Question

7.   Suppose that Canada imposes an import quota on automobiles. In the open-economy macroeconomic model, which of the following curves would this quota shift?

a.	supply of loanable funds left
b.	demand for loanable funds left
c.	demand for Canadian dollars right
d.	supply of Canadian dollars left

8.   Suppose the Canadian government imposed import quotas on agricultural products. According to the foreign-currency exchange market diagram, which of the following outcomes would most likely result?

a.	Both the demand and supply curves would shift right.
b.	Both the demand and supply curves would shift left.
c.	Only the demand curve would shift right.
d.	Only the supply curve would shift right.

9.   When Mexico suffered from capital flight in 1994, what happened to Mexico’s net exports?

a.	They decreased.
b.	They did not change.
c.	They increased.
d.	They decreased until the peso appreciated; then they increased.

10.   Which of the following would do the most to reduce a trade deficit?

a.	increasing domestic saving
b.	increasing political stability and respect for property rights
c.	negotiating with other countries to get them to reduce their trade restrictions
d.	imposing higher tariffs on imported goods

11.   Which of the following happens during recessions?

a.	Firms produce less but invest more.
b.	Firms have to increase production because of falling prices.
c.	Incomes increase because workers have to work overtime.
d.	Many workers are laid off.

12.   Which of the following best describes the effects of a fall in the price level?

a.	The real value of money and the real exchange rate rise.
b.	The real value of money and the real exchange rate fall.
c.	The real value of money rises, and the real exchange rate falls.
d.	The real value of money falls, and the real exchange rate rises.

13.   In the aggregate demand and aggregate supply model, when does the aggregate quantity of goods demanded increase?

a.	when real wealth falls
b.	when the interest rate rises
c.	when the dollar depreciates
d.	when stock prices decrease

14.   What are the effects of a decrease in the price level?

a.	Wealth falls, people lend less, interest rates fall, and the dollar appreciates.
b.	Wealth falls, people lend less, interest rates rise, and the dollar depreciates.
c.	Wealth rises, people lend more, interest rates rise, and the dollar appreciates.
d.	Wealth rises, people lend more, interest rates fall, and the dollar depreciates.

Need help with 7-14, thank you.

Answer 1

Answer 7.c. demand for Canadian dollars right

Reason

The basic purpose of import quotas is to increase the demand for domestic goods. Since these goods can only be brought in domestic currency there is an increase in demand for domestic currency.

Answer 8.c.demand for Canadian dollars right

Reason

Since the demand for Canadian Agricultural products will rise, there will be a rise in the demand for Canadian dollars as well.

Answer 9.c. They increased.

Reason- During 1994, in Mexico the net capital inflow and net exports increased. Net exports are equal to export minus imports.

Answer 10. d.imposing higher tariffs on imported goods.

Reason- Trade deficit reduces when the export is greater than imports. When higher tariffs are imposed on imports, imports become expensive. Hence imports fall. So, protectionism can reduce the trade deficit.

NOTE- According to Chegg's answering policy only first four questions are answered.