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
