Question 1

Domestic saving must equal domestic investment in

Accepted Answer

A) both closed and open economies. 
B) closed,but not open economies. 
C) open,but not closed economies. 
D) neither closed nor open economies. 
A) both closed and open economies. 
B) closed,but not open economies. 
C) open,but not closed economies. 
D) neither closed nor open economies. B

Question 2

If business opportunities in a country become relatively less attractive relative to those of other countries,then

Accepted Answer

A) both its net exports and net capital outflows fall. 
B) both its net exports and net capital outflows rise. 
C) its net exports fall and its net capital outflows fall. 
D) its net exports rise and its net capital outflows fall 
A) both its net exports and net capital outflows fall. 
B) both its net exports and net capital outflows rise. 
C) its net exports fall and its net capital outflows fall. 
D) its net exports rise and its net capital outflows fall B

Question 3

If Canada's national saving exceeds its domestic investment,then Canada has

Accepted Answer

A) positive net capital outflows and negative net exports. 
B) positive net capital outflows and positive net exports. 
C) negative net capital outflows and negative net exports. 
D) negative net capital outflows and positive net exports. 
A) positive net capital outflows and negative net exports. 
B) positive net capital outflows and positive net exports. 
C) negative net capital outflows and negative net exports. 
D) negative net capital outflows and positive net exports. B

Question 4

Gabrielle,an Italian citizen,uses some previously obtained dollars to purchase a bond issued by a U.S.company.This transaction

Accepted Answer

A) decreases U.S.net capital outflow. 
B) does not change U.S.net capital outflow. 
C) increases U.S.net capital outflow by more than the value of the bond. 
D) increases U.S.net capital outflow by the value of the bond. 
A) decreases U.S.net capital outflow. 
B) does not change U.S.net capital outflow. 
C) increases U.S.net capital outflow by more than the value of the bond. 
D) increases U.S.net capital outflow by the value of the bond.

Question 5

An American retailer sells dollars to obtain euros.It then uses the euros to buy ready-to-assemble furniture from Sweden.These transactions

Accepted Answer

A) increase U.S.net capital outflow because foreigners obtain U.S.assets. 
B) decrease U.S.net capital outflow because foreigners obtain U.S.assets. 
C) increase U.S.net capital outflow because the U.S.buys capital goods. 
D) decrease U.S.net capital outflow because the U.S.buys capital goods. 
A) increase U.S.net capital outflow because foreigners obtain U.S.assets. 
B) decrease U.S.net capital outflow because foreigners obtain U.S.assets. 
C) increase U.S.net capital outflow because the U.S.buys capital goods. 
D) decrease U.S.net capital outflow because the U.S.buys capital goods.

Question 6

Suppose the world had only two countries and domestic residents of country A purchased $50 billion of assets from country B and country B purchased $30 billion of assets from country A.What would the net capital outflows of both countries be?

Accepted Answer

A) $50 billion for country A and $30 billion for country B 
B) $30 billion for country A and $50 billion for country B 
C) $20 billion for country A and -$20 billion for country B 
D) -$20 billion for country A and $20 billion for country B 
A) $50 billion for country A and $30 billion for country B 
B) $30 billion for country A and $50 billion for country B 
C) $20 billion for country A and -$20 billion for country B 
D) -$20 billion for country A and $20 billion for country B

Question 7

Ivan,a Russian citizen,sells several hundred cases of caviar to a restaurant chain in the United States.By itself,this sale

Accepted Answer

A) increases U.S.net exports and decreases Russian net exports. 
B) increases U.S.net exports and has no effect on Russian net exports. 
C) decreases U.S.net exports and increases Russian net exports. 
D) decreases U.S.net exports and has no effect on Russian net exports. 
A) increases U.S.net exports and decreases Russian net exports. 
B) increases U.S.net exports and has no effect on Russian net exports. 
C) decreases U.S.net exports and increases Russian net exports. 
D) decreases U.S.net exports and has no effect on Russian net exports.

Question 8

Suppose that the real return from operating factories in Canada rises relative to the real rate of return in the United States.Other things the same,

Accepted Answer

A) this will increases U.S.net capital outflow and decrease Canadian net capital outflow. 
B) this will decreases U.S.net capital outflow and increase Canadian net capital outflow. 
C) this will only increase U.S.net capital outflow. 
D) this will only increase Canadian net capital outflow. 
A) this will increases U.S.net capital outflow and decrease Canadian net capital outflow. 
B) this will decreases U.S.net capital outflow and increase Canadian net capital outflow. 
C) this will only increase U.S.net capital outflow. 
D) this will only increase Canadian net capital outflow.

