Home / My Courses / 2025 Fall 1 BADM 7200E for Faik Koray (Online)
/ Module 5: The Large Open Economy, Inflation, and Unemployment / Module 5 Homework Assignment
Module 5 Homework Assignment
Status Finished
Started Thursday, September 25, 2025, 6:06 PM
Completed Friday, September 26, 2025, 10:03 PM
Duration 1 day 3 hours
Grade 88.00 out of 100.00
Question 1
Correct 4.00 points out of 4.00
In a large open economy with a floating exchange rate, such as in the United States, in the short run a
monetary contraction:
Select one:
A. raises the interest rate, lowers investment and income, but does not affect the exchange rate.
B. raises the exchange rate, lowers net exports and income, but does not affect the interest rate.
C. initially raises the exchange rate, causing arbitrageurs to sell dollars and return the money supply to its initial level.
D. raises the interest rate and lowers investment and income, but also raises the exchange rate and lowers net exports.
The correct answer is: raises the interest rate and lowers investment and income, but also raises the exchange rate and lowers net exports.
Question 2
Correct 4.00 points out of 4.00
In a short-run model of a large open economy with a floating exchange rate, net capital outflow ______ as
the domestic interest rate increases and is just equal to the ______ in net exports.
Select one:
A. decreases; increase
B. decreases; decrease
C. increases; increase
D. increases; decrease
The correct answer is: decreases; decrease
, Question 3
Correct 4.00 points out of 4.00
In a short-run model of a large open economy, after net capital outflow is substituted for net exports in the
IS curve:
Select one:
A. the larger the absolute value of the responsiveness of net capital outflow with respect to the interest rate, the flatter the IS
curve.
B. the larger the absolute value of the responsiveness of net capital outflow with respect to the interest rate, the steeper the IS
curve.
C. if both domestic investment and net capital outflow are very responsive to the interest rate, they will tend to cancel each other
out.
D. the slope of the IS curve depends only on the interest responsiveness of investment and the marginal propensity to consume.
The correct answer is: the larger the absolute value of the responsiveness of net capital outflow with respect to the interest rate, the flatter
the IS curve.
Question 4
Correct 4.00 points out of 4.00
In a short-run model of a large open economy with a floating exchange rate:
Select one:
A. net exports determine the exchange rate, which in turn determines net capital outflow.
B. net exports determine net capital outflow, which determines the interest rate.
C. the interest rate is determined in the IS–LM framework, and this value determines net capital outflow; then the exchange rate
adjusts to make net exports equal net capital outflow.
D. the interest rate determines investment and net capital outflow, which are equal within the IS–LM framework; the exchange rate
then determines net exports.
The correct answer is: the interest rate is determined in the IS–LM framework, and this value determines net capital outflow; then the
exchange rate adjusts to make net exports equal net capital outflow.
/ Module 5: The Large Open Economy, Inflation, and Unemployment / Module 5 Homework Assignment
Module 5 Homework Assignment
Status Finished
Started Thursday, September 25, 2025, 6:06 PM
Completed Friday, September 26, 2025, 10:03 PM
Duration 1 day 3 hours
Grade 88.00 out of 100.00
Question 1
Correct 4.00 points out of 4.00
In a large open economy with a floating exchange rate, such as in the United States, in the short run a
monetary contraction:
Select one:
A. raises the interest rate, lowers investment and income, but does not affect the exchange rate.
B. raises the exchange rate, lowers net exports and income, but does not affect the interest rate.
C. initially raises the exchange rate, causing arbitrageurs to sell dollars and return the money supply to its initial level.
D. raises the interest rate and lowers investment and income, but also raises the exchange rate and lowers net exports.
The correct answer is: raises the interest rate and lowers investment and income, but also raises the exchange rate and lowers net exports.
Question 2
Correct 4.00 points out of 4.00
In a short-run model of a large open economy with a floating exchange rate, net capital outflow ______ as
the domestic interest rate increases and is just equal to the ______ in net exports.
Select one:
A. decreases; increase
B. decreases; decrease
C. increases; increase
D. increases; decrease
The correct answer is: decreases; decrease
, Question 3
Correct 4.00 points out of 4.00
In a short-run model of a large open economy, after net capital outflow is substituted for net exports in the
IS curve:
Select one:
A. the larger the absolute value of the responsiveness of net capital outflow with respect to the interest rate, the flatter the IS
curve.
B. the larger the absolute value of the responsiveness of net capital outflow with respect to the interest rate, the steeper the IS
curve.
C. if both domestic investment and net capital outflow are very responsive to the interest rate, they will tend to cancel each other
out.
D. the slope of the IS curve depends only on the interest responsiveness of investment and the marginal propensity to consume.
The correct answer is: the larger the absolute value of the responsiveness of net capital outflow with respect to the interest rate, the flatter
the IS curve.
Question 4
Correct 4.00 points out of 4.00
In a short-run model of a large open economy with a floating exchange rate:
Select one:
A. net exports determine the exchange rate, which in turn determines net capital outflow.
B. net exports determine net capital outflow, which determines the interest rate.
C. the interest rate is determined in the IS–LM framework, and this value determines net capital outflow; then the exchange rate
adjusts to make net exports equal net capital outflow.
D. the interest rate determines investment and net capital outflow, which are equal within the IS–LM framework; the exchange rate
then determines net exports.
The correct answer is: the interest rate is determined in the IS–LM framework, and this value determines net capital outflow; then the
exchange rate adjusts to make net exports equal net capital outflow.
