Questions from General Economics

Q: Holding other things constant, an appreciation of a nation’s currency causes

Holding other things constant, an appreciation of a nation’s currency causes a. exports to rise and imports to fall. b. exports to fall and imports to rise. c. both exports and imports to rise. d. bot...

Q: The government in an open economy cuts spending to reduce the budget

The government in an open economy cuts spending to reduce the budget deficit. As a result, the interest rate __________, leading to a capital __________ and a real exchange rate __________. a. falls,...

Q: The nation of Ectenia has long banned the export of its highly

The nation of Ectenia has long banned the export of its highly prized puka shells. A newly elected president, however, removes the export ban. This change in policy will cause the nation’s currency to...

Q: A civil war abroad causes foreign investors to seek a safe haven

A civil war abroad causes foreign investors to seek a safe haven for their funds in the United States, leading to __________ U.S. interest rates and a __________ U.S. dollar. a. higher, weaker b. high...

Q: If business leaders in Great Britain become more confident in their economy

If business leaders in Great Britain become more confident in their economy, their optimism will induce them to increase investment, causing the British pound to __________ and pushing the British tra...

Q: George has a life insurance policy that pays his family $1

George has a life insurance policy that pays his family $1 million if he dies. As a result, he does not hesitate to enjoy his favorite hobby of bungee jumping. This is an example of a. moral hazard. b...

Q: In the model of the open economy just developed, two markets

In the model of the open economy just developed, two markets determine two relative prices. What are the markets? What are the two relative prices?

Q: Suppose that Americans decided to spend a smaller fraction of their incomes

Suppose that Americans decided to spend a smaller fraction of their incomes. What would be the effect on saving, investment, interest rates, the real exchange rate, and the trade balance?

Q: Describe the sources of supply and demand in the market for loanable

Describe the sources of supply and demand in the market for loanable funds and the market for foreign-currency exchange.

Q: Name two macroeconomic variables that decline when the economy goes into a

Name two macroeconomic variables that decline when the economy goes into a recession. Name one macroeconomic variable that rises during a recession.