econ final

other things the same, a decrease in the real interest rate

increases the quantity of loanable funds demanded

in the long run, fiscal policy influences

saving, investment, and growth; in the short run, fiscal policy primarily influences the aggregate demand for goods and services

liquidity preference theory is most relevant to the

short run and supposes that the interest rate adjusts to bring money supply and money demand into balance

bill, a us citizen, pays a spanish architect to design a metal casting factory. which country's exports increase?

spain's

other things the same, an increase in the us interest rate causes

supply in the market for foreign-currency exchange to decrease so the exchange rate increases

the dollar is said to depreciate against the euro if

the exchange rate falls. other things the same, it will cost fewer euros to buy us goods.

shifts in the aggregate demand curve can cause fluctuations in

the level out output and in the level of prices

the variables on the vertical and horizontal axes of the aggregate demand and supply graph are

the price level and real output

according to classical macroeconomic theory, changes in the money supply affect

the price level, but not unemployment

as the interest rate falls,

the quantity of money demanded rises, which would reduce a surplus

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?

the real exchange rate depreciates and net exports rise

when a country's government budget deficit increases,

the real exchange rate of its currency increases and its net exports decrease

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

the real exchange rate would rise and the quantity of dollars exchanged in the market for foreign-currency would fall

refer to the figure 32-1. if the real interest rate is 6 percent, there will be pressure for

the real interest rate to fall

us exports are $300 billion, us imports are $500 billion. which of the following are consistent with the level of net exports?

the us has a trade deficit. the us purchases $600 billion worth of foreign assets and foreign countries purchase $800 billion worth of us asset.

if a country has a trade deficit of $10 billion and then its exports rose by $20 billion and its imports rose by a $10 billion, its net exports would be

$0

last year a country had exports of $100 billion, imports of $70 billion, and purchased $60 billion worth of foreign assets. what was the value of domestic assets purchased by foreigners?

$30 billion

the country of sylvania has a gdp of $900, investment of $200, goveernment purchases of $200, and net capital outflow of -$100. what is consumption?

$600

a country has a national saving of $80 billion, government expenditures of $40 billion, domestic investment of $50 billion, and net capital outflow of $30 billion. what is the supply of loanable funds?

$80 billion

if domestic residents of other countries purchase $600 billion of us assets and us residents purchase $500 billion of foreign assets, then us net capital outflow is

-$100 billion and the us has a trade deficit

if the exchange rate is 2 brazilian reals per dollar and a meal in rio costs 20 reals, then how many dollars does it take to buy a meal in rio?

10 and your purchase will increase Brazil's net exports

an MP3 player in singapore costs 200 singapore dollars. in the us it costs 100 us dollars. what is the nominal exchange rate if purchasing-power parity holds?

2.0

if the real exchange rate for coal is 1.5, the price of coal in the us is $50 per ton, and the price of coal in Britain is 20 british pounds per ton, what is the nominal exchange rate?

3/5

refer to figure 33-4. if the economy is in long run equilibrium, then an adverse shift in aggregate supply would move the economy from

C to D

suppose the economy starts at Y. if aggregate demand increases from AD2 to AD3, then the economy moves to

V

suppose foreigners find us goods and services more desirable for some reason other than a change in exchange rate. which policies could be used to offset the resulting changes in output?

a decrease in the money supply and a decrease in government purchases

refer to figure 33-5. starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience

a rising price level and a falling level out output, as the economy moves to point A

a change in the expected price level is likely to cause which of the following?

a shift in the short run aggregate supply curve

a country purchases more goods and services from residents of foreign countries than residents of foreign countries purchase from it. this country has

a trade deficit and negative net exports

which of the following is an example of us foreign portfolio investment?

a us citizen buys bonds issued by the british government

refer to figure 34-5. a shift of the money-demand curve from MD1 to MD2 could be a result of

all of the above are correct

if you go to the bank and notice that a dollar buys more japanese yen then it used to, then the dollar has

appreciated. other things the same, the appreciation would make americans more likely to travel to japan.

automatic stabilizers

are changes in taxes or government spending increase aggregate demand without requiring policy makers to act when the economy goes into recession

to stabilize interest rates, the federal reserve will respond to an increase in money demand by

buying government bonds, which increases the supply of money

other things the same, if the long-run aggregate supply curve shifts right, prices

decrease and output increases

in the short run, an increase in the money supply causes interest rates to

decrease, and aggregate demand to shift right

when the fed sells government bonds, the reserves of the banking system

decrease, so the money supply decreases

if taxes

decrease, then consumption increases, and aggregate demand shifts rightward

if the fed conducts open-market sales, the money supply

decreases and aggregate demand shifts left

refer to figure 32-3. domestic investment plus net capital outflow is represented by the

demand curve in panel a

assume the money market is initially in equilibrium. if the price level increases, then according to liquidity preference theory there is an excess

demand for money until the interest rate increases

if the nominal exchange rate e is foreign currency per dollar, the domestic price is P, and the foreign price is P*, then the real exchange rate is defined as

e(P/P*)

according to the liquidity preference theory, the money supply should shift if the fed

engaged in open-market operations

a country produces $3 billion of foreign-produced goods and services and sells $2 billion dollars of domestically produced goods and services to foreign countries. it has

exports of $2 billion and a trade deficit of $1 billion

purchasing-power parity implies that the nominal exchange rate given as foreign currency per unit of us currency must rise if the price levels in

foreign countries rise

other things the same, which of the following would shift the supply of dollars in the market for foreign exchange to the right?

