Question 1

GATT is

Accepted Answer

A)  the Government Agreement on Trade with Thailand. 
B)  the General Agreement on Tariffs and Trade. 
C)  the General Authority to Tax and Trade. 
D)  the Government Agreement on Taxes and Tariffs. 
E)  the Great Authority to Trade and Tax. 
A)  the Government Agreement on Trade with Thailand. 
B)  the General Agreement on Tariffs and Trade. 
C)  the General Authority to Tax and Trade. 
D)  the Government Agreement on Taxes and Tariffs. 
E)  the Great Authority to Trade and Tax.

Question 2

In the two-period SOE model

Accepted Answer

A)  there is no government. 
B)  the consumption of the government and private consumers is treated as a national choice. 
C)  government spending is exogenous. 
D)  Ricardian equivalence does not hold. 
E)  there is no trade with the outside world. 
A)  there is no government. 
B)  the consumption of the government and private consumers is treated as a national choice. 
C)  government spending is exogenous. 
D)  Ricardian equivalence does not hold. 
E)  there is no trade with the outside world.

Question 3

In a small open economy model

Accepted Answer

A)  domestic producers have monopoly power. 
B)  real interest rates are set by central banks. 
C)  domestic economic agents cannot affect world real interest rates. 
D)  the domestic government takes account of the behaviour of foreign governments. 
E)  the government cannot affect economic outcomes. 
A)  domestic producers have monopoly power. 
B)  real interest rates are set by central banks. 
C)  domestic economic agents cannot affect world real interest rates. 
D)  the domestic government takes account of the behaviour of foreign governments. 
E)  the government cannot affect economic outcomes.

Question 4

In a two-period model, holding everything else constant, an increase in future taxes

Accepted Answer

A)  unambiguously increases the current account surplus. 
B)  unambiguously decreases the current account surplus. 
C)  has an uncertain effect on the current account surplus. 
D)  increases the present value of taxes. 
E)  has no effect on the current account surplus, as long as Ricardian equivalence holds. 
A)  unambiguously increases the current account surplus. 
B)  unambiguously decreases the current account surplus. 
C)  has an uncertain effect on the current account surplus. 
D)  increases the present value of taxes. 
E)  has no effect on the current account surplus, as long as Ricardian equivalence holds.

Question 5

In a two-period model, holding everything else constant, an increase in current taxes

Accepted Answer

A)  unambiguously increases the current account surplus. 
B)  unambiguously decreases the current account surplus. 
C)  has an uncertain effect on the current account surplus. 
D)  increases the present value of taxes. 
E)  has no effect on the current account surplus. 
A)  unambiguously increases the current account surplus. 
B)  unambiguously decreases the current account surplus. 
C)  has an uncertain effect on the current account surplus. 
D)  increases the present value of taxes. 
E)  has no effect on the current account surplus.

Question 6

The current account surplus is not

Accepted Answer

A)  the trade balance. 
B)  the excess of national savings over investment. 
C)  private saving less government deficit. 
D)  output less taxes and trade deficit. 
E)  the negative of the current account deficit. 
A)  the trade balance. 
B)  the excess of national savings over investment. 
C)  private saving less government deficit. 
D)  output less taxes and trade deficit. 
E)  the negative of the current account deficit.

Question 7

One of the reasons why the growth in world trade has occurred is due to

Accepted Answer

A)  more stable political environments. 
B)  countries are getting more prosperous. 
C)  the income inequality gap is narrowing among countries. 
D)  barriers to trade have been relaxed. 
E)  economies have become more materialistic. 
A)  more stable political environments. 
B)  countries are getting more prosperous. 
C)  the income inequality gap is narrowing among countries. 
D)  barriers to trade have been relaxed. 
E)  economies have become more materialistic.

Question 8

Absorption refers to

Accepted Answer

A)  the quantity of imports that is absorbed into the domestic economy. 
B)  the amount of government spending that is absorbed into the domestic economy. 
C)  the amount of transfer payments from the federal government that is absorbed into the domestic economy. 
D)  the quantity of aggregate output that is absorbed into the domestic economy. 
E)  the amount of current period income that is used to purchase domestic aggregate output. 
A)  the quantity of imports that is absorbed into the domestic economy. 
B)  the amount of government spending that is absorbed into the domestic economy. 
C)  the amount of transfer payments from the federal government that is absorbed into the domestic economy. 
D)  the quantity of aggregate output that is absorbed into the domestic economy. 
E)  the amount of current period income that is used to purchase domestic aggregate output.

