Macroeconomic 8

1. What is The Mundell-Fleming model used to explain for:

• 1. How the total output of an open economy is determined

• 1. How policies and shocks affect income and the exchange rate

• Cannot define

• 1. Both A and B

2. What will happen to the supply curve of Loanable Funds if the domestic interest rate (r) is higher than the global interest rate (r*)

• Increase

• Decrease

• 1. Unchanged

• Fluctuate

3. According to the Mudell-Flemic Model, if the domestic interest rate is higher than the global interest rate  (r<r*), the domestic interest rate will increase until

• 1. CI<CO

• 1. r<r*

• 1. r>r*

• r=r*

4. What is “e” referred to in the open economy

• 1. Nominal Interest Rate

• 1. Real Exchange Rate

• 1. Nominal Exchange Rate

• 1. Real Interest Rate

5. In the short run, P is fixed and

• 1. e = Ɛ

• 1. e = r

• 1. e > r

• 1. e ~ Ɛ

6. What will happen to the open economy if e decrease ->Net exports increase

• 1. Export increase, Import decrease

• 1. Export increase, Import increase

• 1. Export decrease, Import decrease

• 1. Export decrease, Import increase

7. The LM* curve will shift when there is a change in

• 1. The output

• 1. Shocks from money demand

• Consumption

• 1. Tax

8. In the short run, what will happen if the government implements the expansionary fiscal policy under floating exchange rate system

• 1. The IS* curve shifts to the left

• 1. The nominal exchange rate increases 

• 1. Total output decreases

• 1. Cannot define

9.  Trade Policy includes…

• Tariff

• 1. Quota 

• 1. Both A and B

• 1. Government spending

10. In the short run, what will happen if the government implements the expansionary monetary policy under floating exchange rate system

• 1. The LM* curve shifts to the right

• 1. The nominal exchange rate increases

• 1. Total output decreases

• 1. Cannot define