Chapter 2 Homework Vocab

In an open economy, the CA is equal to A. Y - (C -I + G). B. Y - (C + I + G). C. Y + (C - I - G). D. Y + (C + I + G). E. Y - (C + I - G).

???

GNP accounts avoid double counting by including only the value of final goods and services sold on the market. Should the measure of imports and exports used in the GNP accounts therefore be defined to include only imports and exports of final goods and services received from and sold to other countries? A. No, total values and imports and exports should be included in the calculation of the GNP. B. Yes, only the value of final goods that are exported or imported should be included. C. Total value of imports should be included, but only the value of exports of final goods. D. Total value of exports should be included, but only the value of imports of final goods.

A

In 2015, the United States had A. a deficit in the current account. B. a balance in the current account. C. a positive balance of net financial flows. D. a surplus in the current account. E. From 2015 data, it is too difficult to determine whether a surplus or a deficit existed in the current account.

A

The German government carries out an official foreign exchange intervention in which it uses dollars held in an American bank to buy French currency from its citizens. How is this accounted for in the balance of payments? A. financial account, French asset export B. current account, German good import C. current account, French good export D. financial account, German asset import E. financial account, German asset export

A

Do data on the U.S. official settlements balance give an accurate picture of the extent to which foreign central banks buy and sell dollars in currency markets? A. No, this account does not include sales or purchases of dollars by foreign central banks. B. No, this account provides only a partial picture because it shows a net value of all transactions. C. Yes, this account balance is equal to the total net sales of dollars by foreign central banks. D. Yes, this account balance is equal to the total net purchases of dollars by foreign central banks.

B

For most macroeconomists, A. national output accounts exceed national income accounts. B. national income accounts and national output accounts are equal to each other. C. national income accounts exceed national output accounts. D. it is impossible to tell whether national income accounts equal to national output accounts. E. national income accounts is much more important than national output accounts.

B

National income equals GNP A. less depreciation or net unilateral transfers. B. less depreciation, plus net unilateral transfers. C. less depreciation, less net unilateral transfers. D. plus depreciation, plus net unilateral transfers. E. plus depreciation, less net unilateral transfers.

B

Which one of the following statements is the most accurate? A. The sale of a used textbook does generate income for factors of production. B. The sale of a used textbook does not generate income for any factor of production. C. The sale of a used textbook is a part of the GNP. D. The sale of a used textbook sometimes does and sometimes does not generate income for factors of production. E. It is hard to tell whether the sale of a used textbook does or does not generate income for factors of production.

B

For open economies, A. S = I. B. S = I - CA. C. S = I + CA. D. S > I + CA. E. S < I + CA.

C

GDP is different than GNP in that A. it accounts for depreciation. B. it does not account for indirect business taxes. C. it does not account for a country's production using services with foreign − owned capital. D. it is unhelpful when tracking national income. E. it accounts for net unilateral transfers.

C

GDP is supposed to measure A. the volume of production of a country's output. B. net unilateral transfers from foreigners. C. the volume of production within a country's borders. D. GNP plus depreciation. E. the volume of services generated within a country's borders.

C

GNP (Gross National Product) equals GDP plus A. indirect business taxes. B. the capital consumption allowance. C. net receipts of factor income from the rest of the world. D. a statistical discrepancy.

C

Government purchases are defined as A. goods and services purchased from the government. B. all goods and services purchased by the federal or state government. C. all goods and services purchased by the federal, state, or local government. D. only goods purchased by federal, state, or local governments. E. all goods and services purchased by the federal government.

C

In a closed economy, national saving A. is always more than investment. B. is always less than investment. C. always equals investment. D. sometimes equals investment. E. is never equal to investment.

C

In open economies, A. as in a closed economy, saving and investment are not necessarily equal. B. investment always refers to the domestic stock market. C. saving and investment are not necessarily equal as they are in a closed economy. D. saving and investment are necessarily equal. E. saving and investment are necessarily equal contrary to the case of a closed economy.

C

The official settlements balance or balance of payments is the sum of A. the current account balance and the non-reserve portion of the financial account balance. B. the current account balance and the capital account balance. C. the current account balance and the capital account balance, less the non-reserve portion of the financial account balance. D. the current account balance, the capital account balance, the non-reserve portion of the financial account balance, the statistical discrepancy. E. the current account balance and the interest in all investments.

C

Which of the following is not part of the definition for Gross National Product? A. The market value... B. ...of all final goods and services... C. ...produced within a country's borders... D. ...within a given period of time.

C

Which one of the following expressions is the most accurate? A. CA − IM = EX B. CA = IM - EX C. CA = EX - IM D. CA = EX = IM E. CA = EX + IM

C

You travel to Paris and pay for a $100 dinner with your credit card. How is this accounted for in the balance of payments? A. financial account, U.S. asset import B. current account, French service import C. financial account, U.S. asset export D. financial account, French asset export. E. current account, U.S. good export

C

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? A. current account, British good export B. financial account, U.S. asset export C. financial account, British asset import D. financial account, U.S. asset import E. current account, U.S. service import

D

A country's gross national product (GNP) is A. the value of all intermediate goods and services produced by its factors of production and sold on the market in a given time period. B. the value of all final goods and services produced by its factors of production and sold on the market. C. the value of all final goods and services produced by its factors of production, excluding land, and sold on the market in a given time period. D. the value of all final goods and services produced by its factors of production and sold on the market in a given time period. E. the value of all final goods produced by its factors of production and sold on the market in a given time period.

D

Capital gains and losses on a country's net foreign assets are not included in the national income measure of the current account. How would economic statisticians have to modify the national income identity Y = C + I + G + X - M if they did wish to include such gains and losses as part of the definition of the current account? A. Y = C + I + G + X - M - Net capital gain. B. Y = C + I + G + X - M + Gross capital gain. C. Y = C + I + G + X - M - Gross capital gain. D. Y = C + I + G + X - M + Net capital gain.

D

Government savings, Sg is equal to A. T + G. B. T + G -I. C. T - G = I. D. T - G. E. T = G.

D

In an open economy holding GNP and consumption spending constant and where private savings equals domestic investment, a government budget deficit must be matched by A. a current account surplus. B. a current account balance. C. a positive difference between domestic exports and imports. D. a current account deficit.

D

The largest component of GNP is, A. investment. B. government purchases. C. trade. D. consumption. E. the current account.

D

An American buys a Japanese car, paying by writing a check on an account with a bank in New York. How would this be accounted for in the balance of payments? A. current account, a U.S. good import B. financial account, a U.S. asset import C. current account, a Japanese good import D. financial account, a U.S. asset export E. a current account as a U.S. good import and a financial account, a U.S. asset export.

E

In the United States over the past sixty years, the fraction of GNP devoted to consumption has fluctuated in a range of about A. 42 to 49 percent. B. 22 to 29 percent. C. 82 to 89 percent. D. 32 to 39 percent. E. 62 to 70 percent.

E

The United States issues a $10,000 debt forgiveness to Argentina. How is this accounted for in the balance of payments? A. current account, Argentina transfer payment B. current account, Argentina good import C. current account, U.S. service export D. financial account, U.S. asset import E. capital account, U.S. transfer payment

E

Which of the following is false about private savings and government savings? A. SP = Y - T - C B. Total savings (S) = SP + Sg. C. Unlike private saving decisions, government saving decisions are often made with an eye toward their effect on output and employment. 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.

E

In theory, the equality: current account + capital account + financial account = 0 must hold. In reality a statistical discrepancy is often included to achieve this balance. Which account is the likely culprit of this discrepancy? The ____________

financial account