Question 9

If a country has business opportunities that are relatively attractive to other countries,we would expect it to have

Accepted Answer

A) both positive net exports and positive net capital outflow. 
B) both negative net exports and negative net capital outflow. 
C) positive net exports and negative net capital outflow. 
D) negative net exports and positive net capital outflow. 
A) both positive net exports and positive net capital outflow. 
B) both negative net exports and negative net capital outflow. 
C) positive net exports and negative net capital outflow. 
D) negative net exports and positive net capital outflow.

Question 10

All saving in the U.S.economy shows up as

Accepted Answer

A) investment in the U.S.economy. 
B) U.S.net capital outflow. 
C) either investment in the U.S.economy or U.S.net capital outflow. 
D) None of the above is correct. 
A) investment in the U.S.economy. 
B) U.S.net capital outflow. 
C) either investment in the U.S.economy or U.S.net capital outflow. 
D) None of the above is correct.

Question 11

A nation's domestic investment is greater than its savings.Which of the following is correct?

Accepted Answer

A) This nation has a negative net capital outflow. 
B) This nation has a trade surplus. 
C) Purchases of foreign assets by domestic residents exceed purchases of domestic assets by foreigners. 
D) All of the above are correct. 
A) This nation has a negative net capital outflow. 
B) This nation has a trade surplus. 
C) Purchases of foreign assets by domestic residents exceed purchases of domestic assets by foreigners. 
D) All of the above are correct.

Question 12

A U.S.corporation builds a restaurant in China.Its expenditures are U.S.

Accepted Answer

A) foreign portfolio investment that increase U.S.net capital outflow. 
B) foreign portfolio investment that decrease U.S.net capital outflow. 
C) foreign direct investment that increase U.S.net capital outflow. 
D) foreign direct investment that decrease U.S.net capital outflow. 
A) foreign portfolio investment that increase U.S.net capital outflow. 
B) foreign portfolio investment that decrease U.S.net capital outflow. 
C) foreign direct investment that increase U.S.net capital outflow. 
D) foreign direct investment that decrease U.S.net capital outflow.

Question 13

A country purchases $3 billion of foreign-produced goods and services and sells $2 billion dollars of domestically produced goods and services to foreign countries.It has

Accepted Answer

A) exports of $3 billion and a trade surplus of $1 billion. 
B) exports of $3 billion and a trade deficit of $1 billion. 
C) exports of $2 billion and a trade surplus of $1 billion. 
D) exports of $2 billion and a trade deficit of $1 billion. 
A) exports of $3 billion and a trade surplus of $1 billion. 
B) exports of $3 billion and a trade deficit of $1 billion. 
C) exports of $2 billion and a trade surplus of $1 billion. 
D) exports of $2 billion and a trade deficit of $1 billion.

Question 14

A U.S.bakery buys wheat from Canada and pays for it with US dollars.This transaction

Accepted Answer

A) increases Canadian net exports,and increases U.S.net capital outflow. 
B) increases Canadian net exports,and decreases U.S.net capital outflow. 
C) decreases Canadian net exports,and increases U.S.net capital outflow. 
D) decreases Canadian net exports,and decreases U.S.net capital outflow. 
A) increases Canadian net exports,and increases U.S.net capital outflow. 
B) increases Canadian net exports,and decreases U.S.net capital outflow. 
C) decreases Canadian net exports,and increases U.S.net capital outflow. 
D) decreases Canadian net exports,and decreases U.S.net capital outflow.

Question 15

From 1960 to about 1980 the net capital outflow of the U.S.was typically

Accepted Answer

A) small but always positive. 
B) small and sometimes negative and sometimes positive. 
C) large and positive. 
D) large but sometimes negative and sometimes positive. 
A) small but always positive. 
B) small and sometimes negative and sometimes positive. 
C) large and positive. 
D) large but sometimes negative and sometimes positive.

Question 16

Net exports measures the difference between a country's

Accepted Answer

A) income and expenditures. 
B) sale of goods and services abroad and purchase of foreign goods and services. 
C) sale of domestic assets abroad and purchase of foreign assets. 
D) All of the above are correct. 
A) income and expenditures. 
B) sale of goods and services abroad and purchase of foreign goods and services. 
C) sale of domestic assets abroad and purchase of foreign assets. 
D) All of the above are correct.

