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Unformatted text preview: Chapter 31 Open-Economy Macroeconomics: Basic Concepts 1. A countrys balance of international trade is positive when a. exports exceed imports. b. exports plus investment exceed imports plus domestic saving. c. imports exceed exports. d. imports plus domestic saving exceed exports plus investment. ANSWER: a exports exceed imports. SECTION: 1 OBJECTIVE: 1 2. Which of the following would be recorded as an U.S. merchandise export? a. An American tourist spends 10,000 francs on vacation in the south of France. b. A machine shop in Ohio purchases a grinder made in Italy. c. An American receives a $50 dividend check on stock she owns in a business in Germany. d. France purchases a new jet fighter aircraft from the Boeing Company in the United States. ANSWER: d France purchases a new jet fighter aircraft from the Boeing Company in the United States. SECTION: 1 OBJECTIVE: 1 3. Which of the following is equivalent to the trade deficit? a. imports/exports b. net capital inflow c. exports + imports d. net exports imports ANSWER: b net capital inflow SECTION: 1 OBJECTIVE: 1 4. If U.S. imports total $100 billion and U.S. exports total $150 billion, which of the following would be true? a. U.S. net exports equal $50 billion b. The U.S. has a trade surplus of $50 billion. c. The U.S. has a trade deficit of $100 billion. d. The U.S. has a trade deficit of $50 billion. ANSWER: b The U.S. has a trade surplus of $50 billion. SECTION: 1 OBJECTIVE: 1 5. What does a positive U.S. capital inflow signify? a. Nothing. b. That the government is running a budget deficit. c. That more funds were invested in the United States by foreigners than the United States invested abroad. d. That the United States is running a trade surplus. ANSWER: c That more funds were invested in the United States by foreigners than the United States invested abroad. SECTION: 1 OBJECTIVE: 1 183 184 Chapter 31/Open-Economy Macroeconomics: Basic Concepts 6. International trade in financial assets a. increases risk because little is known about firms in foreign lands. b. increases risk because default risk is greater in foreign countries. c. increases risk because of currency fluctuations....
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