Textbooks › Macroeconomics, 7th ed. › Chapter 18
Chapter 18
81 questions · 24 topics · 3 free · not started
The first three are free. Tap an answer to see why.
1 · Recall · Easy · Open Economy Goods Market
Which of the following expressions represents the total domestic demand for goods in an open economy?
Tap an answer. The explanation will appear here, including why each wrong option is wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
Not quite. A is correct.
Domestic demand for goods measures total spending inside the country by domestic residents, firms, and government: C + I + G.
Tap any option to see why it's right or wrong.
2 · Application · Medium · determinants of net exports
Assuming the Marshall-Lerner condition holds, which of the following causes an increase in net exports?
Tap an answer. The explanation will appear here, including why each wrong option is wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
Not quite. D is correct.
The Marshall-Lerner condition guarantees that a real depreciation (a fall in the real exchange rate \epsilon) leads to an improvement in net exports by expanding export volumes and contracting import volumes.
Tap any option to see why it's right or wrong.
3 · Analysis · Hard · foreign shocks in the open economy
Using the goods market equilibrium diagram (ZZ vs. Y) and the net exports (NX) diagram, describe and explain the effects of a reduction in foreign output (Y*) on domestic output (Y), exports (X), imports (IM), and net exports (NX). Specify how curves shift and compare the magnitudes of changes where appropriate.
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Compare with your answer.
Model answer. 1. Effect on exports and the NX curve: A decrease in foreign income Y* reduces foreign demand for domestic goods, causing exports (X) to fall at any given domestic output level. This shifts the NX curve downward by the amount \Delta X.
2. Effect on demand and ZZ curve: Because exports are a component of the demand for domestic goods, the ZZ curve shifts downward by the same amount \Delta X.
3. Effect on domestic output (Y): The downward shift of the ZZ curve reduces equilibrium domestic output Y by a multiplier amount.
4. Effect on imports (IM): As domestic income and output Y fall, domestic spending on foreign goods declines, leading to a fall in imports.
5. Overall effect on net exports (NX): The multiplier effect means the reduction in domestic income is smaller than it would be without imports acting as an automatic stabilizer; specifically, the decrease in imports is strictly smaller than the initial decline in exports (\Delta IM < \Delta X). Consequently, net exports (NX = X - IM/\epsilon) deteriorate overall, leading to a lower net export balance at the final equilibrium.
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