ECON 121 CHAPTER 31 AND 32 assignment 8

Which of the following would make both the equilibrium interest rate and the equilibrium quantity of loanable funds increase? a. The demand for loanable funds shifts right b. the demand for loanable funds shifts left c. the supply of loanable funds shifts right d. the supply of loanable funds shifts left

a. The demand for loanable funds shifts right

Use the graph in Question 17. Domestic investment plus net capital outflow is represented by the a. demand curve in panel a b. demand curve in panel c c. supply curve in panel a d. none of the above is correct

a. demand curve in panel a

In the open-economy macroeconomic model, the quantity of dollars demanded in the market for foreign-currency exchange a. depends on the real exchange rate. The quantity of dollars supplied in the foreign-exchange market depends on the real interest rate. b. depends on the real interest rate. The quantity of dollars supplied in the foreign-exchange market depends on the real exchange rate. c. and the quantity of dollars supplied in the market for foreign-currency exchange depend on the real exchange rate d. and the quantity of dollars supplied in the market for foreign-currency exchange depend on the real interest rate

a. depends on the real exchange rate. The quantity of dollars supplied in the foreign-exchange market depends on the real interest rate.

Purchasing-power parity implies that the nominal exchange rate given as foreign currency per unit of U.S. currency must rise if the price levels in a. foreign countries rise b. the United States rises c. both countries rise d. both countries fall

a. foreign countries rise

In the United States, a three-pound can of coffee costs about $5. Suppose the exchange rate is about 0.8 euros per dollar and that a three-pound can of coffee in Belgium costs about 3 euros. What is the real exchange rate? a. 5/3 cans of Belgian coffee per can of U.S. coffee b. 4/3 cans of Belgian coffee per can of U.S. coffee c. 3/4 cans of Belgian coffee per can of U.S. coffee d. 3/5 cans of Belgian coffee per can of U.S. coffee

b. 4/3 cans of Belgian coffee per can of U.S. coffee

Which of the following is correct? a. NCO + C = NX b. NCO = NX c. NX - NCO = C d. NX + NCO = C

b. NCO = NX

An increase in the U.S. real interest rate induces a. Americans to buy more foreign assets, which increases U.S. net capital outflow b. Americans to buy more foreign assets, which reduces U.S. net capital outflow c. foreigners to buy more U.S. assets, which reduces U.S. net capital outflow d. foreigners to buy more U.S. assets, which increases U.S. net capital outflow

c. foreigners to buy more U.S. assets, which reduces U.S. net capital outflow

Use the graph in Question 17. At an interest rate of 3 percent, the diagram indicates that a. there is a surplus in the market for foreign-currency exchange b. national saving equals domestic investment c. net capital outflow + domestic investment = national saving d. the market for foreign-currency exchange and the quantity of dollars supplied equals the quantity of dollars demanded

c. net capital outflow + domestic investment = national saving

see graphs national saving is represented by the a. demand curve in panel a b. demand curve in panel c c. supply curve in panel a d. supply curve in panel c

c. supply curve in panel a

An increase in the U.S. government budget deficit shifts the a. demand for loanable funds right and decreases investment spending b. supply of loanable funds right and increases investment spending c. supply of loanable funds left and decreases investment spending d. none of the above is correct

c. supply of loanable funds left and decreases investment spending

If you were told that the exchange rate was 1.2 Canadian dollars per U.S. dollar, a watch that costs $12 US dollars would cost a. $8.5 Canadian dollars b. $10 Canadian dollars c. $12.20 Canadian dollars d. $14.40 Canadian dollars

d. $14.40 Canadian dollars

Suppose that a country imports $100 million of goods and services and exports $75 million of goods and services, what is the value of net exports? a. $175 million b. $75 million c. $25 million d. -$25 million

d. -$25 million

Bob, a Greek citizen, opens a restaurant in Chicago. His expenditures a. increases U.S. net capital outflow and have no affect on greek net capital outflow b. increases U.S. net capital outflow and increase greek net capital outflow c. increases U.S. net capital outflow but decrease greek net capital outflow d. decrease U.S. net capital outflow, but increase Greek net capital outflow.

d. decrease U.S. net capital outflow, but increase Greek net capital outflow.

If a U.S. shirt maker purchases cotton from Egypt, U.S. net exports a. increase, and U.S. net capital outflow increases. b. increase, and U.S. net capital outflow decreases. c. decrease, and U.S. net capital outflow increases. d. decrease, and U.S. net capital outflow decreases.

d. decrease, and U.S. net capital outflow decreases.

A firm in China sells jackets to a U.S. department store chain. Other things the same, these sales a. increases U.S. and Chinese net exports b. decreases U.S. and Chinese net exports c. increases U.S. net exports and increases Chinese net exports d. decreases U.S. net exports and increase Chinese net exports.

d. decreases U.S. net exports and increase Chinese net exports.

One year a country has negative net exports. The next year it still has negative net exports and imports have risen more than exports. a. its trade surplus fell b. its trade surplus rose c. its trade deficit fell d. its trade deficit rose

d. its trade deficit rose

In an open economy, the market for loanable funds equates national saving with a. domestic investment b. net capital outflow c. national consumption minus domestic investment d. none of the above are correct

d. none of the above are correct

If there is a trade deficit, then a. saving is greater than domestic investment and Y > C + I + G. b. saving is greater than domestic investment and Y < C + I + G. c. saving is less than domestic investment and Y > C + I + G. d. saving is less than domestic investment and Y < C + I + G.

d. saving is less than domestic investment and Y < C + I + G.

In the open-economy macroeconomic model, the demand for loanable funds comes from a. domestic investment b. net exports c. net capital outflow d. the sum of net capital outflow and domestic investment

d. the sum of net capital outflow and domestic investment

The open-economy macroeconomic model examines the determination of a. the output growth rate and the real interest rate b. Unemployment and the exchange rate c. the output growth rate and the inflation rate d. the trade balance and the exchange rate

d. the trade balance and the exchange rate