Question 1

If the government reduces tariffs or quotas on imports, then:

Accepted Answer

A) real GDP will decrease. 
B) the real current account balance rises. 
C) net domestic investment will rise. 
D) all of the above. 
A) real GDP will decrease. 
B) the real current account balance rises. 
C) net domestic investment will rise. 
D) all of the above. C

Question 2

The real current account balance equals

Accepted Answer

A) the net international investment position. 
B) the trade balance. 
C) the trade balance plus net real asset income from abroad. 
D) all of the above. 
A) the net international investment position. 
B) the trade balance. 
C) the trade balance plus net real asset income from abroad. 
D) all of the above. C

Question 3

The difference between real GDP in a closed economy and real GNP in an open economy is:

Accepted Answer

A) net real asset income from abroad. 
B) net imports. 
C) net international investment position. 
D) the trade balance. 
A) net real asset income from abroad. 
B) net imports. 
C) net international investment position. 
D) the trade balance. A

Question 4

The terms of trade are:

Accepted Answer

A) (£ per home good)/(£ per foreign good). 
B) the number of units of home goods that can be exported for each unit of foreign goods imported. 
C) home good per foreign good. 
D) all of the above. 
A) (£ per home good)/(£ per foreign good). 
B) the number of units of home goods that can be exported for each unit of foreign goods imported. 
C) home good per foreign good. 
D) all of the above.

Question 5

The terms of trade are:

Accepted Answer

A) (£ per home foreign/(£ per home good). 
B) the number of units of home goods that can be exported for each unit of foreign goods imported. 
C) foreign good per home good. 
D) all of the above. 
A) (£ per home foreign/(£ per home good). 
B) the number of units of home goods that can be exported for each unit of foreign goods imported. 
C) foreign good per home good. 
D) all of the above.

Question 6

The open economy equilibrium business-cycle model predicts that the real current account balance will be:

Accepted Answer

A) the same in expansions and recession. 
B) low in expansions and high in recessions. 
C) high in expansions and low in recessions. 
D) invariant with the business cycle. 
A) the same in expansions and recession. 
B) low in expansions and high in recessions. 
C) high in expansions and low in recessions. 
D) invariant with the business cycle.

Question 7

Net real foreign investment is:

Accepted Answer

A) rt-1•Bft-1/P. 
B) Yt  - (Ct +It +Gt ). 
C) (Bft - Bft-1)/P. 
D) ((Bft - Bft-1)/P) - (rt-1•Bft-1/P). 
A) rt-1•Bft-1/P. 
B) Yt  - (Ct +It +Gt ). 
C) (Bft - Bft-1)/P. 
D) ((Bft - Bft-1)/P) - (rt-1•Bft-1/P).

Question 8

In the market clearing model with world markets for goods and credit, an increase in technology, A, in the home country causes:

Accepted Answer

A) an decrease in the MPK. 
B) an increase in home country gross domestic investment. 
C) an increase in lending to foreigners. 
D) all of the above. 
A) an decrease in the MPK. 
B) an increase in home country gross domestic investment. 
C) an increase in lending to foreigners. 
D) all of the above.

Question 9

In UK data the real current account balance is:

Accepted Answer

A) procyclical. 
B) weakly procyclical. 
C) countercyclical. 
D) weakly countercyclical. 
A) procyclical. 
B) weakly procyclical. 
C) countercyclical. 
D) weakly countercyclical.

Question 10

If the government imposes or increases tariffs or quotas on imports, then:

Accepted Answer

A) real GDP will increase. 
B) the real current account balance rises. 
C) net domestic investment will rise. 
D) all of the above. 
A) real GDP will increase. 
B) the real current account balance rises. 
C) net domestic investment will rise. 
D) all of the above.

Question 11

The law of one price:

Accepted Answer

A) prohibits price discrimination. 
B) is that markets work to ensure that the same good has the same price in all locations. 
C) is a tax on imports. 
D) prohibits price increases unless firms can show there are unusual circumstances. 
A) prohibits price discrimination. 
B) is that markets work to ensure that the same good has the same price in all locations. 
C) is a tax on imports. 
D) prohibits price increases unless firms can show there are unusual circumstances.

Question 12

The trade balance is:

Accepted Answer

A) the balance on the current account. 
B) real GDP less real domestic expenditure. 
C) net foreign investment. 
D) all of the above. 
A) the balance on the current account. 
B) real GDP less real domestic expenditure. 
C) net foreign investment. 
D) all of the above.

Question 13

The trade balance is:

Accepted Answer

A) rt-1•Bft-1/P. 
B) Yt  - (Ct +It +Gt ). 
C) (Bft - Bft-1)/P. 
D) ((Bft - Bft-1)/P) - (rt-1•Bft-1/P). 
A) rt-1•Bft-1/P. 
B) Yt  - (Ct +It +Gt ). 
C) (Bft - Bft-1)/P. 
D) ((Bft - Bft-1)/P) - (rt-1•Bft-1/P).