Question 9

In the two-period model with default, default can be prevented because

Accepted Answer

A)  collateral can be seized. 
B)  no one will lend of a country that might default. 
C)  default can be too costly, so a country does not choose it. 
D)  a country does not want to reveal itself to be a bad borrower. 
E)  the government makes it illegal. 
A)  collateral can be seized. 
B)  no one will lend of a country that might default. 
C)  default can be too costly, so a country does not choose it. 
D)  a country does not want to reveal itself to be a bad borrower. 
E)  the government makes it illegal.

Question 10

In a two-period SOE model, holding everything else constant, an increase in current-period income

Accepted Answer

A)  unambiguously increases the current account surplus. 
B)  unambiguously decreases the current account surplus. 
C)  has an uncertain effect on the current account surplus. 
D)  has no effect on the current account surplus. 
E)  is engineered by the government. 
A)  unambiguously increases the current account surplus. 
B)  unambiguously decreases the current account surplus. 
C)  has an uncertain effect on the current account surplus. 
D)  has no effect on the current account surplus. 
E)  is engineered by the government.

Question 11

In a two-period model with default, if the market interest rate is low, then

Accepted Answer

A)  default is more likely. 
B)  there is no effect on the nation's default decision. 
C)  default is less likely. 
D)  the income effect is larger than the substitution effect. 
E)  there is more inflation. 
A)  default is more likely. 
B)  there is no effect on the nation's default decision. 
C)  default is less likely. 
D)  the income effect is larger than the substitution effect. 
E)  there is more inflation.

Question 12

In the two-period SOE model, the current account surplus is equal to

Accepted Answer

A)  output minus consumption minus government spending. 
B)  output plus consumption minus government spending. 
C)  output minus consumption plus government spending. 
D)  savings plus investment. 
E)  output plus consumption plus government spending. 
A)  output minus consumption minus government spending. 
B)  output plus consumption minus government spending. 
C)  output minus consumption plus government spending. 
D)  savings plus investment. 
E)  output plus consumption plus government spending.

Question 13

In a two-period SOE model, holding everything else constant, an increase in current income

Accepted Answer

A)  unambiguously increases the current account surplus. 
B)  unambiguously decreases the current account surplus. 
C)  has an uncertain effect on the current account surplus. 
D)  must reduce the present value of taxes. 
E)  has no effect on the current account surplus. 
A)  unambiguously increases the current account surplus. 
B)  unambiguously decreases the current account surplus. 
C)  has an uncertain effect on the current account surplus. 
D)  must reduce the present value of taxes. 
E)  has no effect on the current account surplus.

Question 14

A small open economy is an economy

Accepted Answer

A)  in which both imports and exports are less than 5% of GDP. 
B)  whose firms and consumers are individually, but not collectively price takers. 
C)  whose firms and consumers are collectively, but not individually price takers. 
D)  whose firms and consumers are individually and collectively price takers. 
E)  that is open to ideas. 
A)  in which both imports and exports are less than 5% of GDP. 
B)  whose firms and consumers are individually, but not collectively price takers. 
C)  whose firms and consumers are collectively, but not individually price takers. 
D)  whose firms and consumers are individually and collectively price takers. 
E)  that is open to ideas.

Question 15

What would be the impact of a persistent increase in total factor productivity on domestic aggregate output, consumption, investment, and the current account surplus?

Accepted Answer

A persistent increase in total factor pr

Question 16

In a two-period SOE model with production, an increase in current domestic total factor productivity

Accepted Answer

A)  increases domestic output and increases the current account surplus. 
B)  increases domestic output and decreases the current account surplus. 
C)  decreases domestic output and increases the current account surplus. 
D)  decreases domestic output and decreases the current account surplus. 
E)  decreases domestic output and decreases the marginal product of capital. 
A)  increases domestic output and increases the current account surplus. 
B)  increases domestic output and decreases the current account surplus. 
C)  decreases domestic output and increases the current account surplus. 
D)  decreases domestic output and decreases the current account surplus. 
E)  decreases domestic output and decreases the marginal product of capital.

