Open economy: international trade and finance quiz 2

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.

What will happen to the value of Johnsrudia's currency, its imports, and its exports?

Currency appreciates; imports increase; exports decrease

What happens to the currency of Maxistan and aggregate demand in Maxistan if the demand for its financial assets decreases?

Currency depreciates; aggregate demand (AD) increases

If tourism to Hamsterville increases, what will happen in the foreign exchange market for the SNSNS, N and the exchange rate for the SNSNS, N (in terms of the Canadian dollar)?

Demand for the SN increases; SN appreciates

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

What will happen to the value of Hamsterville's currency and the value of Hamsterville's exports ?

Hamsterville's currency depreciates and its exports increase.

What will happen to the value of Ile's currency and the value of Ile's exports as a result of the decreased demand for foreign financial assets?

Ile's currency appreciates; exports from Ile decrease

If Maxistan runs a budget surplus, how will this impact Ile in the short run?

Increases the unemployment rate in Ile

Which of the following would cause the demand for the cedi to increase?

Indian demand for Ghanian products increases.

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

Which of the following would increase the demand in the foreign exchange market for the U.S. dollar?

Japanese residents want to buy more goods exported from the U.S.

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

What will happen to net exports and aggregate demand (AD) in the eurozone if the exchange rate changes to 5 quetzals per euro?

Net exports and AD in the eurozone will increase.

If the exchange rate changes to 8 cedis per dollar, what will be the effect on net exports and employment in the United States?

Net exports and employment will decrease.

All of the following increase the demand for the snark EXCEP

Other countries buy less of Hamsterville's exports

What will happen to output and employment Japan as a result of the change in the exchange rate shown in this graph?

Output and employment increase.

What effect will the change shown in this graph have on output, employment, and the price level in Hamiltonia?

Output, employment, and price level will increase.

What effect will the change shown in this graph have on output, employment, and the price level in the United States?

Output, employment, and the price level all decrease.

Assuming there is no change in the nominal exchange rate, what will be the effect of contractionary monetary policy in Canada on the Canadian price level and the real exchange rate (RER) of the Canadian dollar?

Price level will decrease; RER will decrease.

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.

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.

Which of the following would be most likely to have caused the change shown in the foreign exchange market?

Residents of Maxistan want to buy more foreign assets.

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.

If the (E.U.) imposes a quota limiting imports from the United States, what will happen to the market for Euros and the exchange rate for the Euro?

Supply of the euro decreases; the euro appreciates

Which of the following happens if the U.S. imposes tariffs on Chinese goods?

The U.S. dollar appreciates.

What happens to the value of each currency if Maxistan places a tariff on exports from Theopolis?

The card depreciates and the peso appreciates.

What will be the impact of the increase in the price level in Atlantis on the foreign exchange market for the Atlantian dollar and the exchange rate for the Atlantian dollar?

The demand for the Atlantian dollar decreases; the Atlantian dollar depreciates

Which of the following best describes the impact if Japan places a tarriff on Canadian exports?

The demand for the Canadian dollar decreases and the supply of the Japanese yen decreases.

What will be the impact of the decrease in the relative price level in Johnsrudia on the foreign exchange market for the Johnrsrudian dollar and the exchange rate for the Johnrsrudian dollar?

The demand for the Johnrsrudian dollar increases; the Johnrsrudian dollar appreciates

Which of the following would definitely lead to an appreciation of the dollar?

The demand for the dollar increases

Which of the following happen to the value of the Mexican peso and the Canadian dollar?

The peso depreciates and the dollar appreciates.

If the exchange rate changes to 5 quetzal per dollar, what happened to the value of the quetzal and what happens to Guatemala's exports?

The quetzal appreciated and its exports will decrease.

Which of the following happens when the supply of the rupee increases?

The rupee depreciates and the yen appreciates.

Which of the following causes the quetzl to appreciate?

The supply of the dollar increases.

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.

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

Which of the following is a likely consequence of an increase in business optimism in Ghana?

a depreciation of the rupee against the cedi

What's the impact of this economic change on the values of the cedi and rupee?

cedi depreciates; rupee appreciates

Which of the following best describes the chain of events that will occur if the value of the U.S. dollar appreciates?

exports ↓ → Aggregate demand (AD) ↓

Which of the following graphs correctly shows the impact of the decrease in relative prices on the exchange rate for the Maxistan peso?

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Which of the following graphs depicts the impact on the exchange rate for the yen if the United States imposes a tariff on goods from Japan?

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Which of the following graphs correctly illustrates the impact this will have on the foreign exchange market for the Hamsterville Snark (SN)?

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