Question 1

U.S.international trade has

Accepted Answer

A) decreased because of a decrease in the trade of goods with a high value per pound. 
B) decreased because of an increase in the trade of goods with a high value per pound. 
C) increased because of a decrease in trade of goods with a high value per pound. 
D) increased because of an increase in trade of goods with a high value per pound. 
A) decreased because of a decrease in the trade of goods with a high value per pound. 
B) decreased because of an increase in the trade of goods with a high value per pound. 
C) increased because of a decrease in trade of goods with a high value per pound. 
D) increased because of an increase in trade of goods with a high value per pound.

Question 2

When Jamie,a U.S.citizen,purchases a wool jacket made in Ireland,the purchase is

Accepted Answer

A) both a U.S.and Irish import. 
B) a U.S.import and an Irish export. 
C) a U.S.export and an Irish import. 
D) neither an export nor an import for either country. 
A) both a U.S.and Irish import. 
B) a U.S.import and an Irish export. 
C) a U.S.export and an Irish import. 
D) neither an export nor an import for either country.

Question 3

A firm in the United Kingdom hires a firm in the U.S.to train its managers.By itself this transaction

Accepted Answer

A) increases U.S.imports and decreases U.S.net exports. 
B) increases U.S.imports and increases U.S.net exports. 
C) increases U.S.exports and decreases U.S.net exports. 
D) increases U.S.exports and increases U.S.net exports. 
A) increases U.S.imports and decreases U.S.net exports. 
B) increases U.S.imports and increases U.S.net exports. 
C) increases U.S.exports and decreases U.S.net exports. 
D) increases U.S.exports and increases U.S.net exports.

Question 4

In an open economy,gross domestic product equals $3,500 billion,consumption expenditure equals $2100 billion,government expenditure equals $400 billion,investment equals $800 billion,and net exports equals $200 billion.What is national savings?

Accepted Answer

A) $200 billion 
B) $600 billion 
C) $800 billion 
D) $1,000 billion 
A) $200 billion 
B) $600 billion 
C) $800 billion 
D) $1,000 billion

Question 5

A country has $40 billion of domestic investment and net capital outflows of -$20 billion.What is the country's saving?

Accepted Answer

A) -$60 billion 
B) -$20 billion 
C) $20 billion 
D) $60 billion 
A) -$60 billion 
B) -$20 billion 
C) $20 billion 
D) $60 billion

Question 6

Alfonso,a citizen of Italy,decides to purchase bonds issued by Ireland instead of ones issued by the United States even though the Irish bonds have a higher risk of default.An economic reason for his decision might be that

Accepted Answer

A) he dislikes U.S.foreign policy. 
B) the Irish bonds pay a higher rate of interest. 
C) the U.S.government is more stable than the Irish government. 
D) None of the above provide an economic reason for buying the riskier bond. 
A) he dislikes U.S.foreign policy. 
B) the Irish bonds pay a higher rate of interest. 
C) the U.S.government is more stable than the Irish government. 
D) None of the above provide an economic reason for buying the riskier bond.

Question 7

Which of the following equations is always correct in an open economy?

Accepted Answer

A) I = Y - C 
B) I = S 
C) I = S - NCO 
D) I = S + NX 
A) I = Y - C 
B) I = S 
C) I = S - NCO 
D) I = S + NX

Question 8

An Italian company exchanges euros for dollars from U.S.residents and then uses the dollars to buy U.S.products to sell in its stores in Rome.U.S.residents who exchanged their dollars for euros use the euros to buy bonds issued by French corporations.At this point

Accepted Answer

A) both U.S.net exports and U.S.net capital outflows have risen. 
B) both U.S.net exports and U.S.net capital outflow have fallen. 
C) U.S.net exports have risen and U.S.net capital outflow have fallen. 
D) U.S.net exports have fallen and U.S.net capital outflow have risen. 
A) both U.S.net exports and U.S.net capital outflows have risen. 
B) both U.S.net exports and U.S.net capital outflow have fallen. 
C) U.S.net exports have risen and U.S.net capital outflow have fallen. 
D) U.S.net exports have fallen and U.S.net capital outflow have risen.

Question 9

Net capital outflow equals the purchase of

Accepted Answer

A) foreign assets by domestic residents. 
B) domestic assets by foreign residents. 
C) domestic assets by foreign residents - the purchase of foreign assets by domestic residents 
D) foreign assets by domestic residents - the purchase of domestic assets by foreign residents 
A) foreign assets by domestic residents. 
B) domestic assets by foreign residents. 
C) domestic assets by foreign residents - the purchase of foreign assets by domestic residents 
D) foreign assets by domestic residents - the purchase of domestic assets by foreign residents

Question 10

An open economy's GDP is always given by

Accepted Answer

A) Y = C + I + G. 
B) Y = C + I + G + T. 
C) Y = C + I + G + S. 
D) Y = C + I + G + NX. 
A) Y = C + I + G. 
B) Y = C + I + G + T. 
C) Y = C + I + G + S. 
D) Y = C + I + G + NX.

Question 11

If a country had a trade surplus of $100 billion and then its exports rose by $40 billion and its imports rose by $30 billion,its net exports would now be

Accepted Answer

A) $110 billion 
B) $90 billion. 
C) $70 billion. 
D) $60 billion. 
A) $110 billion 
B) $90 billion. 
C) $70 billion. 
D) $60 billion.

Question 12

A U.S.firm exchanges dollars for yen and then uses them to buy Japanese goods.Overall as a result of these transactions

Accepted Answer

A) both U.S.net capital outflow and U.S.net exports rise. 
B) both U.S.net capital outflow and U.S.net exports fall. 
C) U.S.net capital outflow rises and U.S.net exports fall. 
D) U.S.net capital outflow falls and U.S.net exports rise. 
A) both U.S.net capital outflow and U.S.net exports rise. 
B) both U.S.net capital outflow and U.S.net exports fall. 
C) U.S.net capital outflow rises and U.S.net exports fall. 
D) U.S.net capital outflow falls and U.S.net exports rise.