Question 17

In the two-period SOE model, if future income decreases

Accepted Answer

A)  C + G decreases. 
B)  C + G stays the same. 
C)  the current account surplus stays the same. 
D)  the current account surplus decreases. 
E)  the current account surplus increases. 
A)  C + G decreases. 
B)  C + G stays the same. 
C)  the current account surplus stays the same. 
D)  the current account surplus decreases. 
E)  the current account surplus increases.

Question 18

In the two-period model with default, default will occur when

Accepted Answer

A)  the government debt is larger than the total taxes. 
B)  the government surplus is smaller than national income. 
C)  the government debt is smaller than the discounted value of the future penalty from defaulting. 
D)  the government debt is larger than the discounted value of the future penalty from defaulting. 
E)  the government surplus is smaller than the discounted value of the future penalty from defaulting. 
A)  the government debt is larger than the total taxes. 
B)  the government surplus is smaller than national income. 
C)  the government debt is smaller than the discounted value of the future penalty from defaulting. 
D)  the government debt is larger than the discounted value of the future penalty from defaulting. 
E)  the government surplus is smaller than the discounted value of the future penalty from defaulting.

Question 19

In the two-period SOE model with production and investment, an increase in the capital stock

Accepted Answer

A)  reduces output. 
B)  increases investment. 
C)  decreases investment. 
D)  increases output. 
E)  reduces the current account surplus. 
A)  reduces output. 
B)  increases investment. 
C)  decreases investment. 
D)  increases output. 
E)  reduces the current account surplus.

Question 20

One of the reasons why the growth in world trade has occurred is due to

Accepted Answer

A)  more stable political environments. 
B)  countries are getting more prosperous. 
C)  the income inequality gap is narrowing among countries. 
D)  the cost of transporting goods and services has fallen dramatically. 
E)  economies have become more materialistic. 
A)  more stable political environments. 
B)  countries are getting more prosperous. 
C)  the income inequality gap is narrowing among countries. 
D)  the cost of transporting goods and services has fallen dramatically. 
E)  economies have become more materialistic.

GATT is

In the two-period SOE model

In a small open economy model

In a two-period model, holding everything else constant, an increase in future taxes

In a two-period model, holding everything else constant, an increase in current taxes

The current account surplus is not

One of the reasons why the growth in world trade has occurred is due to

Absorption refers to

In the two-period model with default, default can be prevented because

In a two-period SOE model, holding everything else constant, an increase in current-period income

In a two-period model with default, if the market interest rate is low, then

In the two-period SOE model, the current account surplus is equal to

In a two-period SOE model, holding everything else constant, an increase in current income

A small open economy is an economy

What would be the impact of a persistent increase in total factor productivity on domestic aggregate output, consumption, investment, and the current account surplus?

In a two-period SOE model with production, an increase in current domestic total factor productivity

In the two-period SOE model, if future income decreases

In the two-period model with default, default will occur when

In the two-period SOE model with production and investment, an increase in the capital stock

One of the reasons why the growth in world trade has occurred is due to

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

Exam 16: International Trade in Goods and Assets

GATT is

In the two-period SOE model

In a small open economy model

In a two-period model, holding everything else constant, an increase in future taxes

In a two-period model, holding everything else constant, an increase in current taxes

The current account surplus is not

One of the reasons why the growth in world trade has occurred is due to

Absorption refers to

In the two-period model with default, default can be prevented because

In a two-period SOE model, holding everything else constant, an increase in current-period income

In a two-period model with default, if the market interest rate is low, then

In the two-period SOE model, the current account surplus is equal to

In a two-period SOE model, holding everything else constant, an increase in current income

A small open economy is an economy

What would be the impact of a persistent increase in total factor productivity on domestic aggregate output, consumption, investment, and the current account surplus?

In a two-period SOE model with production, an increase in current domestic total factor productivity

In the two-period SOE model, if future income decreases

In the two-period model with default, default will occur when

In the two-period SOE model with production and investment, an increase in the capital stock

One of the reasons why the growth in world trade has occurred is due to

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity among Countries and Endogenous Growth

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters