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100 Cards in this Set
- Front
- Back
International trade |
a. raises the standard of living in all trading countries |
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Foreign-produced goods and services that are sold domestically are called |
a. imports |
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Net exports of a country are the value of |
b. goods and services exported minus the value of goods and services imported |
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One year a country has negative net exports. The next year it still has negative net exports and imports have risen more than exports. |
d. its trade deficit rose |
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Suppose that a country imports $100 million of goods and services and exports $75 million of goods and services, what is the value of net exports? |
d. -$25 million |
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Oceania buys $40 of wine from Escudia and Escudia buys $100 of wool from Oceania. Supposing this is the only trade that these countries do. What are the net exports of Oceania and Escudia in that order? |
c. $60 and -$60 |
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When Dee, a U.S. citizen, purchases a designer dress made in Milan, the purchase is |
c. a U. S. import and an Italian export |
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Juan lives in Ecuador and purchases a motorcycle manufactured in the United States. The motorcycle is |
d. a U. S. export and an Ecuadorian import |
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If U.S. imports total $100 billion and U.S. exports total $150 billion, which of the following is correct? |
b. The U. S. has a trade surplus of $50 billion |
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The value of Peru's exports minus the value of Peru's imports is called |
c. Peru's net exports |
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Sonya, a citizen of Denmark, produces boots and shoes that she sells to department stores in the United States. Other things the same, these sales |
d. decrease U. S. net exports and increase Danish net exports |
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A firm in China sells jackets to a U.S. department store chain. Other things the same, these sales |
d. decrease U. S. net exports and increase Chinese net exports |
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Ivan, a Russian citizen, sells several hundred cases of caviar to a restaurant chain in the United States. By itself, this sale |
d. decreases U. S. net exports and increases Russian net exports |
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Bob traps lobsters in Maine and sells them to a restaurant in Egypt. Other things the same, these sales |
b. increase U. S. net exports and decrease Egyptian net exports |
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Suppose a country had $2.4 billion of net exports and bought $4.8 billion of goods and services from foreign countries. This country would have |
a. $7.2 billion of exports and $4.8 billion of imports |
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Suppose a country had net exports of $8.3 billion and sold $52.4 billion of goods and services abroad. This country had |
d. $52.4 billion of exports and $44.1 billion of imports. |
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Mike, a U.S. citizen, buys $1,000 worth of cheese from France. His action alone |
b. increases U.S. imports by $1,000 and decreases U.S. net exports by $1,000. |
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Clear Brook Farms, a U.S. manufacturer of frozen vegetarian entrees, sells cases of their product to stores overseas. Its sales |
c. increase both U.S. exports and U.S. net exports. |
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You buy a new car built in Sweden. Other things the same, your purchase by itself |
d. raises U.S. imports and lowers U.S. net exports. |
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A German company sells cameras to a retailer in the United States. These sales by themselves |
b. decrease U.S. net exports and increase German net exports. |
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A country sells more to foreign countries than it buys from them. It has |
a. a trade surplus and positive net exports. |
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A country's trade balance |
c. is greater than zero only if exports are greater than imports. |
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If the United States had negative net exports, it |
d. bought more abroad than it sold abroad and had a trade deficit. |
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Which of the following is correct? |
b. U.S. exports as a percentage of GDP have about doubled over the last 50 years. The U.S. currently has a trade deficit. |
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Which of the following is correct? Over about the last fifty years |
c. U.S. exports about doubled and U.S. imports about tripled. |
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Over the past five decades, the U.S. economy has become |
b. more open. |
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About what percentage of GDP are U.S. imports? |
d. over 10 percent |
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Over the last 50 years or so, U.S. imports as a percentage of GDP have approximately |
c. tripled |
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Over the last 50 years or so, U.S. exports as a percentage of GDP have approximately |
b. doubled. |
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The increase in international trade in the United States is partly due to |
d. All of the above are correct. |
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Net capital outflow refers to the purchase of |
a. foreign assets by domestic residents minus the purchase of domestic assets by foreign residents. |
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Net capital outflow measures |
b. the imbalance between the amount of foreign assets bought by domestic residents and the amount of domestic assets bought by foreigners. |
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If a country changes its corporate tax laws so that domestic firms build and manage more firms overseas, then this country will |
a. increase foreign direct investment which increases net capital outflow. |
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Suppose that more Chinese decide to vacation in the U.S. and that the Chinese purchase more U.S. Treasury bonds. Ignoring how payments are made for these purchases, |
