surplus will lead to

Accepted Answer

The answer of Suppose the real exchange rate is such...

Question 2

If the demand for dollars in the market for foreign-currency exchange shifts left,then the exchange rate

Accepted Answer

The answer of If the demand for dollars in the...

Question 3

Figure 32-2 
-Refer to Figure 32-2.What are the equilibrium values of the real exchange rate and net exports?

Accepted Answer

The answer of Figure 32-2 
-Refer to Figure 32-2.What are...

Question 4

Which of the following is consistent with moving from a surplus to equilibrium in the market for foreign currency exchange?

Accepted Answer

Moving from a surplus to equilibrium in the market for foreign currency exchange involves a decrease in the exchange rate. This decrease in the exchange rate makes foreign goods relatively more expensive for U.S. residents, thus encouraging them to import less. Therefore, option B is the correct choice as it shows that the exchange rate falls, causing U.S. residents to import less, which helps the market move towards equilibrium.

Question 5

An open economy has GDP of $1,200 billion,consumption expenditures of $900 billion government expenditures of $400 billion,domestic investment of $100 billion,and net exports of -$200 billion.What is its demand for loanable funds?

Accepted Answer

The answer of An open economy has GDP of $1,200...

Question 6

If the real exchange rate for the dollar is above the equilibrium level,the quantity of dollars supplied in the market for foreign-currency exchange is

Accepted Answer

If the real exchange rate for the dollar is above the equilibrium level, it means that the price of dollars in terms of foreign currency is too high, resulting in an excess supply of dollars. This would lead to a decline in the value of the dollar, which is a depreciation. Therefore, the correct option is B - greater than the quantity demanded and the dollar will depreciate.

Question 7

If the supply of dollars in the market for foreign-currency exchange shifts left,then the exchange rate

Accepted Answer

A leftward shift of the supply curve means that there are fewer dollars available for exchange, which will increase the demand for dollars and result in an appreciation of the exchange rate. As a result, the quantity of dollars exchanged will decrease because dollars are more expensive relative to other currencies.

Question 8

Other things the same,in the open-economy macroeconomic model,if the exchange rate rises,

Accepted Answer

According to the open-economy macroeconomic model, when the exchange rate rises, it means that the value of the domestic currency is appreciating relative to the foreign currency. This leads to a decrease in the quantity of goods and services demanded from foreign consumers, and as a result, the demand for dollars falls. Therefore, option C is the correct choice.

Question 9

If the real exchange rate for the dollar is below the equilibrium level,the quantity of dollars supplied in the market for foreign-currency exchange is

Accepted Answer

When the real exchange rate is below equilibrium, the quantity of dollars supplied is less than the quantity demanded, leading to upward pressure on the dollar, causing it to appreciate.

Question 10

Which of the following is consistent with moving from a shortage to equilibrium in the market for foreign currency exchange?

Accepted Answer

The answer of Which of the following is consistent with...

Question 11

In the open-economy macroeconomic model,the

Accepted Answer

The answer of In the open-economy macroeconomic model,the
...

Question 12

Which of the following is consistent with moving from a surplus to equilibrium in the market for foreign-currency exchange?

Accepted Answer

When moving from a surplus to equilibrium in the foreign-currency exchange market, the exchange rate depreciates, making domestic goods relatively less expensive, which increases demand for domestic goods and helps eliminate the surplus.

Question 13

In the open economy macroeconomic model,the price that balances supply and demand in the market for foreign-currency exchange model is the

Accepted Answer

The real exchange rate balances supply and demand in the market for foreign-currency exchange by adjusting for differences in price levels between countries, affecting the relative cost of goods and services.

Question 14

Figure 32-2 
-Refer to Figure 32-2.At what real exchange rate is the quantity of dollars demanded equal to 500?

