曼昆宏观经济学三十二章答案.docVIP

SOLUTIONS TO TEXT PROBLEMS: Quick Quizzes 1. The supply of loanable funds comes from national saving. The demand for loanable funds comes from domestic investment and net capital outflow. Supply in the market for foreign-currency exchange comes from net capital outflow. Demand in the market for foreign-currency exchange comes from net exports. 2. The two markets in the model of the open economy are the market for loanable funds and the market for foreign-currency exchange. These markets determine two relative prices: (1) the market for loanable funds determines the real interest rate; and (2) the market for foreign-currency exchange determines the real exchange rate. 3. If Americans decided to spend a smaller fraction of their incomes, the increase in saving would shift the supply curve for loanable funds to the right, as shown in Figure 1. The decline in the real interest rate increases net capital outflow and shifts the supply of dollars to the right in the market for foreign-currency exchange. The result is a decline in the real exchange rate. Since the real interest rate is lower, domestic investment increases. Since net capital outflow increases, the trade balance also increases. Overall, saving and domestic investment increase, the real interest rate and real exchange rate decrease, and the trade balance increases. Figure 1 Questions for Review 1. The supply of loanable funds comes from national saving; the demand for loanable funds comes from domestic investment and net capital outflow. The supply of dollars in the market for foreign exchange comes from net capital outflow; the demand for dollars in the market for foreign exchange comes from net exports. The link between the two markets is net capital outflow. 2. Government budget deficits and trade deficits are sometimes called the twin deficits because a government budget deficit often leads to a trade deficit. The government budget deficit leads to reduced national saving,