Question 1

Last year a country had exports of $50 billion,imports of $60 billion,and domestic investment of $40 billion.What was its saving last year?

Accepted Answer

A)  $30 billion
B)  $20 billion
C)  $10 billion
D)  -$10 billionE) A) and B)
F) A) and C)

Question 2

When the Sykes Corporation (an American company) buys shares of Audi stock (a German company) for its pension fund,U.S.net capital outflow

Accepted Answer

A)  increases because an American company makes a portfolio investment in Germany.
B)  declines because an American company makes a portfolio investment in Germany.
C)  increases because an American company makes a direct investment in Germany.
D)  declines because an American company makes a direct investment in Germany.E) A) and C)
F) None of the above

Question 3

A U.S.firm buys bonds issued by a technology center in India.This purchase is an example of U.S.

Accepted Answer

A)  foreign portfolio investment.By itself it is an increase in U.S.holdings of foreign bonds and increases U.S.net capital outflow.
B)  foreign portfolio investment.By itself it is an increase in U.S.holdings of foreign bonds and decreases U.S.net capital outflow.
C)  foreign direct investment.By itself it is an increase in U.S.holdings of foreign bonds and increases U.S.net capital outflow.
D)  foreign direct investment.By itself it is an increase in U.S.holdings of foreign bonds and decreases U.S.net capital outflow.E) A) and B)
F) C) and D)

Question 4

Which of the following is correct?

Accepted Answer

A)  U.S.exports as a percentage of GDP have about tripled since 1950.The U.S.currently has a trade deficit.
B)  U.S.exports as a percentage of GDP have about tripled since 1950.The U.S.currently has a trade surplus.
C)  U.S.exports as a percentage of GDP have about doubled since 1950.The U.S.currently has a trade deficit.
D)  U.S.exports as a percentage of GDP have about doubled since 1950.The U.S.currently has a trade surplus.E) B) and D)
F) B) and C)

Question 5

If purchases of French assets by foreigners are less than French purchases of foreign assets,then France has a

Accepted Answer

A)  positive net capital outflow and a trade surplus.
B)  positive net capital outflow and a trade deficit.
C)  negative net capital outflow and a trade surplus.
D)  negative net capital outflow and a trade deficit.E) A) and B)
F) A) and C)

Question 6

The country of Wiknam has net capital outflow of $1,000,government purchases of $5,000 and consumption of $20,000.Which of the following is correct?

Accepted Answer

A)  If its domestic investment is $1,000,its GDP is $26,000.
B)  If its domestic investment is $2,000,its GDP is $28,000.
C)  If its domestic investment is $5,000,its GDP is $29,000.
D)  None of the above are correct.E) A) and B)
F) B) and C)

Question 7

Which of the following is an example of U.S.foreign direct investment?

Accepted Answer

A)  A U.S.based mutual fund buys stock in Eastern European companies.
B)  A U.S.citizen builds and operates a coffee shop in the Netherlands.
C)  A Swiss bank buys a U.S.government bond.
D)  A German tractor factory opens a plant in Waterloo,Iowa.E) A) and C)
F) None of the above

Question 8

A country purchases more goods and services from residents of foreign countries than residents of foreign countries purchase from it.This country has

Accepted Answer

A)  a trade surplus and positive net exports.
B)  a trade surplus and negative net exports.
C)  a trade deficit and positive net exports.
D)  a trade deficit and negative net exports.E) None of the above
F) A) and B)

Question 9

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries,then it has

Accepted Answer

A)  $7.2 billion of exports and $4.8 billion of imports.
B)  $7.2 billion of imports and $4.8 billion of exports.
C)  $4.8 billion of exports and $2.4 billion of imports.
D)  $4.8 billion of imports and $2.4 billion of exports.E) B) and C)
F) A) and D)

Question 10

Visitors to a country hosting a world soccer tournament purchase food,souvenirs,and accommodations while attending the tournament.Which of the following should these expenditures raise?

Accepted Answer

A)  ​The host country's net exports and its net capital outflow.
B)  The host country's net exports but not its net capital outflow.
C)  The host country's net capital outflow but nor its net exports.
D)  Neither the host country's net exports not its net capital outflow.E) A) and D)
F) B) and C)

Question 11

Bill,a U.S.citizen,pays a Spanish architect to design a metal casting factory.Which country's exports increase?

Accepted Answer

A)  Spain's
B)  the U.S.'s
C)  Spain's and the U.S.'s
D)  neither Spain's nor the U.S.'sE) A) and C)
F) A) and B)

Question 12

If the U.S.has exports of $1.5 trillion and imports of $2.2 trillion,then the U.S.

