Question 1

How can changes in the market price of wealth previously acquired alter a country's net foreign wealth?

Accepted Answer

When Japan's stock market lost value in the 1990s,American and European owners of Japanese asset lost value in their claims,while Japan's net foreign wealth increased.Similarly,exchange rate changes can have this effect.When the dollar depreciates against foreign currency,foreigners who hold dollar assets will see their wealth fall when measured in their home currencies.

Question 2

In an open economy,private saving,   ,is equal to

Accepted Answer

A)  I - CA + (G - T). 
B)  I + CA - (G - T). 
C)  I + CA + (G - T). 
D)  I - CA - (G - T). 
E)  I + CA + (G + T). 
A)  I - CA + (G - T). 
B)  I + CA - (G - T). 
C)  I + CA + (G - T). 
D)  I - CA - (G - T). 
E)  I + CA + (G + T). C

Question 3

Assume:
C = 40 + 0.8(Y - T)
G = 10
I = 20
T = 0,where T are taxes.
(a)Calculate Y at equilibrium.
(b)Calculate C,I,and G at equilibrium.
(c)Now assume,
EX = 5 + 4EP*/P
IM = 10 + 0.1 (Y - T)- 3EP*/P
E = 3
P *= 1.5
P = 2
Find equilibrium Y.

Accepted Answer

(a)Y = C + I + G
Y = 350
(b)C = 40 + 0.8 Y = 320
I = 20
G = 10
(c)Y = 269.1667

Question 4

"The Balance of payments is always balances." Discuss.

Accepted Answer

A) True 
 B)False

Question 5

In the United States over the past fifty years,the fraction of GNP devoted to consumption has fluctuated in a range of about

Accepted Answer

A)  42 to 49 percent. 
B)  32 to 39 percent. 
C)  22 to 29 percent. 
D)  82 to 89 percent. 
E)  62 to 70 percent. 
A)  42 to 49 percent. 
B)  32 to 39 percent. 
C)  22 to 29 percent. 
D)  82 to 89 percent. 
E)  62 to 70 percent.

Question 6

Which of the following is FALSE about private savings and government savings?

Accepted Answer

A)  Sᴾ = Y - T - C 
B)  Unlike private saving decisions, government saving decisions are often made with an eye toward their effect on output and employment. 
C)  Total savings (S) = Sᴾ +   . 
D)  The national income identity can help us to analyze the channels through which government saving decisions influence macroeconomic conditions. 
E)  None of the above; all statements are true. 
A)  Sᴾ = Y - T - C 
B)  Unlike private saving decisions, government saving decisions are often made with an eye toward their effect on output and employment. 
C)  Total savings (S) = Sᴾ +   . 
D)  The national income identity can help us to analyze the channels through which government saving decisions influence macroeconomic conditions. 
E)  None of the above; all statements are true.

Question 7

The services British capital provides in Spain are a service export from Britain

Accepted Answer

A)  therefore they are subtracted from British GDP in calculating British GNP. 
B)  therefore they are added to Spanish GDP in calculating Spanish GDP. 
C)  therefore they are added to British GDP in calculating British GNP. 
D)  therefore they are added to Spanish GNP in calculating Spanish GDP. 
E)  therefore they are subtracted from Spanish GNP. 
A)  therefore they are subtracted from British GDP in calculating British GNP. 
B)  therefore they are added to Spanish GDP in calculating Spanish GDP. 
C)  therefore they are added to British GDP in calculating British GNP. 
D)  therefore they are added to Spanish GNP in calculating Spanish GDP. 
E)  therefore they are subtracted from Spanish GNP.

Question 8

Which of the following is TRUE about current cost method and market value method?

Accepted Answer

A)  They are used by the BEA to place current values on foreign indirect investments. 
B)  These methods lead to the same valuations. 
C)  Based on the current cost method, the BEA's 2009 estimate of U.S. net foreign wealth was $2,737.86 billion. 
D)  The current cost method is preferred by the BEA. 
E)  Foreign direct investments of the U.S. are valued at their original purchase price. 
A)  They are used by the BEA to place current values on foreign indirect investments. 
B)  These methods lead to the same valuations. 
C)  Based on the current cost method, the BEA's 2009 estimate of U.S. net foreign wealth was $2,737.86 billion. 
D)  The current cost method is preferred by the BEA. 
E)  Foreign direct investments of the U.S. are valued at their original purchase price.

Question 9

For most macroeconomists

Accepted Answer

A)  gross national income and gross national product are the same. 
B)  gross national income exceeds gross national product. 
C)  gross national product exceeds gross national product. 
D)  it is hard to tell whether gross national income equal gross national product. 
E)  gross national product is much more important than gross national income. 
A)  gross national income and gross national product are the same. 
B)  gross national income exceeds gross national product. 
C)  gross national product exceeds gross national product. 
D)  it is hard to tell whether gross national income equal gross national product. 
E)  gross national product is much more important than gross national income.