Question 14

In the market clearing model with world markets for goods and credit, an increase in technology, A, in the home country causes:

Accepted Answer

A) an increase in the MPK. 
B) an increase in home country gross domestic investment. 
C) an increase in borrowing from foreigners. 
D) all of the above. 
A) an increase in the MPK. 
B) an increase in home country gross domestic investment. 
C) an increase in borrowing from foreigners. 
D) all of the above.

Question 15

An increase in the terms of trade:

Accepted Answer

A) reduces real GDP. 
B) increases consumption. 
C) lowers real national saving. 
D) all of the above. 
A) reduces real GDP. 
B) increases consumption. 
C) lowers real national saving. 
D) all of the above.

Question 16

In the Ricardian case, if the government budget deficit is increased, then the trade balance:

Accepted Answer

A) moves toward a deficit too. 
B) moves toward a surplus. 
C) is unaffected. 
D) is exogenous. 
A) moves toward a deficit too. 
B) moves toward a surplus. 
C) is unaffected. 
D) is exogenous.

Question 17

The balance of trade is net exports or imports less exports.

Accepted Answer

A) True 
 B)False

Question 18

If the government imposes or increases tariffs or quotas on imports, then:

Accepted Answer

A) real GDP will decrease. 
B) the real current account balance rises. 
C) net domestic investment will fall. 
D) all of the above. 
A) real GDP will decrease. 
B) the real current account balance rises. 
C) net domestic investment will fall. 
D) all of the above.

Question 19

Tariffs and quotas lead to a higher real GDP growth rate in the country imposing them.

Accepted Answer

A) True 
 B)False

Question 20

If the government reduces tariffs or quotas on imports, then:

Accepted Answer

A) real GDP will decrease. 
B) the real current account balance falls. 
C) net domestic investment will fall. 
D) all of the above. 
A) real GDP will decrease. 
B) the real current account balance falls. 
C) net domestic investment will fall. 
D) all of the above.

If the government reduces tariffs or quotas on imports, then:

The real current account balance equals

The difference between real GDP in a closed economy and real GNP in an open economy is:

The terms of trade are:

The terms of trade are:

The open economy equilibrium business-cycle model predicts that the real current account balance will be:

Net real foreign investment is:

In the market clearing model with world markets for goods and credit, an increase in technology, A, in the home country causes:

In UK data the real current account balance is:

If the government imposes or increases tariffs or quotas on imports, then:

The law of one price:

The trade balance is:

The trade balance is:

In the market clearing model with world markets for goods and credit, an increase in technology, A, in the home country causes:

An increase in the terms of trade:

In the Ricardian case, if the government budget deficit is increased, then the trade balance:

The balance of trade is net exports or imports less exports.

If the government imposes or increases tariffs or quotas on imports, then:

Tariffs and quotas lead to a higher real GDP growth rate in the country imposing them.

If the government reduces tariffs or quotas on imports, then:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

Exchange Rates

Filters

Exam 18: World Markets in Goods and Credit

If the government reduces tariffs or quotas on imports, then:

The real current account balance equals

The difference between real GDP in a closed economy and real GNP in an open economy is:

The terms of trade are:

The terms of trade are:

The open economy equilibrium business-cycle model predicts that the real current account balance will be:

Net real foreign investment is:

In the market clearing model with world markets for goods and credit, an increase in technology, A, in the home country causes:

In UK data the real current account balance is:

If the government imposes or increases tariffs or quotas on imports, then:

The law of one price:

The trade balance is:

The trade balance is:

In the market clearing model with world markets for goods and credit, an increase in technology, A, in the home country causes:

An increase in the terms of trade:

In the Ricardian case, if the government budget deficit is increased, then the trade balance:

The balance of trade is net exports or imports less exports.

If the government imposes or increases tariffs or quotas on imports, then:

Tariffs and quotas lead to a higher real GDP growth rate in the country imposing them.

If the government reduces tariffs or quotas on imports, then:

Thinking About Macroeconomics

National-Income Accounting: Gross Domestic Product and the Price Level

Introduction to Economic Growth

Working With the Solow Growth Model

Conditional Convergence and Long-Run Economic Growth

Macroeconomics Without Microeconomic Foundations

Markets, Prices, Supply, and Demand

Consumption, Saving, and Investment

An Equilibrium Business-Cycle Model

Capital Utilization and Unemployment

The Demand for Money and the Price Level

Inflation, Money Growth, and Interest Rates

Government Expenditure

Taxes

Public Debt

Money and Business Cycles I: the Price-Misperceptions Model

Money and Business Cycles Ii: Sticky Prices and Nominal Wage Rates

Exchange Rates

Filters