Exercise Topic 10 - Topic 10 A Macroeconomic Theory of the...

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Topic 10. A Macroeconomic Theory of the Open Economy 1. Households make their savings available to borrowers through a. resource markets. b. the loanable funds market. c. the labor market. d. taxes. 2. The supply of funds curve is upward sloping because a rise in the interest rate a. decreases the opportunity cost of firms’ investment spending. b. increases the opportunity cost of firms’ investment spending. c. decreases the opportunity cost to households of consuming. d. increases the opportunity cost to households of consuming. 3. Market clearing in the loanable funds market a. guarantees that total spending will be just sufficient to purchase whatever output is produced. b. means that the interest rate will never change. c. guarantees that total spending will equal the quantity of loanable funds demanded. d. requires that the government run a budget deficit. 4. Which of the following changes would cause a movement along the U.S. demand curve for a foreign currency? a. an increase in U.S. real GDP b. a decrease in U.S. real GDP Topic 10 - 1 -
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c. an increase in the U.S. interest rate d. a change in the real exchange rate 5. As the U.S. interest rate falls relative to the British interest rate, a. the U.S. demand curve for pounds will not change. b. the U.S. demand curve for pounds will shift to the left. c. the U.S. demand curve for pounds will shift to the right. d. there will be a move down the existing U.S. demand curve for pounds. 6. The supply of foreign exchange is a. determined by the real exchange rate. b. independent of the real exchange rate. c. determined by central bankers. d. determined by the President.
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Exercise Topic 10 - Topic 10 A Macroeconomic Theory of the...

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