1.- In the openeconomy macroeconomic model, if a country’s supply of loanable funds shifts right, then
A. net capital outflow rises, so the exchange rate rises.
B. net capital outflow rises, so the exchange rate falls.
C. net capital outflow falls, so the exchange rate rises.
D. net capital outflow falls, so the exchange rate falls.
2.- An increase in the budget deficit
A. reduces net capital outflow and domestic investment.
B. reduces net capital outflow and raises domestic investment.
C. raises net capital outflow and domestic investment
D. raises net capital outflow and reduces domestic investment.
3.- Which of the following decreases if the U.S. removes an import quota on computer components?
A. U.S. imports and U.S. exports.
B. U.S. imports but not U.S. exports.
C. U.S. exports but not U.S. imports.
D. Neither U.S. exports nor U.S. imports.
4.- Which of the following will not change the U.S. real interest rate?
A. capital flight from the United States
B. the government budget deficit increases
C. the U.S. imposes import quotas
D. None of the above is correct.
5.- Suppose that U.S. savers decide that holding Brazilian assets has become riskier. What happens to U.S. net capital outflow? What happens to the U.S. real interest rate?
Running head: BUSINESS PAPER 1 Business PaperStudent’s nameInstitution BUSINESS PAPER126.96.36.199.5. ACDCEffects on US net capital flow and interest rate If the US savers find that holding…