macro final

a country has private saving of $100 billion, public saving of -$30 billion domestic investment of $50 billion and net capital outflow of $20 billion what is its supply of loanable funds

$70 billion

suppose that a country imports $90 million worth of goods and services and exports $80 million worth of goods and services. what is the value of net exports

-$10 million

an Egyptian tourist is trying to decide if a watch for sale in the US is a good deal and so wants to convert the price in US dollars to Egyptian pounds, if the exchange rate is 5 Egyptian pounds per US dollar, a watch that costs $25 US dollars costs

125 Egyptian pounds

If a U.S. dollar purchases 4 Argentinean pesos, and a gallon of milk costs $3 in the U.S. and 6 pesos in Argentina what is the real exchange rate?

2

in the US a candy bar costs $1, if the nominal exchange rate were 6 Chinese yuan per dollar and the real exchange rate were 1.2, the, what would be the price of a candy bar in china

5 yuan

a country has national saving of 90 billion government expenditures of 30 billion domestic investment of 50 billion and net capital outflow of 40 billion what is its demand for loanable funds

90 billion

33-1 if the economy starts at C, in the short run an increase in the money supply moves the economy to point

B

33-4 if the economy is in long-run equilibrium, there an adverse shift in aggregate supply would move the economy from C to __ in the short run and __ in the long run

D,C

if a country has a trade deficit then

S>I and Y>C+I+G

which of the following is an example of US foreign direct investment

a US based restaurant chain opens new restaurants in India

a country sells more to foreign countries than it buys from them, it has

a trade surplus and positive net exports

the classical dichotomy and monetary neutrality are represented graphically by

a vertical long-run aggregate-supply curve

case 1. suppose the economy is in long-run equilibrium. then because of corporate scandal, international tensions, and loss of confidence in policymakers, people become pessimistic regarding the future and retain that level of pessimism for some time. which curve shifts and in which direction?

aggregate supply shifts right

which of the following shifts the long-run aggregate supply curve to the right?

an increase in capital stock

which of the following shifts short-run aggregate supply right

an increase in the actual price level

other things the same, if the exchange rate changes from 6 Chinese yuan per dollar to 7 Chinese yuan per dollar, then the dollar

appreciates and buys more Chinese goods

other things the same, of the exchange rate changes .8 euros per dollar to .9 euros the dollar

appreciates to US goods become more expensive relative to foreign goods

32-8

b to a

which of the following would cause investment spending to increase and aggregate demand to shift right?

both an increase in the money supply and an investment tax credit

the interest rate in a country goes up while the value of its currency falls, this might be due to

capital flight

33-5 the shift of the short-run aggregate-supply curve from SRAS1 to SRAS2

could be caused by a decrease in the price of energy

aggregate demand shifts left when the government

cuts military expenditures

part of the explanation for why the aggregate-demand curve slopes downward is that a decrease in the price level

decrease in the interest rate

if US citizens decide to save a smaller fraction of their incomes US domestic investment

decreases and US net capital outflow decreases

If U.S. citizens decide to save a larger fraction of their incomes, the real interest rate

decreases the real exchange rate of the dollar depreciates and us net capital outflow increases

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

foreign countries rise

the purchase of US government bonds by Egyptians is an example of

foreign portfolio investment by Egyptians

a US firm buys bonds issued by a technology center in India, this purchase is an example of US

foreign portfolio investment, by itself it is an increase in US holdings of foreign bonds and increases IS net capital outflow

other things the same and increase int he US real interest rate induces

foreigners to buy more US assets which reduces US net capital outflow

if a country went from a government budget deficit to a surplus national saving would

increase, shifting the supply of loanable funds right

in 2001, the United States was in recession. which of the following things would you not expect to have happen?

increased investment spending

in an open economy the source for the demand for loanable funds is

investment/net capital outflow

a German firm purchases a bond issued by united express, a US delivery company. as a result what happens to US net capital outflow

it falls

when the US real interest rate falls, purchasing US assets becomes

less attractive and so US net capital outflow rises

suppose that real interest rates in the US rise relative to real interest rates in other countries, this increase would make foreigners

more willing to purchase US bonds, so US net capital outflow would fall

during recessions, automatic stabilizers tend to make the government's budget

move toward deficit

a country has a trade deficit, which of the following must also be true

net capital outflow is negative and domestic investment is larger than saving

in the open-economy macroeconomic model, if a country's supply of loanable funds shifts right then

net capital outflow rises, so the supply curve in the foreign exchange market shifts right

in the open-economy macroeconomic model if investment demand decreases then

net exports rise and the real exchange rate falls

a US imposed quota on automobiles would shift

only the demand curve in the market for foreign-currency exchange right

if a country has y>c+I+g then it has

positive net capital outflow and positive net exports

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

real exchange rate

the ability to profit by purchasing wheat in the US and selling it in china implies the

real exchange rate is less than 1

34-9 suppose the economy is currently at point A. to restore full employment, the appropriate monetary response

requires the central bank to sell government bonds, which will reduce the money supply

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

rises and the quantity of dollars exchanges falls

an economic expansion caused by a shift in aggregate demand remedies itself over time as the wage level

rises, shifting aggregate supply left

which of the following is always correct in an open economy

s=1-nco

if a country raises its budget deficit, then in the market for foreign currency exchange

supply shifts left

which of the following is not a determinant of the long-run level of real GDP?

the amount of capital used by firms

case 1. what happens to the expected price level and what's the result for wage bargaining?

the expected price level falls. bargains are struck for lower wages.

if purchasing-power parity holds, the price level in the US is 250 and the price level in Japan in 260 which of the following is true

the nominal exchange rate is 260/250

case 1. how is the new long-run equilibrium different from the original one?

the price level is lower and real GDP is the same

consider an identical basket of goods in both the US and Taiwan, for a given nominal exchange rate, in which case is it certain that the US real exchange rate with Taiwan falls

the price of the basket of goods falls in the US and rises in Taiwan

which of the following does purchasing-power parity conclude should equal 1

the real exchange rate but not the nominal exchange rate

if the demand of loanable funds shifts left then

the real interest rate and the equilibrium quantity of loanable funds both fall

if the supply of loanable funds shifts left then

the real interest rate rises and the equilibrium quantity of loanable funds falls

if output is above its natural rate, then according to sticky-wage theory

workers and firms will strike bargains for higher. this increase in wages shifts the short-run aggregate supply curve left