Accepted Answer

At a real exchange rate of .6, the quantity of dollars demanded is equal to 500. This can be seen by tracing the vertical line from 500 on the y-axis until it intersects with the curve representing the real exchange rate of .6, and then following the horizontal line until it intersects with the x-axis, giving us an exchange rate of .6. Therefore, the correct answer is choice C.

Question 15

If for some reason Americans desired to increase their purchases of foreign assets,then other things the same

Accepted Answer

When Americans increase their purchases of foreign assets, they supply more dollars to the foreign exchange market, leading to a depreciation of the dollar (fall in the real exchange rate) and an increase in the quantity of dollars exchanged.

Question 16

If the supply of dollars in the market for foreign-currency exchange shifts right,then the exchange rate

Accepted Answer

When the supply of dollars increases, it shifts the supply curve to the right, leading to a lower exchange rate and a higher quantity of dollars exchanged.

Question 17

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?

Accepted Answer

A surplus in the foreign-currency exchange market means there is more supply than demand for the currency. To reach equilibrium, the real exchange rate must depreciate, making domestic goods cheaper for foreigners, thus increasing net exports.

Question 18

Figure 32-2 
-Refer to Figure 32-2.If the real exchange rate is 1,then there is a

Accepted Answer

When the real exchange rate is 1, the quantity of dollars supplied exceeds the quantity demanded by 100, indicating a surplus. In response to a surplus, the real exchange rate tends to fall to restore equilibrium.

Question 19

If the demand for dollars in the market for foreign-currency exchange shifts right,then the exchange rate

Accepted Answer

The answer of If the demand for dollars in the...

Question 20

If for some reason Americans desired to decrease their purchases of foreign assets,then other things the same

Accepted Answer

If Americans desired to decrease their purchases of foreign assets, they would need to exchange less dollars for foreign currency in order to make those purchases. This decrease in demand for foreign currency would cause the exchange rate to rise (in this case, the real exchange rate), making foreign assets more expensive and therefore reducing the quantity of dollars exchanged in the foreign-currency exchange market.

Quiz 19: A Macroeconomic Theory of the Open Economy: Supply and Demand for Loanable Funds and for Foreign-Currency Exchange

Suppose the real exchange rate is such that the market for foreign-currency exchange has a surplus.This surplus will lead to

If the demand for dollars in the market for foreign-currency exchange shifts left,then the exchange rate

Figure 32-2 -Refer to Figure 32-2.What are the equilibrium values of the real exchange rate and net exports?

Which of the following is consistent with moving from a surplus to equilibrium in the market for foreign currency exchange?

An open economy has GDP of $1,200 billion,consumption expenditures of $900 billion government expenditures of $400 billion,domestic investment of $100 billion,and net exports of -$200 billion.What is its demand for loanable funds?

If the real exchange rate for the dollar is above the equilibrium level,the quantity of dollars supplied in the market for foreign-currency exchange is

If the supply of dollars in the market for foreign-currency exchange shifts left,then the exchange rate

Other things the same,in the open-economy macroeconomic model,if the exchange rate rises,

If the real exchange rate for the dollar is below the equilibrium level,the quantity of dollars supplied in the market for foreign-currency exchange is

Which of the following is consistent with moving from a shortage to equilibrium in the market for foreign currency exchange?

In the open-economy macroeconomic model,the

Which of the following is consistent with moving from a surplus to equilibrium in the market for foreign-currency exchange?

In the open economy macroeconomic model,the price that balances supply and demand in the market for foreign-currency exchange model is the

Figure 32-2 -Refer to Figure 32-2.At what real exchange rate is the quantity of dollars demanded equal to 500?

If for some reason Americans desired to increase their purchases of foreign assets,then other things the same

If the supply of dollars in the market for foreign-currency exchange shifts right,then the exchange rate

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?

Figure 32-2 -Refer to Figure 32-2.If the real exchange rate is 1,then there is a

If the demand for dollars in the market for foreign-currency exchange shifts right,then the exchange rate

If for some reason Americans desired to decrease their purchases of foreign assets,then other things the same