Question 1

The real current account balance equals:

Accepted Answer

A) net foreign investments. 
B) the net international investment position. 
C) the trade balance. 
D) all of the above. 
A) net foreign investments. 
B) the net international investment position. 
C) the trade balance. 
D) all of the above.

Question 2

Net real asset income from abroad 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 3

The terms of trade are:

Accepted Answer

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

Question 4

The real current account balance is real national saving less net domestic investment.

Accepted Answer

A) True 
 B)False

Question 5

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

Question 6

The balance on the current account is:

Accepted Answer

A) real GNP less net foreign investment income. 
B) real GNP less net foreign investment. 
C) real GNP less the net international investment position. 
D) real GNP less real domestic expenditure. 
A) real GNP less net foreign investment income. 
B) real GNP less net foreign investment. 
C) real GNP less the net international investment position. 
D) real GNP less real domestic expenditure.

Question 7

The balance on the current account:

Accepted Answer

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

Question 8

What does the open market clearing model predict about the association of the real current account balance and real GDP growth and what do the data on the UK show?

Accepted Answer

The model predicts that the re

Question 9

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

Accepted Answer

A) acyclical. 
B) procyclical. 
C) countercyclical. 
D) exogenous. 
A) acyclical. 
B) procyclical. 
C) countercyclical. 
D) exogenous.

Question 10

An increase in the terms of trade:

Accepted Answer

A) raises real GDP. 
B) increases consumption. 
C) increases real national saving if the change in terms of trade is less than fully permanent. 
D) all of the above. 
A) raises real GDP. 
B) increases consumption. 
C) increases real national saving if the change in terms of trade is less than fully permanent. 
D) all of the above.

Question 11

An increase in the terms of trade:

Accepted Answer

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

Question 12

While according to the model the current account balance will be countercyclical, the balance can also decline due to:

Accepted Answer

A) a temporary positive shock like a positive harvest 
B) a less developed country having a high capital stock. 
C) a temporary increase in government purchases as in war time. 
D) all of the above. 
A) a temporary positive shock like a positive harvest 
B) a less developed country having a high capital stock. 
C) a temporary increase in government purchases as in war time. 
D) all of the above.

Question 13

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

Question 14

Real GNP in an open economy is:

Accepted Answer

A) the closed economy real output less net real asset income from abroad. 
B) the closed economy real output plus gross real asset income from abroad. 
C) the closed economy real output less gross real asset income from abroad. 
D) the closed economy real output plus net real asset income from abroad. 
A) the closed economy real output less net real asset income from abroad. 
B) the closed economy real output plus gross real asset income from abroad. 
C) the closed economy real output less gross real asset income from abroad. 
D) the closed economy real output plus net real asset income from abroad.

Question 15

In UK data the real current account balance is:

Accepted Answer

A) procyclical when the model predicts it will be countercyclical. 
B) procyclical as the model predicts. 
C) countercyclical when the model predicts it will be procyclical. 
D) countercyclical as the model predicts. 
A) procyclical when the model predicts it will be countercyclical. 
B) procyclical as the model predicts. 
C) countercyclical when the model predicts it will be procyclical. 
D) countercyclical as the model predicts.

Question 16

A decrease in the terms of trade:

Accepted Answer

A) reduces real GDP. 
B) decreases consumption. 
C) decreases real national saving if the change in terms of trade is less than fully permanent. 
D) all of the above. 
A) reduces real GDP. 
B) decreases consumption. 
C) decreases real national saving if the change in terms of trade is less than fully permanent. 
D) all of the above.

Question 17

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

Question 18

The real current account balance equals:

Accepted Answer

A) the trade balance. 
B) real GNP less real domestic expenditure. 
C) the net international investment position. 
D) all of the above. 
A) the trade balance. 
B) real GNP less real domestic expenditure. 
C) the net international investment position. 
D) all of the above.

Question 19

An increase in the terms of trade:

Accepted Answer

A) reduces real GDP. 
B) decreases consumption. 
C) increases real national saving if the change in terms of trade is less than fully permanent. 
D) all of the above. 
A) reduces real GDP. 
B) decreases consumption. 
C) increases real national saving if the change in terms of trade is less than fully permanent. 
D) all of the above.

Question 20

While according to the model the current account balance will be countercyclical, the balance can also decline due to:

Accepted Answer

A) a temporary negative shock like a harvest failure. 
B) a less developed country having a low capital stock. 
C) a temporary increase in government purchases as in war time. 
D) all of the above. 
A) a temporary negative shock like a harvest failure. 
B) a less developed country having a low capital stock. 
C) a temporary increase in government purchases as in war time. 
D) all of the above.

The real current account balance equals:

Net real asset income from abroad is:

The terms of trade are:

The real current account balance is real national saving less net domestic investment.

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

The balance on the current account is:

The balance on the current account:

What does the open market clearing model predict about the association of the real current account balance and real GDP growth and what do the data on the UK show?

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

An increase in the terms of trade:

An increase in the terms of trade:

While according to the model the current account balance will be countercyclical, the balance can also decline due to:

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

Real GNP in an open economy is:

In UK data the real current account balance is:

A decrease in the terms of trade:

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

The real current account balance equals:

An increase in the terms of trade:

While according to the model the current account balance will be countercyclical, the balance can also decline due to:

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

The real current account balance equals:

Net real asset income from abroad is:

The terms of trade are:

The real current account balance is real national saving less net domestic investment.

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

The balance on the current account is:

The balance on the current account:

What does the open market clearing model predict about the association of the real current account balance and real GDP growth and what do the data on the UK show?

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

An increase in the terms of trade:

An increase in the terms of trade:

While according to the model the current account balance will be countercyclical, the balance can also decline due to:

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

Real GNP in an open economy is:

In UK data the real current account balance is:

A decrease in the terms of trade:

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

The real current account balance equals:

An increase in the terms of trade:

While according to the model the current account balance will be countercyclical, the balance can also decline due to:

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