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macroeconomics Blanchard chapter 17 questions and answers graded A+ 2024/2025
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macroeconomics Blanchard chapter 17 questions and answers graded A+ 2024/2025
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macroeconomicsBlanchard
chapter
17
Assume
that
the
price
levels
in
two
countries
are
constant.
In
this
situation,
we
know
that
A)
neither
the
real
nor
the
nominal
exchange
rate
can
change.
B)
the
real
exchange
rate
can
change,
while
the
nominal
exchange
rate
is
constant.
C)
the
nominal
exchange
rate
can
change,
while
the
real
exchange
rate
is
constant.
D)
the
real
and
nominal
exchange
rate
must
move
together,
changing
by
the
same
percentage.
E)
the
nominal
exchange
rate
will
fluctuate
more
widely
than
the
real
exchange
rate.
-
ANSD
As
the
economy
moves
up
and
to
the
right
along
the
IS
curve,
which
of
the
following
will
occur
when
exchange
rates
are
flexible?
A)
investment
spending
increases
B)
consumption
increases
C)
the
domestic
currency
depreciates
D)
all
of
the
above
E)
none
of
the
above
-
ANSD
In
order
for
an
individual
to
be
indifferent
between
holding
foreign
or
domestic
bonds,
A)
the
Marshall-Lerner
condition
must
hold.
B)
the
foreign
and
domestic
interest
rates
must
be
equal.
C)
the
expected
rate
of
depreciation
of
the
domestic
currency
is
zero.
D)
the
interest
parity
condition
must
hold.
-
ANSD
The
interest
parity
condition
indicates
that
the
domestic
interest
rate
must
be
equal
to
A)
the
foreign
interest
rate.
B)
the
expected
rate
of
depreciation
of
the
domestic
currency.
C)
the
expected
rate
of
appreciation
of
the
domestic
currency.
D)
the
foreign
interest
rate
minus
the
expected
rate
of
appreciation
of
the
foreign
currency.
E)
none
of
the
above
-
ANSE
Assume
that
the
interest
parity
condition
holds.
Also
assume
that
the
U.S.
interest
rate
is
8%
while
the
U.K.
interest
rate
is
6%.
Given
this
information,
financial
markets
expect
the
pound
to
A)
depreciate
by
14%.
B)
depreciate
by
2%.
C)
appreciate
by
2%.
D)
appreciate
by
6%.
E)
appreciate
by
14%.
-
ANSC Assume
that
the
interest
parity
holds
and
that
the
dollar
is
expected
to
depreciate
against
the
pound.
Given
this
information,
we
know
that
A)
U.S.
and
U.K.
interest
rates
are
equal.
B)
the
U.S.
interest
rate
exceeds
the
U.K.
interest
rate.
C)
the
U.K.
interest
rate
exceeds
the
U.S.
interest
rate.
D)
individuals
will
prefer
to
hold
U.S.
bonds
because
the
U.S.
interest
rate
exceeds
the
U.K.
interest
rate.
E)
none
of
the
above
-
ANSB
In
an
open
economy,
we
know
that
individuals
must
choose
between
which
of
the
following?
A)
domestic
bonds
and
foreign
currency
B)
foreign
goods
and
domestic
currency
C)
domestic
and
foreign
bonds
D)
domestic
goods
and
foreign
currency
E)
none
of
the
above
-
ANSC
Assume
that
the
interest
parity
condition
holds.
Also
assume
that
the
U.S.
interest
rate
is
6%
while
the
U.K.
interest
rate
is
8%.
Given
this
information,
financial
markets
expect
the
pound
to
A)
depreciate
by
14%.
B)
depreciate
by
2%.
C)
appreciate
by
2%.
D)
appreciate
by
6%.
E)
appreciate
by
14%.
-
ANSC
A
real
depreciation
will
tend
to
cause
A)
a
reduction
in
exports.
B)
an
increase
in
imports.
C)
a
reduction
in
net
exports.
D)
an
increase
in
demand
for
domestic
goods.
E)
none
of
the
above
-
ANSD
As
the
economy
moves
up
and
to
the
left
along
the
IS
curve,
which
of
the
following
will
occur
when
exchange
rates
are
flexible?
A)
investment
spending
decreases
B)
consumption
decreases
C)
the
domestic
currency
appreciates
D)
all
of
the
above
E)
none
of
the
above
-
ANSD
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