ECO Chapter 13

Suppose that a country imports $90 million worth of g+s and exports $80 million worth of g+s. What is the value of net exports?

-10 million

If a US based restaurant opens in India, it is an example of

US foreign direct investment

Erica, a US citizen buys bonds issued by the Swiss government is an example of

US foreign portfolio investment

Dave, a US citizen buys a bike made in China. Daves purchase is

a US import and a Chinese export

A country sells more goods and services to to foreign countries then it buys from them. It has

a trade surplus, and positive net exports

if you go to the bank and notice that a dollar buys more Japanese yen then it used to, then the dollar has

appreciated. Other things the same, the appreciation would make Americans more likely to travel to Japan.

Net exports are the value of a country

goods and services exported minus the value of goods and services imported

A Texas ranch sells beef to a US company that sells it to a grocery chain in Japan. These sales

increase both US exports and US net exports

A company in Panama pays for a US architect to design a factory building. By itself this transaction

increases US exports and so increases the US trade balance

A countrys trade balance

is greater than zero only if exports are greater than imports

The value of the goods and services Australia purchases from the U.S are less than the value of goods and services the U.S purchases from Australia. The U.S has

negative net exports with Australia, and a trade deficit with Australia

Net capital outflow equals the difference between a countrys

purchases of foreign assets and sales of domestic assets abroad

The nominal exchange rate is the

rate at which a person can trade the currency of one country to another

When exports fall and imports rise they

reduce net exports

One year a country has negative net exports. The next year it still has negative net exports and imports have risen more than exports. Its

trade deficit rose

If a country had a trade deficit of $10 billion and then its exports rose by $20 billion, and its imports rose by $10 billion, its net exports would now be

0 billion

If the exchange rate is 5 Egyptian pounds per U.S Dollar, a watch that costs $25 US costs

125 Egyptian Dollars

If a country had a trade surplus of $50 billion and then its exports rose by $30 billion, and its imports rose by $20 billion its net exports would now be

60 million

Matt and Melinda are American residents. Matt buys stock issued by a German corporation. Melinda opens a shoe factory in Panama. Whose purchase, by itself, increases the US' net capital outflow?

both Matt and Melinda

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

buys more from overseas then it sells overseas; it has a trade deficit

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

foreign direct investment that increase US net capital outflow

The purchase of US government bonds by Egyptians is an example of

foreign portfolio investment by Egyptians

If a country has a trade surplus

it has a positive net exports and positive net capital outflow

If a country has a trade deficit

it has negative net exports and negative net capital outflow

One year a country has positive net exports. The next year it still has positive but larger net exports. Its

trade surplus rose

Nominal Exchange Rates

vary substantially over time