Macroeconomics Ch. 10

in 2010, the country of Vesey exported goods worth $312 billion and services worth $198 billion. It imported goods worth $525 billion and services worth $255 billion. It sent $1.2 billion in famine relief to Africa, and received $3 billion to support its first democratic election efforts. What was the current account balance in Vesey for 2010?

$271.8 billion

If a country's economy records a surplus, how will the X and M components be represented in its national savings and investment identity?

(X - M); left side

A country finds itself in the following situation: the government budget surplus is 2% of its GDP; private savings is 30% of GDP; and physical investment is 33% of GDP. Based on the national saving and investment identity, if the government budget surplus falls to zero, what will happen to this country's current account balance?

deficit increases from 1% to 3% of GDP

A country finds itself in the following situation: the government budget surplus is 2% of its GDP; private savings is 30% of GDP; and physical investment is 33% of GDP. Based on the national saving and investment identity, if private savings fall to zero, what will happen to this country's current account balance?

deficit increases from 1% to 31% of GDP

A country's trade in manufactured goods diminished substantially, causing it to lose tax revenue and become a net borrower of foreign funds. For the next two decades, its government used the borrowed funds to upgrade the nation's waste-water treatment plants and to develop efficient rapid transit systems, creating substantial gainful employment for its workforce. Thereafter, the country began to quickly repay its past borrowing debt. Which of the following most strongly supported this country's successful economic recovery?

ensuring borrowed funds were invested in long-term productive economic assets

Which of the following represents the national savings and investment identity - Supply of financial capital = Demand for financial capital - expressed in algebraic terms?

S + (M - X) = I + (G - T)

Which of the following countries suffered deep recessions as a result of pessimistic foreign investors moving their money to other countries?

South Korea, Russia, and Indonesia,Thailand, Argentina and Malaysia

Which of the following represents a financial outflow from the U.S. economy?

U.S. investors buying foreign assets in Germany

The ________________ refers to the gap that can exist between what a nation's _____________, and a nation's ____________________.

balance of trade; producers sell abroad; imports

When did the U.S. current account balance experience the largest surplus?

before the 1980s

Trade surpluses and trade deficits can be _______ for an economy in certain circumstances.

beneficial and or harmful

The extent to which a national economy is involved in global trade:

c. is not very strongly related to either a or b above. a. is not very strongly related to the issue of whether the economy has a substantial trade imbalance. b.is not very strongly related to the underlying economic meaning of trade imbalances. d. is very strongly related to both a and b above.

From a macroeconomic perspective, if GDP economic indicators show a decline of 10% or more in a single year, then which of the following outcomes is most likely to result?

deep economic recession

A country finds itself in the following situation: a government budget deficit of $800; total domestic savings of $1800, and total domestic physical capital investment of $1300. According to the national saving and investment identity, what is the current account balance?

deficit of $300

A country's current national savings and investment identity is expressed in algebraic terms as (M - X) = I - S - (T - G). In this instance:

domestic investment is higher than domestic savings.

the two main sources for the supply of capital in the U.S. economy are:

domestic savings from individuals and firms and inflows of financial capital from foreign investors.

In what way are the factors used to calculate the current account balance similar to each other?

each involves a flow of financial payments between countries

One insight that can be obtained from the national saving and investment identity is that a nation's balance of trade is determined by:

each nation's own levels of domestic saving and domestic investment.

If imports ______________, then the economy is said to have a trade deficit.

exceed exports

If exports ______________, then the economy is said to have a trade surplus

exceed imports

From a macroeconomic perspective, a payment made by a foreign firm to a U.S. investor looks just like an:

export of a service.

Goods and services produced in one country that are then sold in other countries are called ____________.

exports

When some countries increase their imports as a result of worldwide economic growth, other countries must be increasing their:

exports as demand in all countries substantially rises.

The term __________ is used to describe what those in one country buy from those in other countries.

imports

To a macroeconomist, a trade deficit is synonymous with which of the following?

inflow of financial capital

The statement that GDP = C + I + G + X - M is an identity, because ____________.

it is true according to the definition of GDP

Under what conditions would a nation be viewed as being neither a net borrower nor a net lender in the international economy?

its trade balance is zero

The national saving and investment identity teaches that the rest of the economy can absorb an inflow of foreign financial capital by:

leaving domestic saving and investment unchanged using any of the above.

in the United States, which of the following government institutions would most likely provide economists with the basic data for merchandise trade?

