Economics PS 10

1. A country's exports may be written as equal to:

GDP minus consumption minus investment minus government spending.

Imports.

GDP minus imports.

2. Use the following to answer questions 23-27: (Exhibit: Policies Influence Real Exchange Rate) Which of the graphs illustrates the impact on the real exchange rate of contractionary fiscal policies abroad?

(A)

(B)

(C)

(D)

3. An increase in the trade deficit of a small open economy could be the result of:

An increase in taxes.

An increase in government spending.

A decrease in the world interest rate.

The expiration of an investment tax-credit provision.

4. In a small open economy, when the government reduces national saving, the equilibrium real exchange rate:

Rises and net exports fall.

Rises and net exports rise.

Falls and net exports fall.

Falls and net exports rise.

5. In a small open economy with perfect capital mobility, a reduction in the government's budget deficit net exports and the real exchange rate .

Increases; appreciates

Increases; depreciates

Decreases; appreciates

Decreases; depreciates

6. When exports exceed imports, all of the following are true except:

Net capital outflows are positive.

Net exports are positive.

Domestic investment exceeds domestic saving.

Domestic output exceeds spending.

7. Starting from trade balance, if the world interest rate falls, then, holding other factors constant, in a small, open economy the amount of domestic investment will _ and net exports will _.

Increase; increase

Increase; decrease

Increase, not change

Decrease; increase

8. If the real exchange rate decreases, then net exports will _____.

Be positive.

Be negative.

Increase.

Decrease.

9. Use the following to answer questions 23-27: (Exhibit: Policies Influence Real Exchange Rate) Which of the graphs illustrates the impact on the real exchange rate of an increase in investment demand?

(A)

(B)

(C)

(D)

10. Use the following to answer questions 23-27: (Exhibit: Policies Influence Real Exchange Rate) Which of the graphs illustrates the impact on the real exchange rate of protectionist trade policies?

(A)

(B)

(C)

(D)

11. In a small, open economy, if the world interest rate increases, then the supply of domestic currency on the foreign exchange market will _ and the real exchange rate will _, holding all else constant.

Decrease; decrease

Decrease; increase

Increase; decrease

Increase; increase

12. In a small open economy, if consumer confidence falls and consumers decide to save more, then the real exchange rate:

Rises and net exports fall.

And net exports both rise.

Falls and net exports rise.

And net exports both fall.

13. Holding other factors constant, legislation to cut taxes in an open economy will:

Increase national saving and lead to a trade surplus.

Increase national saving and lead to a trade deficit

Reduce national saving and lead to a trade surplus.

Reduce national saving and lead to a trade deficit.

14. The adoption of an investment tax credit in a small open economy is likely to lead to:

No change in either domestic investment or domestic saving in the small open economy.

An increase in both domestic investment and domestic saving in the small open economy.

An increase in domestic saving but no change in domestic investment in the small open economy.

An increase in domestic investment but no change in domestic saving in the small open economy.

15. Starting from a small open economy with balanced trade, if large foreign countries increase their domestic government purchases, this policy will tend to increase:

Investment in the small open economy.

Saving in the small open economy.

Exports by the small open economy.

Imports by the small open economy.

16. In a small, open economy, if the world interest rate falls, then domestic investment will _ and the real exchange rate will _, holding all else constant.

Decrease; decrease

Decrease; increase

Increase; decrease

Increase; increase

17. The currencies of countries with high inflation rates relative to the United States have tended to , and the currencies of countries with low inflation rates relative to the United States have tended to .

Appreciate; appreciate

Appreciate; depreciate

Depreciate; depreciate

Depreciate; appreciate

18. In a small open economy, when foreign governments reduce national saving in their countries, the equilibrium real exchange rate:

Rises and net exports fall.

Rises and net exports rise.

Falls and net exports fall.

Falls and net exports rise.

Economics Ps 10

1. A country's exports may be written as equal to:

2.

What first name or nickname would you like us to use?

2. Use the following to answer questions 23-27: (Exhibit: Policies Influence Real Exchange Rate) Which of the graphs illustrates the impact on the real exchange rate of contractionary fiscal policies abroad?

3. An increase in the trade deficit of a small open economy could be the result of:

4. In a small open economy, when the government reduces national saving, the equilibrium real exchange rate:

5. In a small open economy with perfect capital mobility, a reduction in the government's budget deficit net exports and the real exchange rate .

