Quiz 11 Chapters 13 & 14
If consumption is $8,000, investment is $1,300, government consumption is $2,100, exports are $900 and imports are $1,750, what is GDP?
$10,550
If consumption is $8,000, investment is $1,300, and government consumption is $2,100, what is GNE?
$11,400
If exports are $210, and imports are $60, what is the trade balance?
$150
In 2002, $1=1 euro. In 2006, $1=0.6 euro. If a Ferrari cost $100,000 in 2002, then it should have cost ________ in 2006.
$166,666
If consumption is $400, investment is $150, and government consumption is $80, exports are $210, and imports are $60 what is GDP?
$780
If exports are $900 and imports are $1,750, what is the trade balance for the economy?
-$850
Consider the following information on Mexico's trade. Thirty percent of the trade is conducted with country A, 55% of trade with country B, and 15% of trade with country C. If the peso appreciates 10% against country A, depreciates 30% against country B, and depreciates 10% against country C, then the effective trade-weighted real exchange rate experiences a:
15% depreciation
If a nation experiences an exchange rate appreciation, what happens to the value of its external wealth?
It depends on the currency composition of its assets and liabilities.
If taxes fall and foreign income falls, what will happen to output? ceterus paribus.
It is uncertain what will happen
If output falls, what could be an explanation?
A rise in the interest rate, a fall in foreign income, or a decline in government spending.
The personal consumption expenditure includes all of the following except spending by private households on -durable goods -final goods and services -capital stock -nondurable goods
Capital stock
Suppose that an Austrian buys a car from Germany with cash. For Germany, this counts as a
Current account credit, financial account debit
In a fixed exchange rate regime, an expansionary fiscal policy is effective by stimulating spending; it has no impact on the currency value or trade balance. T/F
False
The sale of a suitcase from a foreign seller to a domestic buyer is an example of a surplus in the financial account or current account?
Financial account (FA)
A nation that has a surplus in its current account
Must have imported foreign assets (lent invested abroad) or decreased the quantity of home assets held by foreigners (paid back loans or deposits)
Barters show up
Only in current account transactions
To fund private investment without borrowing from abroad, a nation may have access to
Private saving (Y-C)
Government consumption expenditure includes the following, except government spending on -national defense -civil services -public works -social security
Social security
A balance on the current account equals the negative of the balance of the financial account, plus
The negative of the balance on the capital account
If the trade balance of the economy is $150, the country is running a balance of trade surplus or deficit?
Trade surplus
In a fixed exchange rate regime, an expansionary fiscal policy is effective by stimulating spending, as long as the parallel expansionary policy keeps exchange rates stable. T/F
True
In a floating exchange rate regime, an expansionary fiscal policy is effective by stimulating spending, though there may be crowding-out effects due to higher rates of interest and currency appreciation. T/F
True
In a floating exchange rate regime, an expansionary monetary policy is effective by stimulating spending and by depreciating the currency. T/F
True
When calculating gross national income in an open economy, we adjust gross national expenditure by
adding in net income earned from foreign sources plus net unilateral transfers from abroad
If the central bank expands the money supply under floating exchange rates, it potentially stimulates the economy in two ways, namely
by lowering the rate of interest and by causing a depreciation of the currency