b. the first action by itself raises U.S. net exports, the second action by itself lowers U.S. net capital outflow. |
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Which of the following would be U.S. foreign direct investment? |
c. A U.S. based hotel chain opens a new hotel in Brazil. |
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Which of the following would be U.S. foreign direct investment? |
b. A U.S. citizen opens and operates a law firm in Norway. |
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Which of the following would be U.S. foreign direct investment? |
d. A U.S. furniture maker opens a plant in Mexico. |
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Which of the following would be U.S. foreign portfolio investment? |
b. A U.S. citizen buys stock in companies located in Asia. |
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Which of the following is an example of U.S. foreign portfolio investment? |
a. Toni, a U.S. citizen, buys bonds issued by a Swedish corporation. |
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Which of the following is an example of U.S. foreign portfolio investment? |
c. Ruth, a U.S. citizen, buys bonds issued by a German corporation. |
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John, a U.S. citizen, opens up a Sports bar in Tokyo. This counts as U.S. |
d. foreign direct investment. |
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If a Swiss watchmaker opens a factory in the United States, this is an example of Swiss |
d. foreign direct investment. |
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Sue, a U.S. citizen, buys stock in an Italian automobile corporation. Her purchase counts as |
d. saving for Sue and U.S. foreign portfolio investment. |
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Larry, a U.S. citizen, opens and operates a bookstore in Spain. This counts as |
a. investment for Larry and U.S. foreign direct investment. |
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An Italian citizen opens and operates a spaghetti factory in the United States. This is Italian |
a. foreign direct investment that increases Italian net capital outflow. |
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Greg, a U.S. citizen, opens an ice cream store in Bermuda. His expenditures are U.S. |
c. foreign direct investment that increase U.S. net capital outflow. |
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A U.S. citizen buys bonds issued by an automobile manufacturer in Japan. Her expenditures are U.S. |
c. foreign portfolio investment that increase U.S. net capital outflow. |
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Paul, a U.S. citizen, builds a telescope factory in Israel. His expenditures |
b. increase U.S. net capital outflow, but decrease Israeli net capital outflow. |
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Bob, a Greek citizen, opens a restaurant in Chicago. His expenditures |
d. decrease U.S. net capital outflow, but increase Greek net capital outflow. |
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When making investment decisions, investors |
a. compare the real interest rates offered on different bonds. |
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Net capital outflow equals the difference between a country's |
d. purchases of foreign assets and sales of domestic assets abroad. |
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Net exports measures the difference between a country's |
b. sale of goods and services abroad and purchase of foreign goods and services. |
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Catherine, a citizen of Spain, decides to purchase bonds issued by Chile instead of ones issued by the United States even though the Chilean bonds have a higher risk of default. An economic reason for her decision might be that |
b. the Chilean bonds pay a higher rate of interest. |
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When a French vineyard establishes a distribution center in the U.S., U.S. net capital outflow |
d. declines because the foreign company makes a direct investment in capital in the U.S. |
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When Microsoft establishes a distribution center in France, U.S. net capital outflow |
c. increases because Microsoft makes a direct investment in capital in France. |
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When the Sykes Corporation (an American company) buys shares of Audi stock (a German company) for its pension fund, U.S. net capital outflow |
a. increases because an American company makes a portfolio investment in Germany. |
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Net capital outflow |
c. is always equal to net exports. |
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Which of the following is correct? |
a. NCO = NX |
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Which of the following is correct? |
b. NCO = NX |
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When Ghana sells chocolate to the United States, U.S. net exports |
d. decrease, and U.S. net capital outflow decreases. |
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If a U.S. textbook publishing company sells texts overseas, U.S. net exports |
a. increase, and U.S. net capital outflow increases. |
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If a U.S. shirtmaker purchases cotton from Egypt, U.S. net exports |
d. decrease, and U.S. net capital outflow decreases. |
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A U.S. firm buys sardines from Morocco and pays for them with U.S. dollars. Other things the same, U.S. net exports |
d. decrease, and U.S. net capital outflow decreases. |
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A U.S. firm opens a factory that produces camping equipment in Estonia. |
a. This increases U.S. net capital outflow and decreases Estonian net capital outflow. |
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A Japanese firm buys lumber from the United States and pays for it with yen. Other things the same, Japanese |
c. net exports decrease, and U.S. net capital outflow increases. |
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A Mexican flour mill buys wheat from the United States and pays for it with pesos. Other things the same, Mexican |
c. net exports decrease, and U.S. net capital outflow increases. |
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JillusessomeeurostopurchaseabondissuedbyaFrenchvineyard.Thisexchange |
c. does not change U.S. net capital outflow. |
