study for test 2

In a small open economy, if exports equal $20 billion, imports equal $30 billion, and domestic national saving equals $25 billion, then net capital outflow equals:

-$10 billion.

A country's exports may be written as equal to:

GDP minus consumption of domestic goods and services minus investment of domestic goods and services minus government purchases of domestic goods and services.

Net exports equal GDP minus domestic spending on:

all goods and services.

In a small open economy, if domestic saving equals $50 billion and domestic investment equals $50 billion, then there is ______ and net capital outflow equals ______.

balanced trade; $0

In a small open economy, if domestic investment exceeds domestic saving, then the extra investment will be financed by:

borrowing from abroad.

If a U.S. corporation purchases a product made in Europe and the European producer uses the proceeds to purchase a U.S. government bond, then U.S. net exports ______ and net capital outflows ______.

decrease; decrease

In a small open economy, if exports equal $5 billion and imports equal $7 billion, then there is a trade ______ and ______ net capital outflow.

deficit; negative

If a U.S. corporation sells a product in Canada and uses the proceeds to purchase a product manufactured in Canada, then U.S. net exports ______ and net capital outflows ______.

do not change; do not change

When exports exceed imports, all of the following are true except:

domestic investment exceeds domestic saving.

Net capital outflow is equal to the amount that:

domestic investors lend abroad minus the amount that foreign investors lend here.

In a small, open economy if net exports are negative, then:

domestic spending is greater than output.

If domestic spending exceeds output, we ______ the difference—net exports are ______.

import; negative

If a U.S. corporation sells a product in Europe and uses the proceeds to purchase shares in a European corporation, then U.S. net exports ______ and net capital outflows ______.

increase; increase

In a small open economy, if domestic saving exceeds domestic investment, then the extra saving will be used to:

make loans to foreigners.

Net capital outflow is equal to:

national saving minus domestic investment.

If domestic saving is less than domestic investment, then net exports are ______ and net capital outflows are ______.

negative; negative

If domestic saving exceeds domestic investment, then net exports are ______ and net capital outflows are ______.

positive; positive

In a small open economy, if exports equal $15 billion and imports equal $8 billion, then there is a trade ______ and ______ net capital outflow.

surplus; positive

The value of net exports is also the value of:

the excess of national saving over domestic investment.

If net capital outflow is positive, then:

the trade balance must be positive.

An "open" economy is one in which:

there is trade in goods and services with the rest of the world.