foreigners want to buy fewer us bonds

which of the following would not be included in aggregate demand?

government's tax collections

which of the following shifts aggregate demand to the left?

households decide to save a larger fraction of their income

when the price level falls

households want to lend more, so the interest rate falls, making the quantity of goods and services demanded rise

a texas ranch sells beef to a us company that sells it to a grocery chain in Japan. these sales

increase both us exports and us net exports

the price of imported oil rises. if the government wanted to stabilize output, which of the following could it do?

increase government expenditures or increase the money supply

suppose there is a tax increase. to stabilize output, the federal reserve will

increase the money supply

to reduce the effects of crowding out caused by an increase in government expenditures, the federal reserve could

increase the money supply by buying bonds

a turkish company exchanges liras for dollars and then uses the dollars to purchase medical equipment from a us company. these transactions

increase us net exports, and decrease turkish net capital outflow

in 2008, the united states was in recession. which of the following things would you not expect to have happened?

increased real GDP

in the open-economy macroeconomic model, if the supply of loanable funds increases, net capital outflow

increases and the real exchange rate decreases

in the open-economy macroeconomic model, the

interest rate adjusts to equate national saving with the sum of investment and net capital outflow.

if the economy is initially at long-run equilibrium and aggregate demand declines, then in the long run the price level

is lower and output is the same as the original long run equilibrium

according to the liquidity preference, money demand

is negatively related to the interest rate, while the money supply is independent of the interest rate

if a country places tariffs on imported goods, then

its currency appreciates which reduces exports

suppose that a us citizen purchase more cars made in Korea, and Koreans purchase more bonds issued by us corporations. other things the same, these actions

lower both us net exports and us net capital outflows

the effect of an increase in the price level on the aggregate-demand curve is represented by a

movement to the left along a given aggregate-demand curve

in the open-economy macroeconomic model, the supply of loanable funds comes from

national saving

if a country has negative net capital outflows, then its net exports are

negative and its saving is smaller than its domestic investment

in the open-economy macroeconomic model, if a country's interest rate falls, then its

net capital outflow and its net exports rise

when the dollar depreciates, us

net exports rise, which increases the aggregate quantity of goods and services demanded

if a country has a negative net capital outflow, then

on net other countries are purchasing assets from it. this subtracts from its demand for domestically generated loanable funds.

in which case can we be sure aggregate demand demand shifts left overall?

people want to save more for retirement and the fed decreases the money supply

suppose the money-demand curve is currently MD1. if the current interest rate is r2, then

people will respond by selling interest-bearing bonds or by withdrawing money from interest-bearing bank accounts

refer to figure 33-5. in figure 33-5,

point B represent a short run equilibrium, and point A represents a long run equilibrium

the sticky-wage theory of the short-run aggregate supply curve says that when the price level is lower than expected,

production is less profitable and employment falls

the model of the aggregate demand and aggregate supply explains the relationship between

real GDP and the price level

if purchasing power parity holds, then the value of the

real exchange rate is equal to one. a dollar buys as many goods in the us as it does overseas.

the aggregate quantity of goods and services demanded changes as the price level falls because

real wealth rises, interest rates fall, and the dollar depreciates

if the demand for dollars in the market of foreign currency exchange shifts right, then the exchange rate

rises and the quantity of dollars exchanged does not change

when a country imposes an import quota, its exchange rate

rises because the demand for dollars in the market for foreign-currency exchange rises

if the us government went from a budget deficit to a budget surplus then

the interest rate and the real exchange rate would decrease

people choose to hold a larger quantity of money if

the interest rate falls, which causes the opportunity cost of holding money to fall

the idea that expansionary fiscal policy has a positive affect on investment is known as

the investment accelerator

if saving is less than domestic investment, then

there is a trade deficit and Y<C+I+G

which of the following is correct concerning recessions?

they tend to be associated with rising unemployment rates

nominal exchange rates

vary substantially over time

the aggregate supply curve is

vertical in the long run and slopes upward in the short run

when a country experiences capital flight, its net capital outflow,

which is part of the demand for loanable funds, increases

if the exchange rate is .70 euro per dollar, the price of an MP3 player in Paris is 150 euros and the price of an MP3 player in the us is $150, then what is the real exchange rate?

.70 french MP3 players per us MP3 player

which of thee following is an example of foreign direct investment?

a us company opens an auto parts factory in canada

if the stock market crashes, then

aggregate demand decreases, which the fed could offset by increasing the money supply

the multiplier effect is exemplified by the multiplied impact on

aggregate demand of a given increase in government purchases

other things the same, an increase in the amount of capital firms wish to purchase would initially shift

aggregate demand right

the price level rises in the short run if

aggregate demand shifts right or aggregate supply shifts left

an increase in government spending on goods to build or repair infrastructure

all of the above are correct

refer to figure 34-7. which of the following is correct?

all of the above are correct

the long-run aggregate supply curve shifts right if

all of the above are correct

when the price level falls

all of the above are correct

which of the following illustrates how the investment accelator works?

an increase in government expenditures increases aggregate spending so that Burgerville finds it profitable to build more new restaurants

suppose that the us imposes an import quota on lumber. the quota makes the real exchange rate of the us dollar

appreciate but does not change the real interest rate in the united states.