ECO 302 Week 11 Quiz - Strayer
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Chapter 17 and 18
TRUE/FALSE
1. With
an international sector real GNP is consumption plus gross investment plus
government purchases plus net real asset income from abroad.
2. The
balance of trade is net exports or imports less exports.
3. A
higher current account deficit is caused by a declining domestic economy.
4. The
real current account balance is real national saving less net domestic
investment.
5. Tariffs
and quotas lead to a higher real GDP growth rate in the country imposing them.
6. The
law of one price says that there must be a unique price for a good in each
location where it is sold.
7. If
the home country has a real GNP which is greater than real domestic
expenditure, then the home country has a current-account deficit.
8. Foreign
direct investment occurs when the home country acquires additional ownership of
capital located in the rest of the world.
9. If
the home country has negative trade balance, then its real GDP is less than
real domestic expenditure.
10. The
equilibrium business-cycle model predicts that the real current-account balance
will be countercyclical.
MULTIPLE CHOICE
1. The
law of one price:
a. prohibits price discrimination. c. is
a tax on imports.
b. is that markets work to ensure that the
same good has the same price in all locations. d. prohibits price increases unless firms
can show their are unusual circumstances.
2. The
difference between real GDP in a closed economy and real GNP in a open economy is:
a. net real asset income from abroad. c. net
international investment position.
b. net imports. d. the trade
balance.
3. Real
GNP in an open economy is:
a. the closed economy real output less net
real asset income from abroad. c. the
closed economy real output less gross real asset income from abroad.
b. the closed economy real output plus
gross real asset income from abroad. d. the
closed economy real output plus net real asset income from abroad.
4. Net
real asset income from abroad is:
a. rt-1•Bft-1/P. c. (Bft - Bft-1)/P.
b. Yt
- (Ct +It +Gt ). d. ((Bft - Bft-1)/P) - (rt-1•Bft-1/P).
5. Net
real foreign investment is:
a. rt-1•Bft-1/P. c. (Bft - Bft-1)/P.
b. Yt
- (Ct +It +Gt ). d. ((Bft - Bft-1)/P) - (rt-1•Bft-1/P).
6. The
trade balance is:
a. rt-1•Bft-1/P. c. (Bft - Bft-1)/P.
b. Yt
- (Ct +It +Gt ). d. ((Bft - Bft-1)/P) - (rt-1•Bft-1/P).
7. The
balance on the current account:
a. rt-1•Bft-1/P. c. (rt-1•Bft-1/P) +
((Bft - Bft-1)/P).
b. Yt
+ (rt-1•Bft-1/P) - (Ct +It +Gt ). d. ((Bft - Bft-1)/P) - (rt-1•Bft-1/P).
8. The
balance on the current account is:
a. real GNP less net foreign investment
income. c. real GNP less the net international
investment position.
b. real GNP less net foreign investment. d. real
GNP less real domestic expenditure.
9. The
real current-account balance is:
a. net real asset income from abroad less
trade balance c. trade balance times the net real asset
income from abroad.
b. trade balance plus the net real asset
income from abroad. d. trade balance less the net real income
from abroad.
10. The
real current account balance equals:
a. net foreign investments. c. the
trade balance plus net real asset income from abroad.
b. real GNP less real domestic
expenditure. d. all of the above.
11. The
real current account balance equals:
a. net foreign investments. c. the
trade balance.
b. the net international investment
position. d. all of the above.
12. The
real current account balance equals:
a. the trade balance. c. the
net international investment position.
b. real GNP less real domestic
expenditure. d. all of the above.
13. The
real current account balance equals
a. the net international investment
position. c. the trade balance plus net real asset income from abroad.
b. the trade balance. d. all
of the above.
14. The
trade balance is:
a. the difference between exports and
imports. c. the real current-account balance less
net real asset income from abroad.
b. real GDP less real domestic
expenditure. d. all of the above.
15. The
trade balance is:
a. the difference between exports and
imports. c. net foreign investment.
b. real asset income from abroad. d. all
of the above.
16. The
trade balance is:
a. the balance on the current account. c. net
foreign investment.
b. real GDP less real domestic
expenditure. d. all of the above.
17. The
trade balance is:
a. net foreign investment. c. the
real current-account balance less net real asset income from abroad.
b. the net international investment
position. d. all of the above.
18. In
the market clearing model with world markets for goods and credit, an increase
in technology, A, in the home country causes:
a. an increase in the MPK. c. an
increase in borrowing from foreigners.
b. an increase in home country gross
domestic investment. d. all of the above.
19. In
the market clearing model with world markets for goods and credit, an increase
in technology, A, in the home country causes:
a. an increase in the MPK. c. an
increase in lending to foreigners.
b. an decrease in home country gross
domestic investment. d. all of the above.
20. In
the market clearing model with world markets for goods and credit, an increase
in technology, A, in the home country causes:
a. an decrease in the MPK. c. an
increase in lending to foreigners.
b. an increase in home country gross
domestic investment. d. all of the above.
21. In
the market clearing model with world markets for goods and credit, an increase
in technology, A, in the home country causes:
a. a decrease in the MPK. c. an
increase in borrowing from foreigners.
b. a decrease in gross domestic
investment. d. all of the above.
22. In
the market clearing model with world markets for goods and credit, an increase
in technology, A, in the home country causes:
a. a larger current account deficit. c. a
lower MPK.
b. a smaller current account deficit. d. lower
domestic gross investment.
23. In
the market clearing model with world markets for goods and credit, a decrease
in technology, A, in the home country causes:
a. a larger current account deficit. c. a
higher MPK.
b. a smaller current account deficit. d. higher
domestic gross investment.
24. The
open economy equilibrium business-cycle model predicts that the real current
account balance will be:
a. acyclical. c. countercyclical.
b. procyclical. d. exogenous.
25. The
open economy equilibrium business-cycle model predicts that the real current
account balance will be:
a. the same in expansions and recession. c. high
in expansions and low in recessions.
b. low in expansions and high in
recessions. d. invariant with the business cycle.
26. In
US data the real current account balance is:
a. procyclical when the model predicts
it will be countercyclical. c. countercyclical
when the model predicts it will be
procyclical.
b. procyclical as the model predicts. d. countercyclical
as the model predicts.
27. In
US data the real current account balance is:
a. procyclical. c. countercyclical.
b. weakly procyclical. d. weakly
countercyclical.
28. While
according to the model the current account balance will be countercyclical, the
balance can also decline due to:
a. a temporary negative shock like a
harvest failure. c. a temporary increase in government
purchases as in war time.
b. a less developed country having a low
capital stock. d. all of the above.
29. While
according to the model the current account balance will be countercyclical, the
balance can also decline due to:
a. a temporary negative shock like a
harvest failure. c. a permanent decrease in government
purchases.
b. a less developed country having poor
institutions for growth. d. all of the above.
30. While
according to the model the current account balance will be countercyclical, the
balance can also decline due to:
a. a temporary positive shock like a good
harvest. c. a permanent decrease in government purchases.
b. a less developed country having a low
capital stock. d. all of the above.
31. While
according to the model the current account balance will be countercyclical, the
balance can also decline due to:
a. a temporary positive shock like a
positive harvest c. a temporary increase in government
purchases as in war time.
b. a less developed country having a high
capital stock. d. all of the above.
32. In
the Ricardian case, if the government budget deficit is increased, then the
trade balance:
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