ECO ch19 - Chapter 19 A Macroeconomic Theory of the Open...

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Unformatted text preview: Chapter 19 A Macroeconomic Theory of the Open Economy MULTIPLE CHOICE 1. Over the past two decades, the United States has a. generally had, or been very near to a trade balance. b. had trade deficits in about as many years as it has trade surpluses. c. persistently had a trade deficit. d. persistently had a trade surplus. ANSWER: c. persistently had a trade deficit. TYPE: M DIFFICULTY: 1 SECTION: 19.0 2. Many U.S. business leaders argue that the current state of U.S. net exports is the result of a. U.S. export subsidies. b. free trade policies of foreign governments. c. unproductive U.S. workers. d. unfair foreign competition. ANSWER: d. unfair foreign competition. TYPE: M DIFFICULTY: 1 SECTION: 19.0 3. If a countrys imports are greater than its exports, the country is said to have a a. trade surplus. b. trade deficit. c. comparative advantage. d. absolute advantage. ANSWER: b. trade deficit. TYPE: M DIFFICULTY: 1 SECTION: 19.0 4. The open-economy macroeconomic model includes a. only the market for loanable funds. b. only the market for foreign-currency exchange. c. both the market for loanable funds and the market for foreign-currency exchange. d. neither the market for loanable funds or the market for foreign-currency exchange. ANSWER: c. both the market for loanable funds and the market for foreign-currency exchange. TYPE: M DIFFICULTY: 1 SECTION: 19.0 5. The open-economy macroeconomic model examines the determination of a. output growth rate and the real interest rate. b. unemployment and the exchange rate c. output growth rate and the inflation rate. d. the trade balance and the exchange rate. ANSWER: d. the trade balance and the exchange rate. TYPE: M DIFFICULTY: 1 SECTION: 19.0 253 254 Chapter 19/A Macroeconomic Theory of the Open Economy 6. The open-economy macroeconomic model takes a. GDP, but not the price level as given. b. the price level, but not GDP as given. c. both the price level and GDP as given. d. the price level and GDP as variables to be determined by the model. ANSWER: c. both the price level and GDP as given. TYPE: M DIFFICULTY: 1 SECTION: 7. In an open economy, the market for loanable funds equates national saving with a. domestic investment. b. net capital outflow. c. the sum of national consumption and government spending. d. the sum of domestic investment and net capital outflow. ANSWER: d. the sum of domestic investment and net capital outflow....
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ECO ch19 - Chapter 19 A Macroeconomic Theory of the Open...

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