Quiz #1

अब Quizwiz के साथ अपने होमवर्क और परीक्षाओं को एस करें!

a trade surplus

(See Exhibit 1: Saving and Investment in a Small Open Economy) In a small open economy, if the world interest rate is r1, then the economy has:

a trade deficit.

(See Exhibit 1: Saving and Investment in a Small Open Economy) In a small open economy, if the world interest rate is r3, then the economy has:

domestic interest rate equals the world interest rate.

A "small" economy is one in which the:

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

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

its domestic interest rate always exceeds the world interest rate.

A small open economy with perfect capital mobility is characterized by all of the following except that:

borrowing from domestic lenders

A trade deficit can be financed in all of the following ways except by:

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

An "open" economy is one which:

an increase in government spending

An increase in the trade deficit of a small open economy could be the result of:

an increase in the world interest rate.

An increase in the trade surplus of a small open economy could be the result of:

weaker; deficit

As the U.S. budget deficit shrank in the 1990s, the increase in U.S. national saving was ______ than the expansionary shift in the U.S. investment function, resulting in a trade ______.

this simplifying assumption can assist our understanding and intuition of open economy macroeconomics.

Building an economic model based on the assumption of a small open economy is useful because:

reduce national saving and lead to a trade deficit.

Holding other factors constant, legislation to cut taxes in an open economy will:

Domestic spending is greater than output.

I'm a small open economy if net exports are negative, then:

do not change; do not change

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 ______.

increase; increase

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 ______.

Positive; positive

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

Import; negative

If domestic spending exceeds output, we _____ the difference ---net exports are _____.

The trade balance must be positive.

If net capital outflow is positive, then:

increasing taxes

If the government of a small open economy wishes to reduce a trade deficit, which policy action will be successful in achieving this goal:

equal to the world real interest rate.

In a small open economy with perfect capital mobility, the real interest rate will always be:

Borrowing from abroad

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

make loans to foreigners

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

-$10 billion

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:

Deficit ; negative

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

surplus; positive

In a small open economy, if the world real interest rate is above the rate at which national saving equals domestic investment, then there will be a trade ______ and ______ net capital outflow.

investment tend to cause a trade deficit.

In a small open economy, policies that increase:

deficit; negative

In a small open economy, starting from a position of balanced trade, if the government increases domestic government purchases, this produces a tendency toward a trade ______ and ______ net capital outflow.

a trade deficit may be good or bad.

In an open economy:

saving is fixed, and investment is determined by the investment function and the world interest rate.

In the small open economy in equilibrium:

National saving minus domestic investment.

Net Capital outflow is equal to:

All goods and services.

Net Exports equal GDP minus domestic spending on:

Domestic investors lead abroad minus the amount that foreign investors lend here.

Net capital outflow is equal to the amount that:

increase; decrease

Starting from a trade balance, if the world interest rate falls, then, holding other factors constant, in a small open economy the amount of domestic investment will _____ and net exports will _____.

is the interest rate prevailing in world financial markets.

The world interest rate:

Domestic investment exceeds domestic saving.

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


संबंधित स्टडी सेट्स

PHYSIO: chapter 1 practice questions

View Set

Clinical Practice Fundamentals Mastery Level 2 Basics of Nursing Practice

View Set

Life Policy Provisions, Riders and Options

View Set

Insulin, Glucagon and Diabetes melitus

View Set

Common nasal and sinus problems topics

View Set

Intro to Business Chapter 1 Quiz

View Set

Ch. 7 - Financing and Accounting

View Set