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.
