According to the open-economy macro model, which of the following contains a list only of things...

According to the open-economy macro model, which of the following contains a list only of things that increase when the budget deficit of the U.S. increases?

A.U.S. interest rates, the real exchange rate of the dollar, U.S. domestic investment

B.U.S. supply of loanable funds, U.S. interest rates, U.S. domestic investment

C.U.S. supply of loanable funds, U.S. interest rates, U.S. net capital outflow

D.the real exchange rate of the dollar, U.S. net capital outflow, U.S. net exports

E.U.S. interest rates, the real exchange rate of the dollar, U.S. import

A decrease in the U.S. government budget deficit shifts the supply of U.S. loanable funds to the _________. If the demand for loanable funds does not shift, then the supply shift will cause U.S. interest rates to ___________ and U.S. domestic investment to __________.

A.right; rise; increase.

B.right; fall; increase.

C.left; fall; increase.

D.left; fall; decrease.

E.left; rise; decrease

Expert Solution

a) "E"

An increase in the US budget deficit will increase the interest rate in the market, it will appreciate the dollar and that will lead to a higher imports.

b) "B"

This will shift the supply of the loanable fund to the right, lower the interest rate and increase the domestic investment.

Rahul Sunny answered 2 years ago

According to the open-economy macro model, if the U.S. government imposes a quota on imports of...

According to the open-economy macro model, if the U.S. government imposes a quota on imports of jet planes, then a. net capital outflow rises. b. net exports rise. c. the exchange rate rises. d. All of the above are correct.

According to the open-economy macro model, if the budget deficit of the U.S. increases then U.S....

According to the open-economy macro model, if the budget deficit of the U.S. increases then U.S. interest rates increase, U.S. domestic investment increases, NCO decreases and the U.S imports decrease because the U.S. dollar appreciates. Select one: True False In the market for foreign currency exchange, the amount of U.S. net exports desired at each real exchange rate represents the quantity of U.S. dollars demanded for the purpose of buying U.S. goods and services by foreign residents. Select one: True...

6. According to the open economy macroeconomic model, which of the following statements is (are) correct?...

6. According to the open economy macroeconomic model, which of the following statements is (are) correct? (x) The usual effects of capital flight include a rightward shift of demand in the loanable funds market and a rightward shift of the NCO curve, (y) Capital flight typically causes a decrease in the domestic interest rate and an increase in NCO. (z) Capital flight typically causes the real exchange rate of the domestic currency to depreciate because capital flight causes an increase...

4. According to the open economy macroeconomic model, which of the following statements is (are) correct?...

4. According to the open economy macroeconomic model, which of the following statements is (are) correct? (x) Capital flight requires the cooperation of the country’s airlines to move precious metals to safe areas. (y) A large and sudden movement of funds out of a country is called capital flight (z) Capital flight is frequently caused by an increase in political or economic instability. A. (x), (y) and (z) B. (x) and (y) only C. (x) and (z) only D. (y)...

6.According to the open economy macroeconomic model, which of the following statements is (are) correct? (x)The...

6.According to the open economy macroeconomic model, which of the following statements is (are) correct? (x)The usual effects of capital flight include a rightward shift of demand in the loanable funds marketand a rightward shift of the NCO curve, (y)Capital flight typically causes a decrease in the domestic interest rate and an increase in NCO. (z)Capital flight typically causes the real exchange rate of the domestic currency to depreciate because capital flight causes an increase in the supply of the...

14. According to the open-economy macroeconomic model, which of the following statements is (are) correct? (x)...

14. According to the open-economy macroeconomic model, which of the following statements is (are) correct? (x) In the open-economy macroeconomic model, if for some reason foreign citizens want to purchase more U.S. goods and services at each exchange rate, then the demand for dollars in the market for foreign-currency exchange shifts right. (y) If foreign citizens want to buy fewer U.S. bonds, then the demand for U.S. dollars in the market for foreign currency exchange will shift to the right...

4.According to the open economy macroeconomic model, which of the following statements is (are) correct? (x)Capital...

4.According to the open economy macroeconomic model, which of the following statements is (are) correct? (x)Capital flight requires the cooperation of the country’s airlines to move precious metals to safe areas. (y)A large and sudden movement of funds out of a country is called capital flight (z)Capital flight is frequently caused by an increase in political or economic instability .A.(x), (y) and (z) B. (x) and (y) only C.(x) and (z) only D.(y) and (z) only E.(x) only 5.According to...

Classical small open economy model: According to the Classical small open economy model, what happens to...

Classical small open economy model: According to the Classical small open economy model, what happens to domestic national saving, investment, the trade balance, and the real exchange rate in response to each of the following events? Draw a loanable funds market diagram and a net exports diagram to illustrate your answer in each case. (For these diagrams, let’s assume that the country starts out running a current account surplus and capital account deficit, as in the examples in class.) a)...

In the open economy macroeconomic model, which of the following is included in the supply of...

In the open economy macroeconomic model, which of the following is included in the supply of U.S. dollars in the market for foreign-currency? (x) Nebraska Life, a U.S. life insurance company, wants to buy a Japanese government bond. (y) ABC Securities, a U.S. stock brokerage, wants to purchase stock issued by a French corporation. (z) Tony, a U.S. citizen, wants to hold more currency in case of emergencies. A. (x), (y) and (z) B. (x) and (y) only C. (x)...

In the open economy macroeconomic model which of the following is included in the demand for...

In the open economy macroeconomic model which of the following is included in the demand for U.S. dollars in the market for foreign-currency? (x) A retail outlet in Canada wants to buy computers from a U.S. computer manufacturer. (y) ABC Securities, a U.S. stock brokerage, wants to purchase stock issued by a French corporation. (z) A United States bank that has branch offices in Mexico and Canada loans dollars to Tom, a resident of the United States, who wants to...

Question