practicequestions5spring2005

practicequestions5spring2005 - Economics 302 Spring 2005...

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Economics 302 Spring 2005 Practice Questions 5 for Chapter 5 Multiple Choice Questions: 1. Which of the following statements is true? a. When spending is greater than production in an open economy, the economy will have a trade surplus. b. If an economy is a net lender in the international market for funds it must have a trade surplus. c. It is possible for a country to have balanced trade and still find that its spending is greater than its production. d. A country that is a net importer produces less than it spends. e. (b) and (d) 2. The sum of domestic spending on foreign goods and services equals a. Consumption. b. Consumption plus investment. c. Consumption plus investment plus government spending. d. Net Exports. e. Imports. 3. A national accounts identify is true a. Only when the economy is in equilibrium. b. Only for small open economies. c. Only for closed economies. d. (a) and (b) e. (a) and (c) f. By definition. 4. Which of the following equations is a national income accounts identity? i. Y = C + G + I + NX ii. C = a + b( Y – T) iii. I = I (r) iv. NX = NX (real exchange rate) v. S – I = NX a. (i ) and (v) b. (i) c. (v) d. (i), (ii), and (v) e. All of the above are national income accounts identities. 5. Suppose data for your small open economy indicates that investment is greater than saving. This implies a. That the trade balance is negative.
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b. That the trade balance is positive. c. That exports are greater than imports. d. That imports are greater than exports. e. (a) and (c) f. (a) and (d) g. (b) and (c) h. (b) and (d) 6. Net capital outflows are positive when (pick all correct answers) a. Imports are greater than exports. b. The trade balance is positive. c. The economy runs a trade deficit. d. The economy borrows from foreigners. e. Saving is greater than investment. 7. Suppose there is a small open economy that finds the world real interest rate is greater than the real interest rate that would prevail in its economy if it operated as a closed economy. Which of the following statements is true? For this economy a. Net capital outflows are negative. b. Exports are greater than imports leading to a trade deficit. c.
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This note was uploaded on 08/08/2008 for the course ECON 302 taught by Professor Gold during the Spring '07 term at University of Wisconsin.

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practicequestions5spring2005 - Economics 302 Spring 2005...

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