Question 1

________ refers to the increase in domestic assets held by foreigners minus the increase in foreign assets held domestically.

Accepted Answer

A)  The current account 
B)  The financial account 
C)  Foreign direct investment 
D)  A trade deficit 
A)  The current account 
B)  The financial account 
C)  Foreign direct investment 
D)  A trade deficit

Question 2

Which of the following is included a country's current account?
i.Exports of services
ii.Net transfers
iii.Increases in currency holdings

Accepted Answer

A)  i), ii), and iii) 
B)  i) and ii) 
C)  i) and iii) 
D)  ii) and iii) 
A)  i), ii), and iii) 
B)  i) and ii) 
C)  i) and iii) 
D)  ii) and iii)

Question 3

Which of the following statements is true?
i.Specialization does not work without trade.
ii.Trade does not work without specialization.

Accepted Answer

A)  i) and ii) are both true 
B)  i) and ii) are both false 
C)  i) is true and ii) is false 
D)  i) is false and ii) is true 
A)  i) and ii) are both true 
B)  i) and ii) are both false 
C)  i) is true and ii) is false 
D)  i) is false and ii) is true

Question 4

There exists a strong ________ correlation between GDP per capita and ________.

Accepted Answer

A)  positive; mortality rate 
B)  negative; child labor 
C)  positive; the unemployment rate 
D)  negative; life expectancy 
A)  positive; mortality rate 
B)  negative; child labor 
C)  positive; the unemployment rate 
D)  negative; life expectancy

Question 5

Everything else equal,when U.S.imports ________,net capital outflows ________.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; decrease 
D)  decrease; are unaffected 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; decrease 
D)  decrease; are unaffected

Question 6

Suppose a country's net exports equal −$2.1 billion.Which of the following will happen if the volume of exports increases by $3 billion without any change in the volume of imports?

Accepted Answer

A)  The country's net exports will equal −$5.1 billion. 
B)  The country's net exports will equal −$0.9 billion. 
C)  The country's net exports will become positive. 
D)  The country's net exports will become zero. 
A)  The country's net exports will equal −$5.1 billion. 
B)  The country's net exports will equal −$0.9 billion. 
C)  The country's net exports will become positive. 
D)  The country's net exports will become zero.

Question 7

When the United States exports goods to other countries,the United States ________.

Accepted Answer

A)  makes payments to other countries 
B)  receives payments from other countries 
C)  makes transfers to other countries 
D)  receives transfers from other countries 
A)  makes payments to other countries 
B)  receives payments from other countries 
C)  makes transfers to other countries 
D)  receives transfers from other countries

Question 8

When the United States imports goods from other countries,the United States ________.

Accepted Answer

A)  makes payments to other countries 
B)  receives payments from other countries 
C)  makes transfers to other countries 
D)  receives transfers from other countries 
A)  makes payments to other countries 
B)  receives payments from other countries 
C)  makes transfers to other countries 
D)  receives transfers from other countries

Question 9

When international trade is based on the concept of comparative advantage,then a country will specialize in producing goods that the country can produce ________.

Accepted Answer

A)  at a lower cost than other countries in the same time span 
B)  at a higher price than other countries in the same time span 
C)  more of than other countries in the same time span 
D)  faster than other countries in the same time span 
A)  at a lower cost than other countries in the same time span 
B)  at a higher price than other countries in the same time span 
C)  more of than other countries in the same time span 
D)  faster than other countries in the same time span

Question 10

If ________,net exports are zero.

Accepted Answer

A)  imports exceed exports 
B)  exports equal imports 
C)  imports equal transfer payments 
D)  exports exceed transfer payment 
A)  imports exceed exports 
B)  exports equal imports 
C)  imports equal transfer payments 
D)  exports exceed transfer payment

Question 11

The current account is the sum of ________.

Accepted Answer

A)  net exports and net transfers from abroad 
B)  net exports and net investment from abroad 
C)  consumption, investment, and government expenditure 
D)  net exports, net factor income from abroad, and net transfers from abroad 
A)  net exports and net transfers from abroad 
B)  net exports and net investment from abroad 
C)  consumption, investment, and government expenditure 
D)  net exports, net factor income from abroad, and net transfers from abroad

Question 12

Everything else equal,when U.S.exports ________,net capital outflows ________.

Accepted Answer

A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; are unaffected 
A)  increase; increase 
B)  increase; decrease 
C)  decrease; increase 
D)  decrease; are unaffected

Question 13

Scenario: Consider two economies, Beta and Zeta. Each farmer in Beta can grow 1,000 pounds of apples or 500 pounds of oranges in a year. Each farmer in Zeta can grow 400 pounds of apples or 1,200 pounds of oranges in a year.
-Refer to the scenario above.Which of the following statements is true in this case?

Accepted Answer

A)  Beta has both comparative and absolute advantage in producing apples. 
B)  Zeta has both comparative and absolute advantage in producing apples. 
C)  Beta has a comparative advantage in producing oranges and absolute advantage in producing apples. 
D)  Zeta has a comparative advantage in producing apples and absolute advantage in producing oranges. 
A)  Beta has both comparative and absolute advantage in producing apples. 
B)  Zeta has both comparative and absolute advantage in producing apples. 
C)  Beta has a comparative advantage in producing oranges and absolute advantage in producing apples. 
D)  Zeta has a comparative advantage in producing apples and absolute advantage in producing oranges.

Question 14

Assuming all else equal,if ________,net exports are negative.

Accepted Answer

A)  imports exceed exports 
B)  exports exceed imports 
C)  imports exceed transfer payments 
D)  exports exceed transfer payments 
A)  imports exceed exports 
B)  exports exceed imports 
C)  imports exceed transfer payments 
D)  exports exceed transfer payments

Question 15

A U.S.company selling cameras to a Japanese company is an example of a(n)________.