Question 10

What are the main aspects of economic life that macroeconomics analysis is most concerned with?

Accepted Answer

There are four main

Question 11

An example of how GNP accounts for services provided by foreign-owned capital (and GDP does not)is

Accepted Answer

A)  earnings of a Spanish factory with British owners counts only in Spain's GDP. 
B)  earnings of a Spanish factory with British owners counts only in Britain's GNP. 
C)  earnings of a Spanish factory counts in Spain's GNP but are part of Britain's GDP. 
D)  earnings of a Spanish factory counts in Spain's GDP but are part of Britain's GNP. 
E)  earnings of a Spanish factory counts in Spain's GNP but not in Britain's GDP or GNP. 
A)  earnings of a Spanish factory with British owners counts only in Spain's GDP. 
B)  earnings of a Spanish factory with British owners counts only in Britain's GNP. 
C)  earnings of a Spanish factory counts in Spain's GNP but are part of Britain's GDP. 
D)  earnings of a Spanish factory counts in Spain's GDP but are part of Britain's GNP. 
E)  earnings of a Spanish factory counts in Spain's GNP but not in Britain's GDP or GNP.

Question 12

The position of the United States current account balance in 2009 was

Accepted Answer

A)  lent over 6 percent of its GNP, resulting in a large current account surplus. 
B)  borrowed over 9 percent of its GNP, leading to a large current account deficit. 
C)  achieved a currant account balance of zero. 
D)  borrowed over 10 percent of its GNP, leading to a large current account deficit. 
E)  borrowed less then 5 percent of its GNP, leading to a large current account surplus. 
A)  lent over 6 percent of its GNP, resulting in a large current account surplus. 
B)  borrowed over 9 percent of its GNP, leading to a large current account deficit. 
C)  achieved a currant account balance of zero. 
D)  borrowed over 10 percent of its GNP, leading to a large current account deficit. 
E)  borrowed less then 5 percent of its GNP, leading to a large current account surplus.

Question 13

In open economies

Accepted Answer

A)  saving and investment are necessarily equal. 
B)  as in a closed economy, saving and investment are not necessarily equal. 
C)  saving and investment are not necessarily equal as they are in a closed economy. 
D)  saving and investment are necessarily equal contrary to the case of a closed economy. 
E)  investment always refers to the domestic stock market. 
A)  saving and investment are necessarily equal. 
B)  as in a closed economy, saving and investment are not necessarily equal. 
C)  saving and investment are not necessarily equal as they are in a closed economy. 
D)  saving and investment are necessarily equal contrary to the case of a closed economy. 
E)  investment always refers to the domestic stock market.

Question 14

Net unilateral transfers

Accepted Answer

A)  are part of a national income. 
B)  are part of a country's product. 
C)  must be added to NNP in calculations of national income. 
D)  are part of a country's GNP. 
E)  Only A and C. 
A)  are part of a national income. 
B)  are part of a country's product. 
C)  must be added to NNP in calculations of national income. 
D)  are part of a country's GNP. 
E)  Only A and C.

Question 15

Which one of the following statements is the MOST accurate?

Accepted Answer

A)  The sale of a used textbook does generate income for factors of production. 
B)  The sale of a used textbook does not generate income for any factor of production. 
C)  The sale of a used textbook sometimes does and sometimes does not generate income for factors of production. 
D)  It is hard to tell whether a sale of a used textbook does or does not generate income for factors of production. 
E)  The sale of a used textbook is a part of the GNP. 
A)  The sale of a used textbook does generate income for factors of production. 
B)  The sale of a used textbook does not generate income for any factor of production. 
C)  The sale of a used textbook sometimes does and sometimes does not generate income for factors of production. 
D)  It is hard to tell whether a sale of a used textbook does or does not generate income for factors of production. 
E)  The sale of a used textbook is a part of the GNP.

Question 16

What can you learn from the figure below which depicts the U.S.GNP and its components for the year 2009?

Accepted Answer

The highest componen

Question 17

A U.S.citizen buys a newly issued share of stock in England,paying for his order with a check,which the British company deposits in its own U.S.bank account in New York.How is this transaction accounted for in the balance of payments?

Accepted Answer

A)  financial account, U.S. asset export 
B)  current account, U.S. service import 
C)  current account, British good export 
D)  financial account, British asset import 
E)  financial account, U.S. asset import 
A)  financial account, U.S. asset export 
B)  current account, U.S. service import 
C)  current account, British good export 
D)  financial account, British asset import 
E)  financial account, U.S. asset import

Question 18

Fill in the following table.

Accepted Answer

The answer of Fill in the following table.
  ...