Census Bureau

One of the questions on Anders' economics exam provided him with the algebraic term: I + (G - T) = S + (M - X) and asked him to choose its matching written identity. Of the following possible answers presented on the exam, which one is the correct choice?

Demand for financial capital = Supply of financial capital

In the U.S., all companies involved in international flows of capital must file reports, which are ultimately compiled by the:

Department of the Treasury.

An economics professor is discussing a measure of trade that involves a comparison of exports and imports of goods for the year just ended. What name is given to this measurement?

merchandise trade balance

Which of the following would most likely be included in the negative side of the current account balance?

money earned by Canadian firms in the U.S.

Which of the following represents a financial inflow to the U.S. economy?

returns paid on U.S. financial investments in Switzerland

Which of the following will strongly influence a nation's level of trade?

size of its economy, its geographic location, and its history of trade

The surge in international trade related to services to be performed in one country and sold in another that began in the 1990s has been powered by which of the following?

technological advances

Why would an analyst include, among other things, airplane parts, legal services and software, in an analysis of international economic trade?

to determine the current account balance

A recession tends to make a _____________________.

trade deficit smaller

The term ______ describes circumstances where a country's imports exceed its exports.

trade deficits

From a macroeconomic perspective, an economic transaction in the form of a financial investment is synonymous with which of the following?

trade in the financial capital market

A country's current national savings and investment identity is expressed in algebraic terms as I - S - (T - G) = (M - X). Assume that the level of domestic investment in a country rises, while the level of private and public saving remains unchanged. In this instance, the rise in domestic: investment will mean

a higher trade deficit.

A country's current national savings and investment identity is expressed in algebraic terms as I - S - (T - G) = (M - X). Assume that the level of domestic savings rises, while the level of domestic investment and private saving remains unchanged. In this instance:

a.less foreign financial capital is required to meet investment needs. B. government policy will involve increasing private savings. C. the country's trade deficit will decline. D. all of the above

Only one of the following statements about the trade surplus is correct. Which one is it?

generating a trade surplus and an overall net inflow of capital is impossible

At the outset of the 21st century, most global trade took the form of:

goods, rather than services.

A country's current national savings and investment identity is expressed in algebraic terms as X - M = S + (G - T) - I. In this instance:

private and public domestic savings are higher than domestic investment

Under what circumstances would it most likely be considered beneficial for a government to be a large borrower of foreign investment capital?

when those funds are invested in a way that sustains economic growth over time

in 2010, a country imported goods worth $500 billion and exported goods worth $443 billion. It exported services worth $248 billion and imported services worth $330 billion. Payments on investments abroad totaled $199 billion, while returns paid on foreign investments were $125 billion. Unilateral transfers from the country to other nations amounted to $94 billion. What was the country's current account balance for 2010?

$159 billion

During the past year a country's government ran a budget surplus. How will this be represented as a component of in the country's national savings and investment identity?

(T - G); saving side

A country finds itself in the following situation: a government budget deficit of $900; total domestic savings of $200, and total domestic physical capital investment of $1300. According to the national saving and investment identity, if investment decreases by $300 while the government budget deficit and savings remain the same, what will happen to the current account balance?

$200 deficit changes to $100 surplus

In 2010, the country of Vesey exported goods worth $312 billion and services worth $198 billion. It imported goods worth $525 billion and services worth $255 billion. It sent $1.2 billion in famine relief to Africa, and received $3 billion to support its first democratic election efforts. What was the merchandise trade deficit in Vesey in 2010?

$213 billion

A country finds itself in the following situation: the government budget surplus is 2% of its GDP; private savings is 30% of GDP; and physical investment is 33% of GDP. Based on the national saving and investment identity, what is this country's current account balance?

deficit of 1% of GDP

One of the following must be used as a starting point in order to perform an analysis that will determine what the connections between imbalances of trade in goods and services and the flows of international financial capital are. Which one is it?

define the balance of trade

With respect to the national saving and investment identity for any country, the quantity of ________ at any given time by savings must _______ for purposes of making investments.

foreign aid supplied; be lower than the quantity of domestic aid demanded

In most high-income economies, including the United States, goods currently make up ___________, while services currently compose ____________.

less than half of total production; more than half of total production

A period of strong economic growth tends to make a __________________.

trade deficit larger

A series of macroeconomic events has led an economy into a deep recession. Which of the following factors is most likely to have initiated this series of events?

unbalanced trade