CHAPTER 8
A MACROECONOMIC THEORY OF THE OPEN ECONOMY
FILL IN THE BLANK
1. In market for loanable funds, all savers get into the market to deposit their _____.
2. When Net Capital Outflow is below zero, the capital resources coming from abroad will _____ the demand for loanable funds.
3. The supply of loanable funds is exactly its _____ of a nation.
4. The _____ slopes upward because if the interest rate is higher, the quantity of loanable funds supplied is _____.
5. When Indonesia economy is running trade surplus, the foreigners are buying _____ Indonesia’s goods and services than its citizens.
6. The appreciation of the real exchange rate _____ the quantity of domestic currency in foreign exchange market.
7. The _____ is the variable that link between market for ____ and the market for foreign exchange currency.
8. Simply the budget deficit causes the real exchange rate to _____
9. The _____ raises the real exchange rate but it doesn’t affect real interest rate.
10. The large and sudden movement of funds that out of a country will _____ the real interest rate and the quantity of loanable funds demanded.
TRUE-FALSE
1. When the Capital Outflow is positive, the currency suffers a net capital inflow.
2. The supply of loanable funds comes from the domestic investment and the net capital outflow.
3. The lower interest rate of a country will raise its Net Capital Outflow.
4. Trade deficit occurs when the citizens are spending more on foreign goods and services than selling abroad.
5. The Net Capital Outflow is the source of supply in the market for loanable funds.
6. The Net Capital Outflow is the supply of domestic currency in the foreign exchange market.
7. The government budget deficit will shift the NCO curve to the right.
8. The Capital Flight causes no changing in the market for loanable funds.
9. The import quota is the form of trade policy which says that there’s a limit of a quantity of domestic good produced that can be sold abroad.
10. The import quota will increase the real exchange rate.
MULTIPLE CHOICES
1. The source of supply in the market for foreign exchange currency is:
a. Domestic Invetsment
b. Net Export
c. Net Capital Outflow
d. Saving
2. As the real interest rate _____, the Net Capital Outflow will be reduced.
a. Decrease
b. Increase
c. Zero
d. Fixed
3. The _____ occurs when the Net Export is positive.
a. Trade balance
b. Trade Surplus
c. Trade Deficit
d. Trade Policy
4. What price balances the supply and demand in the market for foreign exchange currency?
a. Risk Premium
b. Shadow Price
c. Real Interest Rate
d. Real Exchange Rate
5. The forms of trade policy are below, except:
a. Tariff
b. Tax on imported goods
c. Money supply determination
d. Import quota
6. When Indonesia government imposes an import quota on China textile, the Net Capital Outflow of Indonesia will be:
a. Stay the same
b. Increase
c. Decrease
d. Unidentified
7. The decrease in Net Capital Outflow reduces the supply of currency to be:
a. Unidentified
b. Stay the same
c. Appreciate
d. Depreciate
8. In market for loanable funds, the borrowers go for:
a. Getting their loans
b. Getting their facility
c. Saving their money
d. Saving their asset
9. The Net Capital Inflow occurs when:
a. NCO > 0
b. NCO < 0
c. NCO is fixed
d. NCO is sticky
10. The supply and demand for loanable funds determines the:
a. Real exchange rate
b. Real interest rate
c. Real money balance
d. Real GDP
ESSAY
1. Explain with graph and equation about the market for loanable funds!
2. Consider two mutual funds – Indonesia and South Korea- what would the mutual funds manager like to do if the Indonesia’ real interest rate is higher?
3. How are the market for the loanable funds and foreign exchange market related to each other? (briefly with equation)
4. Why does the NCO curve in the market of foreign currency exchange is vertical?
5. Explain with graph, how the government budget deficit affect both market.
6. What is Capital Flight? (explain with graph)
7. As the minister of foreign trade, you would like to set up the import quota. What does it likely affect the market for foreign exchange market and the market for loanable funds?
8. What is twin deficits?
9. What happened to the demand in foreign exchange market when there’s an appreciation of real exchange rate?
10. Explain about net inflow of capital and net outflow of capital!
yang dikerjakan :
FIB : genap
T/F : ALL
M/C : ALL
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