Question 19

Over the 1980s

Accepted Answer

A)  there is no question that a large increase in U.S. foreign assets did occur. 
B)  there is a question whether a large decrease in U.S. foreign assets did occur. 
C)  there is no question that a large decrease in U.S. foreign assets did occur. 
D)  there is no question that there was almost no change in U.S. foreign assets. 
E)  there is no question that rising exports exceeded U.S. foreign debt. 
A)  there is no question that a large increase in U.S. foreign assets did occur. 
B)  there is a question whether a large decrease in U.S. foreign assets did occur. 
C)  there is no question that a large decrease in U.S. foreign assets did occur. 
D)  there is no question that there was almost no change in U.S. foreign assets. 
E)  there is no question that rising exports exceeded U.S. foreign debt.

Question 20

Ricardian equivalence argues that when the government

Accepted Answer

A)  increases taxes and raises its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. 
B)  cuts taxes and decreases its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. 
C)  cuts taxes and raises its surplus, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. 
D)  cuts taxes and raises its deficit, consumers anticipate that they will face lower taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. 
E)  cuts taxes and raises its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. 
A)  increases taxes and raises its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. 
B)  cuts taxes and decreases its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. 
C)  cuts taxes and raises its surplus, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. 
D)  cuts taxes and raises its deficit, consumers anticipate that they will face lower taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving. 
E)  cuts taxes and raises its deficit, consumers anticipate that they will face higher taxes later to pay for the resulting government debt, thus people will raise their own private saving to offset the fall in government saving.

How can changes in the market price of wealth previously acquired alter a country's net foreign wealth?

In an open economy,private saving, ,is equal to

Assume: C = 40 + 0.8(Y - T) G = 10 I = 20 T = 0,where T are taxes. (a)Calculate Y at equilibrium. (b)Calculate C,I,and G at equilibrium. (c)Now assume, EX = 5 + 4EP/P IM = 10 + 0.1 (Y - T)- 3EP/P E = 3 P *= 1.5 P = 2 Find equilibrium Y.

"The Balance of payments is always balances." Discuss.

In the United States over the past fifty years,the fraction of GNP devoted to consumption has fluctuated in a range of about

Which of the following is FALSE about private savings and government savings?

The services British capital provides in Spain are a service export from Britain

Which of the following is TRUE about current cost method and market value method?

For most macroeconomists

What are the main aspects of economic life that macroeconomics analysis is most concerned with?

An example of how GNP accounts for services provided by foreign-owned capital (and GDP does not)is

The position of the United States current account balance in 2009 was

In open economies

Net unilateral transfers

Which one of the following statements is the MOST accurate?

What can you learn from the figure below which depicts the U.S.GNP and its components for the year 2009?

A U.S.citizen buys a newly issued share of stock in England,paying for his order with a check,which the British company deposits in its own U.S.bank account in New York.How is this transaction accounted for in the balance of payments?

Fill in the following table.

Over the 1980s

Ricardian equivalence argues that when the government

Introduction

Labor Productivity and Comparative Advantage: The Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: The Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions,Outsourcing,and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

Filters

Exam 2: National Income Accounting and the Balance of Payments

How can changes in the market price of wealth previously acquired alter a country's net foreign wealth?

In an open economy,private saving, ,is equal to

Assume: C = 40 + 0.8(Y - T) G = 10 I = 20 T = 0,where T are taxes. (a)Calculate Y at equilibrium. (b)Calculate C,I,and G at equilibrium. (c)Now assume, EX = 5 + 4EP*/P IM = 10 + 0.1 (Y - T)- 3EP*/P E = 3 P *= 1.5 P = 2 Find equilibrium Y.

"The Balance of payments is always balances." Discuss.

In the United States over the past fifty years,the fraction of GNP devoted to consumption has fluctuated in a range of about

Which of the following is FALSE about private savings and government savings?

The services British capital provides in Spain are a service export from Britain

Which of the following is TRUE about current cost method and market value method?

For most macroeconomists

What are the main aspects of economic life that macroeconomics analysis is most concerned with?

An example of how GNP accounts for services provided by foreign-owned capital (and GDP does not)is

The position of the United States current account balance in 2009 was

In open economies

Net unilateral transfers

Which one of the following statements is the MOST accurate?

What can you learn from the figure below which depicts the U.S.GNP and its components for the year 2009?

A U.S.citizen buys a newly issued share of stock in England,paying for his order with a check,which the British company deposits in its own U.S.bank account in New York.How is this transaction accounted for in the balance of payments?

Fill in the following table.

Over the 1980s

Ricardian equivalence argues that when the government

Introduction

Labor Productivity and Comparative Advantage: The Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: The Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions,Outsourcing,and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

Filters

Assume: C = 40 + 0.8(Y - T) G = 10 I = 20 T = 0,where T are taxes. (a)Calculate Y at equilibrium. (b)Calculate C,I,and G at equilibrium. (c)Now assume, EX = 5 + 4EP/P IM = 10 + 0.1 (Y - T)- 3EP/P E = 3 P *= 1.5 P = 2 Find equilibrium Y.