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