Question 13

Which of the following equations is correct?

Accepted Answer

A) S = I + C 
B) S = I - NX 
C) S = I + NCO 
D) S = NX - NCO. 
A) S = I + C 
B) S = I - NX 
C) S = I + NCO 
D) S = NX - NCO.

Question 14

Dave,a U.S.citizen buys a bicycle manufactured in China.Dave's purchase is

Accepted Answer

A) both a U.S.and Chinese export. 
B) both a U.S.and Chinese import. 
C) a U.S.import and a Chinese export. 
D) a U.S.export and a Chinese import. 
A) both a U.S.and Chinese export. 
B) both a U.S.and Chinese import. 
C) a U.S.import and a Chinese export. 
D) a U.S.export and a Chinese import.

Question 15

Net capital outflow is defined as the purchase of

Accepted Answer

A) foreign assets by domestic residents minus the purchase of domestic assets by foreign residents. 
B) foreign assets by domestic residents minus the purchase of foreign goods and services by domestic residents. 
C) domestic assets by foreign residents minus the purchase of domestic goods and services by foreign residents. 
D) domestic assets by foreign residents minus the purchase of foreign assets by domestic residents. 
A) foreign assets by domestic residents minus the purchase of domestic assets by foreign residents. 
B) foreign assets by domestic residents minus the purchase of foreign goods and services by domestic residents. 
C) domestic assets by foreign residents minus the purchase of domestic goods and services by foreign residents. 
D) domestic assets by foreign residents minus the purchase of foreign assets by domestic residents.

Question 16

When Microsoft establishes a distribution center in France,U.S.net capital outflow

Accepted Answer

A) increases because Microsoft makes a portfolio investment in France. 
B) decreases because Microsoft makes a portfolio investment in France. 
C) increases because Microsoft makes a direct investment in capital in France. 
D) decreases because Microsoft makes a direct investment in capital France. 
A) increases because Microsoft makes a portfolio investment in France. 
B) decreases because Microsoft makes a portfolio investment in France. 
C) increases because Microsoft makes a direct investment in capital in France. 
D) decreases because Microsoft makes a direct investment in capital France.

Question 17

Jill,a U.S.citizen,uses some euros to purchase a bond issued by a French vineyard.This exchange

Accepted Answer

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

Question 18

A company in Panama pays for a U.S.architect to design a factory building.By itself this transaction

Accepted Answer

A) increases U.S.exports and so increases the U.S.trade balance. 
B) increases U.S.exports and so decreases the U.S.trade balance. 
C) increases U.S.imports and so increases the U.S.trade balance. 
D) increases U.S.imports and so decreases the U.S.trade balance. 
A) increases U.S.exports and so increases the U.S.trade balance. 
B) increases U.S.exports and so decreases the U.S.trade balance. 
C) increases U.S.imports and so increases the U.S.trade balance. 
D) increases U.S.imports and so decreases the U.S.trade balance.

Question 19

Ann,a U.S.citizen,uses some previously obtained euros to purchase a bond issued by a Spanish company.This transaction

Accepted Answer

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

Question 20

An increase in U.S.sales of movies to other countries raises U.S.

Accepted Answer

A) exports and so raises the U.S.trade balance. 
B) exports and so reduces the U.S.trade balance. 
C) imports and so raises the U.S.trade balance. 
D) imports and so reduces the U.S.trade balance. 
A) exports and so raises the U.S.trade balance. 
B) exports and so reduces the U.S.trade balance. 
C) imports and so raises the U.S.trade balance. 
D) imports and so reduces the U.S.trade balance.

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

U.S.international trade has

When Jamie,a U.S.citizen,purchases a wool jacket made in Ireland,the purchase is

A firm in the United Kingdom hires a firm in the U.S.to train its managers.By itself this transaction

In an open economy,gross domestic product equals $3,500 billion,consumption expenditure equals $2100 billion,government expenditure equals $400 billion,investment equals $800 billion,and net exports equals $200 billion.What is national savings?

A country has $40 billion of domestic investment and net capital outflows of -$20 billion.What is the country's saving?

Alfonso,a citizen of Italy,decides to purchase bonds issued by Ireland instead of ones issued by the United States even though the Irish bonds have a higher risk of default.An economic reason for his decision might be that

Which of the following equations is always correct in an open economy?

An Italian company exchanges euros for dollars from U.S.residents and then uses the dollars to buy U.S.products to sell in its stores in Rome.U.S.residents who exchanged their dollars for euros use the euros to buy bonds issued by French corporations.At this point

Net capital outflow equals the purchase of

An open economy's GDP is always given by

If a country had a trade surplus of $100 billion and then its exports rose by $40 billion and its imports rose by $30 billion,its net exports would now be

A U.S.firm exchanges dollars for yen and then uses them to buy Japanese goods.Overall as a result of these transactions

Which of the following equations is correct?

Dave,a U.S.citizen buys a bicycle manufactured in China.Dave's purchase is

Net capital outflow is defined as the purchase of

When Microsoft establishes a distribution center in France,U.S.net capital outflow

Jill,a U.S.citizen,uses some euros to purchase a bond issued by a French vineyard.This exchange

A company in Panama pays for a U.S.architect to design a factory building.By itself this transaction

Ann,a U.S.citizen,uses some previously obtained euros to purchase a bond issued by a Spanish company.This transaction

An increase in U.S.sales of movies to other countries raises U.S.

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