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Tony, a U.S. citizen, uses some previously obtained Portuguese currency (escudo) to purchase a bond issued by a Portuguese company. This transaction |
c. does not change U.S. net capital outflow. |
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A citizen of Saudi Arabia uses previously obtained U.S. dollars to purchase apples from the United States.This transaction |
c. decreases Saudi net capital outflow, and increases U.S. net exports. |
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A U.S. pharmacy buys drugs from a British company and pays for them with US dollars. This transaction |
b. increases British net exports, and decreases U.S. capital outflow. |
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A Venezuelan firm purchases earth-moving equipment from a U.S. company and pays for it with Venezuelan currency. This transaction |
b. increases U.S. net exports, and decreases Venezuelan net capital outflow. |
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A U.S. firm buys apples from New Zealand with U.S. currency. The New Zealand firm than uses this money to buy packaging equipment from a U.S. firm. Which of the following increases? |
d. neither New Zealand net exports nor New Zealand capital outflow |
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U.S. based John Deere sells machinery to a South African country that pays with South African currency(the rand). |
a. This increases U.S. net capital outflow because the U.S. acquires foreign assets. |
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Suppose that the real return from operating factories in Ghana rises relative to the real rate of return in the United States. Other things the same, |
a. this will increase U.S. net capital outflow and decrease Ghanan net capital outflow. |
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A U.S. based company sells semiconductors to an Italian firm. The U.S. company uses all of the revenues from this sale to purchase automobiles from Italian firms. These transactions |
d. None of the above is correct. |
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Bolivia buys railroad engines from a U.S. firm and pays for them with Bolivianos (Bolivian currency). By itself, this transaction |
a. increases both U.S. net exports and U.S. net capital outflow. |
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Foreign citizens would be more likely to engage in foreign portfolio investment in the U.S. if, compared to their country's assets, U.S. assets had |
b. a higher interest rate and a lower default risk. |
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Stacey, a U.S. citizen, buys a bond issued by an Italian pasta manufacturer. |
c. This is foreign portfolio investment. By itself it increases U.S. net capital outflow. |
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A U.S. firm buys cement mixers from China and pays for them with U.S. dollars. |
d. The purchase of cement mixers decreases U.S. net exports and the payment with dollars decreases U.S. net capital outflow. |
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If a country has negative net capital outflows, then its net exports are |
d. negative and its saving is smaller than its domestic investment. |
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If a country has a trade surplus |
a. it has positive net exports and positive net capital outflow. |
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If a country has a trade deficit |
d. it has negative net exports and negative net capital outflow. |
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In 2004 the U.S. had a large trade |
c. deficit and a large net capital inflow. |
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In 2004 economists were concerned that if foreign investors suddenly moved away from U.S. dollar denominated investments then |
d. stocks prices would fall and interest rates would rise. |
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An open economy's GDP is always given by |
d. Y=C+I+G+NX. |
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Which of the following equations is correct? |
c. S=I+NCO |
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Which of the following equations is correct? |
d. All of the above are correct. |
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Which of the following equations is always correct in an open economy? |
c. I=S-NCO |
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If there is a trade deficit, then |
d. saving is less than domestic investment and Y < C + I + G. |
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If there is a trade surplus then |
a. saving is greater than domestic investment and Y > C + I + G. |
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In which of the following situations must national saving rise? |
a. Both domestic investment and net capital outflow increase. |
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A country has a trade deficit. Its |
d. net capital outflow must be negative and saving is smaller than investment. |
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The country of Freedonia has a GDP of $2,100, consumption of $1,200, and government purchases of $400.This implies that it has |
b. domestic investment plus net capital outflow of $500. |
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The country of Sylvania has a GDP of $900, investment of $200, government purchases of $200, and net capital outflow of negative $100. This means that |
b. consumption equals $600. |
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A country has $100 million of net exports and $170 million of saving. Net capital outflow is |
c. $100 million and domestic investment is $70 million. |
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A country has $60 million of saving and domestic investment of $40 million. Net exports are |
a. $20 million. |
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A country has $50 million of domestic investment and net capital outflow of $15 million. What is saving? |
a. $65 million. |
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A country has $45 million of domestic investment and net capital outflow of -$60 million. What is saving? |
b. -$15 million. |
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A country has $200 billion of domestic investment and net capital outflow of $100 billion. What is saving? |
b. $300 billion |
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In an open economy, gross domestic product equals $1,950 billion, government expenditure equals $280 billion, investment equals $500, and net capital outflow equals $280 billion. What is consumption expenditure? |
c. $890 billion |