Accepted Answer

A)  sells more overseas then it buys from overseas;it has a trade deficit.
B)  sells more overseas then it buys from overseas;it has a trade surplus.
C)  buys more from overseas then it sells overseas;it has a trade deficit.
D)  buys more from overseas then it sells overseas;it has a trade surplus.E) B) and C)
F) A) and B)

Question 13

A utilities company in the Netherlands buys wind generators made by a U.S.company.It pays from them with previously obtained dollars.By itself,this exchange

Accepted Answer

A)  increases both U.S.net exports and U.S.net capital outflow.
B)  decreases both U.S.net exports and U.S.net capital outflow.
C)  increases U.S.net exports and does not affect U.S.net capital outflow.
D)  None of the above is correct.E) B) and D)
F) None of the above

Question 14

If France had positive net exports last year,then it

Accepted Answer

A)  sold more abroad than it purchased abroad and had a trade surplus.
B)  sold more abroad than it purchased abroad and had a trade deficit.
C)  bought more abroad than it sold abroad and had a trade surplus.
D)  bought more abroad than it sold abroad and had a trade deficit.E) B) and C)
F) A) and D)

Question 15

Most of the change from 1980 to 1987 in U.S.net capital outflow as a percent of GDP was due to a(n)

Accepted Answer

A)  decrease in U.S.investment.
B)  decrease in U.S.national saving.
C)  increase in U.S.investment.
D)  increase in U.S.national saving.E) None of the above
F) C) and D)

Question 16

Oceania buys $100 of wine from Escudia and Escudia buys $80 of wool from Oceania.Suppose this is the only trade that these countries do.What are the net exports of Oceania and Escudia,in that order?

Accepted Answer

A)  $80 and $100
B)  $-20 and $20
C)  $20 and -$20
D)  None of the above is correct.E) C) and D)
F) All of the above

Question 17

Greg,a U.S.citizen,opens an ice cream store in Bermuda.His 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.E) C) and D)
F) All of the above

Question 18

From 1991-2000,U.S.net capital outflow as a percent of GDP became a

Accepted Answer

A)  larger positive number.
B)  smaller positive number.
C)  larger negative number.
D)  smaller negative number.E) B) and D)
F) C) and D)

Question 19

An American brewery sells dollars to obtain euros.It then uses the euros to buy brewing equipment from a German company.These transactions

Accepted Answer

A)  increase U.S.net capital outflow because Germans obtain U.S.assets.
B)  decrease U.S.net capital outflow because Germans 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.E) A) and B)
F) All of the above

Question 20

Which of the following is an example of U.S.foreign direct investment?

Accepted Answer

A)  A Chinese company opens a restaurant in the U.S.
B)  An Australian bank buys stocks issued by a U.S.corporation.
C)  A U.S.bank buys bonds issued by an Australian corporation.
D)  A U.S.company opens an auto parts factory in Canada.E) None of the above
F) B) and D)

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

Most of the change from 1980 to 1987 in U.S.net capital outflow as a percent of GDP was due to a(n)

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Which of the following is an example of U.S.foreign direct investment?

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Which of the following is an example of U.S.foreign direct investment?

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Greg,a U.S.citizen,opens an ice cream store in Bermuda.His expenditures are U.S.

Correct AnswerverifiedShow Answer

Visitors to a country hosting a world soccer tournament purchase food,souvenirs,and accommodations while attending the tournament.Which of the following should these expenditures raise?

Correct AnswerverifiedShow Answer

When the Sykes Corporation (an American company) buys shares of Audi stock (a German company) for its pension fund,U.S.net capital outflow

Correct AnswerverifiedShow Answer

The country of Wiknam has net capital outflow of $1,000,government purchases of $5,000 and consumption of $20,000.Which of the following is correct?

Correct AnswerverifiedShow Answer

A utilities company in the Netherlands buys wind generators made by a U.S.company.It pays from them with previously obtained dollars.By itself,this exchange

Correct AnswerverifiedShow Answer

Oceania buys $100 of wine from Escudia and Escudia buys $80 of wool from Oceania.Suppose this is the only trade that these countries do.What are the net exports of Oceania and Escudia,in that order?

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A U.S.firm buys bonds issued by a technology center in India.This purchase is an example of U.S.

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An American brewery sells dollars to obtain euros.It then uses the euros to buy brewing equipment from a German company.These transactions

Correct AnswerverifiedShow Answer

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries,then it has

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If the U.S.has exports of $1.5 trillion and imports of $2.2 trillion,then the U.S.

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Bill,a U.S.citizen,pays a Spanish architect to design a metal casting factory.Which country's exports increase?

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If purchases of French assets by foreigners are less than French purchases of foreign assets,then France has a

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Which of the following is correct?

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A country purchases more goods and services from residents of foreign countries than residents of foreign countries purchase from it.This country has

Correct AnswerverifiedShow Answer

Last year a country had exports of $50 billion,imports of $60 billion,and domestic investment of $40 billion.What was its saving last year?

Correct AnswerverifiedShow Answer

From 1991-2000,U.S.net capital outflow as a percent of GDP became a

Correct AnswerverifiedShow Answer

If France had positive net exports last year,then it

Correct AnswerverifiedShow Answer

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