exam 1-key - NAME_ Exam 1 - ECO 215 SPRING 2008 CUTLER...

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NAME_______________________________________________________________________________________ Exam 1 - ECO 215 – SPRING 2008 – CUTLER MULTIPLE-CHOICE questions – Please, select the letter which best answers each question, and enter it into the answer key provided at the end of the exam. Each multiple-choice question is worth 1 point. 1. Which of the following is true about the components of GNP: (a) Consumption variable does not include consumption of import purchases. (b) Purchases of inventories by firms are counted in investment spending. (c) Purchases of new homes are counted as consumption. (d) Government spending on imports is not included in the government spending variable. (e) None of the above. Answer: B 2. A country’s current account (a) balance equals the change in its net foreign wealth. (b) balance equals its foreign wealth. (c) surplus equals the change in its foreign wealth. (d) deficit equals the change in its foreign wealth. (e) None of the above. Answer: A 3. The official settlements balance or balance of payments is the sum of (a) The current account balance, the capital account balance, the non reserve portion of the financial account balance, the statistical discrepancy (b) The current account balance and the capital account balance (c) The current account balance, the capital account balance, the non reserve portion of the financial account balance (d) The current account balance and the non reserve portion of the financial account balance (e) None of the above Answer: A 4. An American buys a Japanese car, paying by writing a check on an account with a bank in New York. How would this be accounted for in the balance of payments? (a) Current account, a Japanese good import (b) Current account, a U.S. good import (c) Financial account, a U.S. asset import (d) Financial account, a U.S. asset export (e) Only (b) and (d) Answer: E
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5. The United States issues $10,000 debt forgiveness to Argentina. How is this accounted for in the US balance of payments? (a) Financial account, U.S. asset import (b) Current account, Argentina transfer payment (c) Current account, U.S. service export (d) Financial account, U.S. asset export (e) Current account, Argentina good import Answer: D 6. You travel to Paris and pay for a $100 dinner with your credit card. How is this accounted for in the US balance of payments? (a) Current account, French service import
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exam 1-key - NAME_ Exam 1 - ECO 215 SPRING 2008 CUTLER...

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