Macroeconomics Final

If U.S. speculators gained greater confidence in foreign economies so that they wanted to move more of their wealth into foreign countries, the dollar would

a. depreciate which would cause aggregate demand to shift right.

The value of net exports equals the value of

a. national saving - domestic investment.

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

b. movement to the left along a given aggregate-demand curve.

A country has national saving of $50 billion, government expenditures of $30 billion, domestic investment of $10 billion, and net capital outflow of $40 billion. What is its supply of loanable funds?

$50 billion

Which of the following would cause stagflation?

Aggregate supply shifts left.

Refer to Figure 33-3. The shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

d. could be caused by a decrease in the expected price level.

Which of the following would shift the long-run aggregate supply curve right?

a. An increase in the capital stock, but not an increase in the price level

In the open-economy macroeconomic model, the market for loanable funds identity can be written as

a. S = I + NCO.

A country has a net capital outflow of $200 billion and domestic investment of $150 billion. What is the quantity of loanable funds demanded?

b. $350 billion

Refer to Figure 33-2. A decrease in taxes would move the economy from C to

b. B in the short run and A in the long run.

Other things the same, which of the following would cause the real exchange rate to rise?

b. Both an increase in the real interest rate and an increase in foreign demand for U.S. goods and services.

When Mexico suffered from capital flight in 1994, Mexico's net capital outflow

b. and net exports increased.

Refer to Figure 32-4. The initial effect of an increase in the budget deficit in the loanable funds market sown in graph (a) can be illustrated as a move from

d. b to a.

According to the model of aggregate supply and aggregate demand, in the long run, an increase in the money supply should cause

b. prices to rise and output to remain unchanged.

If the United States were to impose import quotas

b. the demand for loanable funds would increase, but the demand for dollars in the market for foreign-currency exchange would not.

An increase in the expected price level shifts

c. the short-run aggregate supply curve to the left but does not affect the long-run aggregate supply curve.

If imports = 500 billion euros, exports = 700 billion euros, purchases of domestic assets by foreign residents = 600 billion euros, and purchases of foreign assets by domestic residents = 800 billion euros, what is the quantity of euros demanded in the market for foreign-currency exchange?

d. 200 billion euros

Which of the following would shift the aggregate-demand curve to the left?

d. All of the above

The sticky-price theory of the short-run aggregate supply curve says that if the price level rises by 5% while firms were expecting it to rise by 2%, then some firms with high menu costs will have

d. lower than desired prices, which leads to an increase in the aggregate quantity of goods and services supplied.

Which of the following would make both the equilibrium real interest rate and the equilibrium quantity of loanable funds decrease?

a. The demand for loanable funds shifts left.

Investment is

a. a small part of real GDP, yet it accounts for a large share of the fluctuation in real GDP.

Which curve is determined by net capital outflow only?

The supply curve in graph (c)

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

a. quantity of dollars demanded falls.

Other things the same, an increase in the U.S. real interest rate induces

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

In 2002, the United States placed higher tariffs on imports of steel. According to the open-economy macroeconomic model this policy reduced imports

b. of steel into the United States, but reduced U.S. exports of other goods by an equal amount.

Refer to Figure 32-3. Suppose that U.S. firms desire to purchase more equipment and build more factories and stores in the United States. The effects of this are illustrated by

b. shifting the demand curve in panel a to the right and the supply curve in graph (c) to the left.

A change in which of the following would shift the short-run aggregate-supply curve but not the long-run aggregate-supply curve?

b. the expected price level

People had been expecting the price level to be 120 but it turns out to be 122. In response Robinson Tire Company increases the number of workers it employs. What could explain this?

c. Both sticky price theory and sticky wage theory

In 2009, Congress passed legislation providing states with funds to build roads and bridges. It also instituted tax cuts. Which of these shifts aggregate demand right?

c. Both the increased funding for states and the tax cuts

If business leaders in Great Britain become more confident in their economy, they will increase investment, causing the British pound to ________ and pushing the British trade balance toward ________.

c. appreciate; deficit

Refer to Figure 33-3. Starting from point B and assuming that aggregate demand is held constant, in the long run the economy is likely to experience a

c. rising price level and a falling level of output, as the economy moves to point A.

According to classical macroeconomic theory and monetary neutrality, changes in the money supply affect

c. the GDP deflator.

During the financial crisis it was proposed that firms be provided with a tax credit for investment projects. Such a tax credit would shift

c. the demand for loanable funds right and shift the supply of dollars in the market for foreign-currency exchange left.

Aggregate demand includes

c. the quantity of goods and services the government, households, firms, and customers abroad want to buy.

When the economy goes into a recession, real GDP ________ and unemployment ________.

d. falls; rises

One reason the short-run aggregate-supply curve slopes upward is that a higher price level

d. reduces real wages if nominal wages are sticky.

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

d. rises and the quantity of dollars exchanged for foreign currency falls.

Imagine that in 2019 the economy is in long-run equilibrium. Then stock prices rise more than expected and stay high for some time. Refer to Scenario 33-2. In the long run, the change in price expectations created by the stock market boom shifts

d. short-run aggregate supply left.

Refer to Figure 32-3 . National saving is represented by the

d. supply curve in graph (a).

A sudden increase in business pessimism shifts the aggregate-________ curve, leading to ________ output.

demand; lower