Question 17

A U.S.purchase of oil from overseas paid for with foreign currency it already owned

Accepted Answer

A) increases U.S.net exports,and increases U.S.net capital outflow. 
B) increases U.S.net exports,and decreases U.S.net capital outflow. 
C) decreases U.S.net exports,and increases U.S.net capital outflow. 
D) decreases U.S.net exports,and decreases U.S.net capital outflow. 
A) increases U.S.net exports,and increases U.S.net capital outflow. 
B) increases U.S.net exports,and decreases U.S.net capital outflow. 
C) decreases U.S.net exports,and increases U.S.net capital outflow. 
D) decreases U.S.net exports,and decreases U.S.net capital outflow.

Question 18

If a county has 25 billion euros of imports,15 billion euros of exports,and sells 20 billion euros of assets to foreigners,how many foreign assets do domestic residents purchase?

Accepted Answer

A) 5 billion euros 
B) 10 billion euros 
C) 30 billion euros 
D) None of the above are correct. 
A) 5 billion euros 
B) 10 billion euros 
C) 30 billion euros 
D) None of the above are correct.

Question 19

A Texas ranch sells beef to a U.S.company that sells it to a grocery chain in Japan.These sales

Accepted Answer

A) decrease U.S.exports but increase U.S.net exports. 
B) decrease both U.S.exports and U.S.net exports. 
C) increase both U.S.exports and U.S.net exports. 
D) increase U.S.exports but decrease U.S.net exports. 
A) decrease U.S.exports but increase U.S.net exports. 
B) decrease both U.S.exports and U.S.net exports. 
C) increase both U.S.exports and U.S.net exports. 
D) increase U.S.exports but decrease U.S.net exports.

Question 20

If a country has saving of $2 trillion and investment of $1.5 trillion,then it has

Accepted Answer

A) a trade surplus and its net capital outflow = $.5 trillion. 
B) a trade surplus and its net capital outflow = -$.5 trillion. 
C) a trade deficit and its net capital outflow = $.5 trillion. 
D) a trade deficit and its net capital outflow = -$.5 trillion. 
A) a trade surplus and its net capital outflow = $.5 trillion. 
B) a trade surplus and its net capital outflow = -$.5 trillion. 
C) a trade deficit and its net capital outflow = $.5 trillion. 
D) a trade deficit and its net capital outflow = -$.5 trillion.

Exam 18: Open Economy Macroeconomics Basic Concepts: The International Flows of Goods and Capital

Domestic saving must equal domestic investment in

If business opportunities in a country become relatively less attractive relative to those of other countries,then

If Canada's national saving exceeds its domestic investment,then Canada has

Gabrielle,an Italian citizen,uses some previously obtained dollars to purchase a bond issued by a U.S.company.This transaction

An American retailer sells dollars to obtain euros.It then uses the euros to buy ready-to-assemble furniture from Sweden.These transactions

Suppose the world had only two countries and domestic residents of country A purchased $50 billion of assets from country B and country B purchased $30 billion of assets from country A.What would the net capital outflows of both countries be?

Ivan,a Russian citizen,sells several hundred cases of caviar to a restaurant chain in the United States.By itself,this sale

Suppose that the real return from operating factories in Canada rises relative to the real rate of return in the United States.Other things the same,

If a country has business opportunities that are relatively attractive to other countries,we would expect it to have

All saving in the U.S.economy shows up as

A nation's domestic investment is greater than its savings.Which of the following is correct?

A U.S.corporation builds a restaurant in China.Its expenditures are U.S.

A country purchases $3 billion of foreign-produced goods and services and sells $2 billion dollars of domestically produced goods and services to foreign countries.It has

A U.S.bakery buys wheat from Canada and pays for it with US dollars.This transaction

From 1960 to about 1980 the net capital outflow of the U.S.was typically

Net exports measures the difference between a country's

A U.S.purchase of oil from overseas paid for with foreign currency it already owned

If a county has 25 billion euros of imports,15 billion euros of exports,and sells 20 billion euros of assets to foreigners,how many foreign assets do domestic residents purchase?

A Texas ranch sells beef to a U.S.company that sells it to a grocery chain in Japan.These sales

If a country has saving of $2 trillion and investment of $1.5 trillion,then it has

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion