Question 1

The official settlements balance or balance of payments is the sum of

Accepted Answer

A)  the current account balance, and the capital account balance, less the non-reserve portion of the financial account balance. 
B)  the current account balance and the capital account balance. 
C)  the current account balance, the capital account balance, the non-reserve portion of the financial account balance, the statistical discrepancy. 
D)  the current account balance and the non-reserve portion of the financial account balance. 
E)  the current account balance and the interest in all investments.

Question 2

The position of the United States current account balance in 2015 was

Accepted Answer

A)  lent roughly 6 percent of its GNP, resulting in a large current account surplus. 
B)  borrowed roughly 3 percent of its GNP, leading to a large current account deficit. 
C)  achieved a currant account balance of zero. 
D)  borrowed roughly 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 3

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.

Question 4

Fill in the following table.

Accepted Answer

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

Question 5

Which one of the following statements is FALSE?

Accepted Answer

A)  The United States had accumulated substantial foreign wealth by the early 1980s. 
B)  The 1980s witnessed a sustained current account deficit of proportions unprecedented in the twentieth century. 
C)  In 1989, the country became a net debtor to foreigners for the first time since World War I. 
D)  U.S. foreign debt has continued to grow and now stands at 40 percent of GNP. 
E)  The U.S. foreign debt was paid off in the 1990s, allowing the U.S. to attain a current account surplus. However, the deficit has returned in recent years.

Question 6

What is the national income identity for a closed economy?

Accepted Answer

The answer of What is the national income identity for...

Question 7

What types of international transactions are recorded in the balance of payment accounts?

Accepted Answer

The answer of What types of international transactions are recorded...

Question 8

How do we allocate statistical discrepancy among the current, capital, and financial accounts?

Accepted Answer

A)  We have no way of knowing exactly how to allocate this discrepancy. 
B)  Depend on the degree of certainty which we attribute to these accounts. 
C)  Divide it evenly amongst the three accounts. 
D)  Depend on the convention adopted by the specific financial institution. 
E)  Statistical discrepancy signals human errors made when dealing with financial accounts.

Question 9

Movements in GDP

Accepted Answer

A)  differ greatly from movements in GNP. 
B)  do not differ greatly from movements in GNP. 
C)  are not allowed to differ at all from movements in GNP by definition. 
D)  need to be inflation adjusted in order to match movements in GNP. 
E)  are not relevant to an examination of national income.

Question 10

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.

Question 11

Government transfer payments like social security and unemployment benefits are

Accepted Answer

A)  included in government purchases. 
B)  not included in government purchases. 
C)  not included in government purchases, but they are included in the consumption component of GNP. 
D)  not included in government purchases, but they are part of the investment component of GNP. 
E)  included in government purchases but not in the GNP.

Question 12

Fill in the following table.

Accepted Answer

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

Question 13

Assume in a closed economy:
C = 50 + 0.6 (Y - T)
G = 15
I = 15
T = 2
(a)Calculate Y at equilibrium
(b)Calculate C
(c)Assume the economy is open

Accepted Answer

The answer of Assume in a closed economy:
C = 50...

Question 14

Which one of the following expressions is the MOST accurate?

Accepted Answer

A)  CA = EX - IM 
B)  CA = IM - EX 
C)  CA = EX = IM 
D)  CA = EX + IM 
E)  CA - IM = EX

Question 15

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 import 
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 export

Question 16

What can you learn from the figure below (Figure 13-1 from the text) which depicts the U.S. GNP and its components for the 1st quarter of 2016?

Accepted Answer

The answer of What can you learn from the figure...

Question 17

Which one of the following statements is the MOST accurate?

Accepted Answer

A)  GNP plus depreciation is called net national product (NNP). 
B)  GNP less depreciation is called net national product (NNP). 
C)  GNP less depreciation is called net factor product (NFP). 
D)  GDP plus depreciation is called net national product (NNP). 
E)  GDP less depreciation is called net national product (NNP).

Question 18

For open economies,

Accepted Answer

A)  S = I. 
B)  S = I + CA. 
C)  S = I - CA. 
D)  S > I + CA. 
E)  S < I + CA.

Question 19

"If the simple rule of double-entry bookkeeping holds true, the Balance of payments is always in balance." Discuss.

Accepted Answer

The answer of "If the simple rule of double-entry bookkeeping...

Question 20

In 1929, government purchases accounted for

Accepted Answer

A)  only 18.5 percent of U.S. GNP. 
B)  only 8.5 percent of U.S. GNP. 
C)  28.5 percent of U.S. GNP. 
D)  38.5 percent of U.S. GNP. 
E)  48.5 percent of U.S. GNP.

Exam 13: National Income Accounting and the Balance of Payments

The official settlements balance or balance of payments is the sum of

The position of the United States current account balance in 2015 was

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

Fill in the following table.

Which one of the following statements is FALSE?

What is the national income identity for a closed economy?

What types of international transactions are recorded in the balance of payment accounts?

How do we allocate statistical discrepancy among the current, capital, and financial accounts?

Movements in GDP

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

Government transfer payments like social security and unemployment benefits are

Fill in the following table.

Assume in a closed economy: C = 50 + 0.6 (Y - T) G = 15 I = 15 T = 2 (a)Calculate Y at equilibrium (b)Calculate C (c)Assume the economy is open

Which one of the following expressions is the MOST accurate?

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?

What can you learn from the figure below (Figure 13-1 from the text) which depicts the U.S. GNP and its components for the 1st quarter of 2016?

Which one of the following statements is the MOST accurate?

For open economies,

"If the simple rule of double-entry bookkeeping holds true, the Balance of payments is always in balance." Discuss.

In 1929, government purchases accounted for