FAC 1602 ASSIGNMENT 5 COMPREHENSIVE EXAM SCRIPT COMPLETE QUESTIONS VERIFIED

FAC 1602 ASSIGNMENT 5 COMPREHENSIVE EXAM SCRIPT COMPLETE QUESTIONS
VERIFIED SOLUTIONS




Question:
The graph above depicts supply and demand for U.S. dollars during a trading day, where the
quantity is millions of dollars. In order to support a fixed exchange rate of 0.30 pounds per dollar,
the U.S. central bank must.

Answer:
sell 0.8 million dollars per trading day.



Question:
In an open economy, expansionary monetary policy will cause.

Answer:
consumption, investment, and net exports to rise.



Question:
Contractionary monetary policy should increase foreign financial investment in the United States.

Answer:
False



Question:
Fiscal policy has a greater impact in a closed economy than it does in an open economy.

Answer:
True

, Question:
Ceteris paribus, an increase in the government budget deficit increases interest rates in the United
States and causes a real appreciation of the dollar.

Answer:
False



Question:
If net exports are equal to net foreign investment,.

Answer:
.



Question:
In an open economy, the current account balance equals ________. (Assume that the capital account
is zero and net transfers are zero.).

Answer:
net foreign investment



Question:
Public saving equals taxes minus government spending minus transfer payments.

Answer:
True



Question:
Refer to Figure 18-1. The appreciation of the dollar is represented as a movement from.

Answer:
D to C.