MacroCH19

MacroCH19 - Before taking this week's Quiz, be sure that...

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Before taking this week's Quiz, be sure that you have mastered the following concepts. The exam includes, but is not limited to these ideas. 1. Which of the following statements regarding the loanable funds market is not true? (Hint: Change in net capital out flow does not affect supply of loanable fund.Re ad everything from THE MARKET FOR Change in net capital out flow does not affect supply of loanable funds 2. An increase in the government budget deficit: (Hint: Read and see Figure 5 on Page 421; Last sentence with italic letters of the second Paragraph on the Page 423.). raise real interest rates, crowd out domestic investment, cause the currency to appreciate, and push the trade balance toward deficit. 3. Which of the following statements regarding the loanable funds market is true? (Hint: Read and see Figure 5 (a) on Page 421 ). The interest rate rises to balance the supply and demand for loanable funds 4. Other things unchanging, a higher U.S. real interest rate:(HInt: Read and see Figure 3 on the Page 418 and see Figure 5(b) and Figure 5(c) on the Page 421). Reduces net capital outflow. Reduced net capital outflow reduces the supply of dollars in the market for foreign-currency exchange which causes the real exchange rate to appreciate, which pushes the trade balance toward deficit. 5. An increase in Europe's taste for U.S. produced Fords would cause the dollar to: (Hint: It will appreciate u.s. dollarbut the total value of U.S. net exports stays the same.Read everything from the Appreciate U.S. dollar but the total value of U.S. net exports stays the same. 6. An increase in the U.S. government budget deficit: (Hint: decreases U.S. net exports and U.S. net capital outflow; See Figure 5 (c) on the Page 421). Decrease U.S. net exports and U.S. net capital outflow 7. The Phrase "twin deficit" refers to: (Hint: the last sentence of the first paragraph on the Page 424). Budget deficit and the trade deficit 8. Which of the following statements regarding the market for foreign - currency exchange is true?(Hint: Know the effect of increase in net exports on the demand for dollars and on value of dollar in the Foreign - Currency Exchange Market; refer figure 6 (c) on the Page 425). Demand for dollars in the foreign currency exchange rises 9.. Which of the following statements regarding the market for foreign-currency exchange is true?( Hint: Know the effect of increase in U.S. net capital outflowon the supply of Dollars and the Value of U.S. Dollar; refer Figure 7 (b) and 7(c) on the Page 427). Increases the supply of dollars which causes the dollar to depreciate.
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10: If the Unites States imposes a quota on the importing of apparel produced in China, which fo the following is true regarding the market for foreign -currency exchange?: ( Hint: Figure 6 (c) on the Page 425). Increases the demand for dollars
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MacroCH19 - Before taking this week's Quiz, be sure that...

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