国际金融全英八练习.ppt

Exercises True or False? True or False? 1.Which of the following is NOT an objective a country’s macroeconomy is judged against? 2. Equilibrium GDP in the short-run is found when: 3. An increase in government spending will: 4. Which of the following will cause the LM curve to shift to the left? 5. The official settlements balance is in ____if the IS-LM intersection is ____the FE curve Answer for Q4 a.The spending multiplier in this small open economy is about 1.82 (= 1/(0.15 + 0.4)). If real spending initially declines by $2 billion, then domestic product and income will decline by about $3.64 billion (= 1.82 ? $2 billion) b.If domestic product and income decline by $3.64 billion, then the countrys imports will decline by about $1.46 billion (= $3.64 billion ? 0.4). c.The decrease in this countrys imports reduces other countries exports, so foreign product and income decline. d.The decline in foreign product and income reduce foreign imports, so the first countrys exports decrease. This reinforces the change (decline) in the first countrys domestic product and income—an example of foreign-income repercussions. Answer for Q6 External balance is the achievement of a reasonable and sustainable makeup of a countrys overall balance of payments with the rest of the world. While specifying a precise goal is not simple, we often presume that achieving a balance of approximately zero in a countrys official settlements balance is external balance. The FE curve shows all combinations of interest rate and domestic product that result in a zero balance for the countrys official settlements balance. Thus, any point on the FE curve is consistent with this concept of external balance. Answer for Q8 a.A decrease in government spending tends to decrease domestic product (and decrease interest rates because the government has to borrow less when it has a smaller budget deficit). Thus, the IS curve shifts to the left (or down). b.An increase in foreign dem