SOL_CHAP_32 - SOL CHAP 32 A macroeconomic theory of open...

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SOL CHAP 32 A macroeconomic theory of open economy PART 1: Multiple choices: 1. 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. ANS: C PTS: 1 DIF: 1 REF: 32-0 TOP: Open-economy macroeconomic modelMSC: Definitional 2. 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. ANS: D PTS: 1 DIF: 1 REF: 32-1 TOP: Market for loanable funds MSC: Interpretive 3. In the open-economy macroeconomic model, the supply of loanable funds comes from a.national saving. b.private saving. c.domestic investment. d.the sum of domestic investment and net capital outflow. ANS: A PTS: 1 DIF: 1 REF: 32-1 TOP: Market for loanable funds MSC: Definitional 4. The purchase of a capital asset adds to the demand for loanable funds a.only if the asset is located at home. b.only if the asset is located abroad. c.whether the asset is located at home or abroad. d.None of the above is correct. ANS: C PTS: 1 DIF: 1 REF: 32-1 TOP: Market for loanable funds MSC: Applicative 5. Other things the same, a higher real interest rate raises the quantity of a.domestic investment. b.net capital outflow. c.loanable funds demanded. d.loanable funds supplied. ANS: D PTS: 1 DIF: 1 REF: 32-1 TOP: Market for loanable funds MSC: Applicative
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6. A fall in the real interest rate a.increases the quantity of loanable funds demanded because firms will want to borrow more b.decreases the quantity of loanable funds demanded because firms will want to borrow less. c.increases the quantity of loanable funds supplied because firms will want to borrow more. d.decreases the quantity of loanable funds supplied because firms will want to borrow less. ANS: A PTS: 1 DIF: 1 REF: 32-1 TOP: Market for loanable funds MSC: Applicative 7. If interest rates rose more in France than in the U.S., then other things the same a.U.S. citizens would buy more French bonds and French citizens would buy more U.S. bonds. b.U.S. citizens would buy more French bonds and French citizens would buy fewer U.S. bonds. c.U.S. citizens would buy fewer French bonds and French citizens would buy more U.S. bonds. d.U.S. citizens would buy fewer French bonds and French citizens would buy fewer U.S. bonds. ANS: B PTS: 1 DIF: 1 REF: 32-1 TOP: Market for loanable funds MSC: Applicative 8. Other things the same, an increase in the interest rate would tend to reduce a.domestic investment, but not net capital outflow. b.net capital outflow, but not domestic investment.
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SOL_CHAP_32 - SOL CHAP 32 A macroeconomic theory of open...

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