Accepted Answer

A)  export to the United States 
B)  import by Japan 
C)  foreign direct investment by the United States 
D)  transfer payment to the United States 
A)  export to the United States 
B)  import by Japan 
C)  foreign direct investment by the United States 
D)  transfer payment to the United States

Question 16

Foreign residents can receive income-based payments in which of the following forms?

Accepted Answer

A)  Exports, factor payments to foreigners, and transfers to foreigners 
B)  Imports, factor payments from foreigners, and transfers to foreigners 
C)  Exports, factor payments from foreigners, and transfers to foreigners 
D)  Imports, factor payments to foreigners, and transfers to foreigners 
A)  Exports, factor payments to foreigners, and transfers to foreigners 
B)  Imports, factor payments from foreigners, and transfers to foreigners 
C)  Exports, factor payments from foreigners, and transfers to foreigners 
D)  Imports, factor payments to foreigners, and transfers to foreigners

Question 17

A tariff does not raise any revenue for the government if ________.

Accepted Answer

A)  it reduces imports to zero 
B)  exports equal imports 
C)  imports exceed exports 
D)  exports exceed imports 
A)  it reduces imports to zero 
B)  exports equal imports 
C)  imports exceed exports 
D)  exports exceed imports

Question 18

The national accounting identity relating the financial account to savings and investment is ________.

Accepted Answer

A)  I - S = NX 
B)  NX - S = I 
C)  NX = S - I 
D)  S - I = -NX 
A)  I - S = NX 
B)  NX - S = I 
C)  NX = S - I 
D)  S - I = -NX

Question 19

The correct calculation for the current account is given by ________.

Accepted Answer

A)  Exports + Net factor payments from abroad + Net domestic transfers 
B)  Net exports + Net domestic factor payments + Net domestic transfers 
C)  Net exports + Net factor payments from abroad + Net transfers from abroad 
D)  Net exports + Net domestic factor payments + Net transfers from abroad 
A)  Exports + Net factor payments from abroad + Net domestic transfers 
B)  Net exports + Net domestic factor payments + Net domestic transfers 
C)  Net exports + Net factor payments from abroad + Net transfers from abroad 
D)  Net exports + Net domestic factor payments + Net transfers from abroad

Question 20

List all the sources of income-based payments from foreigners.

Accepted Answer

The different sources of income-based pa

________ refers to the increase in domestic assets held by foreigners minus the increase in foreign assets held domestically.

Which of the following is included a country's current account? i.Exports of services ii.Net transfers iii.Increases in currency holdings

Which of the following statements is true? i.Specialization does not work without trade. ii.Trade does not work without specialization.

There exists a strong correlation between GDP per capita and .

Everything else equal,when U.S.imports ,net capital outflows .

Suppose a country's net exports equal −$2.1 billion.Which of the following will happen if the volume of exports increases by $3 billion without any change in the volume of imports?

When the United States exports goods to other countries,the United States ________.

When the United States imports goods from other countries,the United States ________.

When international trade is based on the concept of comparative advantage,then a country will specialize in producing goods that the country can produce ________.

If ________,net exports are zero.

The current account is the sum of ________.

Everything else equal,when U.S.exports ,net capital outflows .

Assuming all else equal,if ________,net exports are negative.

A U.S.company selling cameras to a Japanese company is an example of a(n)________.

Foreign residents can receive income-based payments in which of the following forms?

A tariff does not raise any revenue for the government if ________.

The national accounting identity relating the financial account to savings and investment is ________.

The correct calculation for the current account is given by ________.

List all the sources of income-based payments from foreigners.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Open Economy Macroeconomics

Filters

Exam 14: Macroeconomics and International Trade

________ refers to the increase in domestic assets held by foreigners minus the increase in foreign assets held domestically.

Which of the following is included a country's current account? i.Exports of services ii.Net transfers iii.Increases in currency holdings

Which of the following statements is true? i.Specialization does not work without trade. ii.Trade does not work without specialization.

There exists a strong ________ correlation between GDP per capita and ________.

Everything else equal,when U.S.imports ________,net capital outflows ________.

Suppose a country's net exports equal −$2.1 billion.Which of the following will happen if the volume of exports increases by $3 billion without any change in the volume of imports?

When the United States exports goods to other countries,the United States ________.

When the United States imports goods from other countries,the United States ________.

When international trade is based on the concept of comparative advantage,then a country will specialize in producing goods that the country can produce ________.

If ________,net exports are zero.

The current account is the sum of ________.

Everything else equal,when U.S.exports ________,net capital outflows ________.

Assuming all else equal,if ________,net exports are negative.

A U.S.company selling cameras to a Japanese company is an example of a(n)________.

Foreign residents can receive income-based payments in which of the following forms?

A tariff does not raise any revenue for the government if ________.

The national accounting identity relating the financial account to savings and investment is ________.

The correct calculation for the current account is given by ________.

List all the sources of income-based payments from foreigners.

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, Supply, and Equilibrium

The Wealth of Nations: Defining and Measuring Macroeconomic Aggregates

Aggregate Incomes

Economic Growth

Why Isn't the Whole World Developed?

Employment and Unemployment

Credit Markets

The Monetary System

Short-Run Fluctuations

Countercyclical Macroeconomic Policy

Open Economy Macroeconomics

Filters

There exists a strong correlation between GDP per capita and .

Everything else equal,when U.S.imports ,net capital outflows .

Everything else equal,when U.S.exports ,net capital outflows .