macro: real interest rates and international capital flows

Maxistan and Ile are trading partners. The savings rate in Maxistan recently increased, which affected real interest rates there. What effect does this have on real interest rates in Maxistan and the value of Ile's currency?

Maxistan's real interest rate decreases and the value of Ile's currency appreciates

The economies of Maxistan and Ile are open economies. If Maxistan runs a budget surplus, how will this impact Ile in the short run?

Increases the unemployment rate in Ile

Dodgeland and Burginville are trading partners. An increase in the demand for capital in Dodgeland has affected its market for loanable funds. What effect does the change in the market for loanable funds in Dodgeland have on Burginville's currency and the real interest rate in Burginville?

Burginville's real interest rates increase and its currency depreciates.

The Great Central Bank of Hamsterville sells bonds, which has influenced the interest rate in Hamsterville. What is the impact of this action on the financial account, the value of the Hamsterville currency (the Hamsterville snark), and imports into Hamsterville in the short run?

Financial account increases; snark appreciates; imports increase

The currency of Hamsterville is the snark. The central bank of Hamsterville recently engaged in expansionary monetary policy. What effect will expansionary monetary policy have on interest rates, the price level, and the exchange rate of the snark?

Interest rates and the exchange rate will decrease, but the price level will increases

What happens to interest rates and exports in the short run in Atlantis if the central bank of Atlantis buys bonds?

Interest rates decrease; exports increase

Frankland's citizens are living longer which has resulted in more retirement saving. Which of the following best describes the effect of this action on real interest rates in Frankland and the value of the Frankland's currency, the percy?

Real interest rates decrease and the Frankland percy appreciates.

An increase in the savings rates in Johnsrudia has affected the market for loanable funds. What effect does this have on real interest rates and the value of Johnsrudia's currency?

Real interest rates decrease and the currency depreciates

The government of Marthaland has a budget surplus. What effect does this have in Marthaland on real interest rates and the value of Marthaland's currency in the short run and economic growth in the long run?

Real interest rates decrease, Marthaland's currency depreciates, and economic growth increases.

Irrational exuberance by firms in Hamsterville has lead to an increase in investment in capital. Most firms in Hamsterville borrow to pay for investment in plant and equipment. What effect does this have on real interest rates, exports, and long-run aggregate supply?

Real interest rates increase, exports decrease, and long-run aggregate supply increases.

An increase in business optimism in Maxistan has changed the real interest rate in Maxistan which has resulted in a change in the flow of financial assets between Maxistan and its trading partners and impacted the value of Maxistan's currency. Which of the following describes an appropriate action that the central bank of Maxistan could take to offset the change in the value of Maxistan's currency?

Sell its currency or buy another country's currency.

The government of Hamiltonia engaged in expansionary fiscal policy and, as a result, ran a budget deficit. Assume Hamiltonia has an open economy and a flexible exchange rate. What happens to real interest rates and the value of Hamiltonia's currency as a result of the budget deficit?

There will be an increase in real interest rates and an appreciation of Hamiltonia's currency.

As a result of deficit spending, the government of Japan borrowed money in the market for loanable funds. What happens to the exchange rate for the yen and Japanese exports as the result of the change in the market for loanable funds?

Yen appreciates; exports decrease