6. When exports exceed imports, all of the following are true except:

7. Starting from trade balance, if the world interest rate falls, then, holding other factors constant, in a small, open economy the amount of domestic investment will _ and net exports will _.

8. If the real exchange rate decreases, then net exports will _____.

9. Use the following to answer questions 23-27: (Exhibit: Policies Influence Real Exchange Rate) Which of the graphs illustrates the impact on the real exchange rate of an increase in investment demand?

10. Use the following to answer questions 23-27: (Exhibit: Policies Influence Real Exchange Rate) Which of the graphs illustrates the impact on the real exchange rate of protectionist trade policies?

11. In a small, open economy, if the world interest rate increases, then the supply of domestic currency on the foreign exchange market will _ and the real exchange rate will _, holding all else constant.

12. In a small open economy, if consumer confidence falls and consumers decide to save more, then the real exchange rate:

13. Holding other factors constant, legislation to cut taxes in an open economy will:

14. The adoption of an investment tax credit in a small open economy is likely to lead to:

15. Starting from a small open economy with balanced trade, if large foreign countries increase their domestic government purchases, this policy will tend to increase:

16. In a small, open economy, if the world interest rate falls, then domestic investment will _ and the real exchange rate will _, holding all else constant.

17. The currencies of countries with high inflation rates relative to the United States have tended to , and the currencies of countries with low inflation rates relative to the United States have tended to .

18. In a small open economy, when foreign governments reduce national saving in their countries, the equilibrium real exchange rate:

Economics Ps 10

1. A country's exports may be written as equal to:

2.

What first name or nickname would you like us to use?

2. Use the following to answer questions 23-27: (Exhibit: Policies Influence Real Exchange Rate) Which of the graphs illustrates the impact on the real exchange rate of contractionary fiscal policies abroad?

3. An increase in the trade deficit of a small open economy could be the result of:

4. In a small open economy, when the government reduces national saving, the equilibrium real exchange rate:

5. In a small open economy with perfect capital mobility, a reduction in the government's budget deficit ______ net exports and the real exchange rate ______.

6. When exports exceed imports, all of the following are true except:

7. Starting from trade balance, if the world interest rate falls, then, holding other factors constant, in a small, open economy the amount of domestic investment will _____ and net exports will _____.

8. If the real exchange rate decreases, then net exports will _____.

9. Use the following to answer questions 23-27: (Exhibit: Policies Influence Real Exchange Rate) Which of the graphs illustrates the impact on the real exchange rate of an increase in investment demand?

10. Use the following to answer questions 23-27: (Exhibit: Policies Influence Real Exchange Rate) Which of the graphs illustrates the impact on the real exchange rate of protectionist trade policies?

11. In a small, open economy, if the world interest rate increases, then the supply of domestic currency on the foreign exchange market will _____ and the real exchange rate will _____, holding all else constant.

12. In a small open economy, if consumer confidence falls and consumers decide to save more, then the real exchange rate:

13. Holding other factors constant, legislation to cut taxes in an open economy will:

14. The adoption of an investment tax credit in a small open economy is likely to lead to:

15. Starting from a small open economy with balanced trade, if large foreign countries increase their domestic government purchases, this policy will tend to increase:

16. In a small, open economy, if the world interest rate falls, then domestic investment will _____ and the real exchange rate will _____, holding all else constant.

17. The currencies of countries with high inflation rates relative to the United States have tended to ______, and the currencies of countries with low inflation rates relative to the United States have tended to ______.

18. In a small open economy, when foreign governments reduce national saving in their countries, the equilibrium real exchange rate:

5. In a small open economy with perfect capital mobility, a reduction in the government's budget deficit net exports and the real exchange rate .

7. Starting from trade balance, if the world interest rate falls, then, holding other factors constant, in a small, open economy the amount of domestic investment will _ and net exports will _.

11. In a small, open economy, if the world interest rate increases, then the supply of domestic currency on the foreign exchange market will _ and the real exchange rate will _, holding all else constant.

16. In a small, open economy, if the world interest rate falls, then domestic investment will _ and the real exchange rate will _, holding all else constant.

17. The currencies of countries with high inflation rates relative to the United States have tended to , and the currencies of countries with low inflation rates relative to the United States have tended to .