F2010_MT3_MC_VersionA

F2010_MT3_MC_VersionA - first initial of last name ECO 320L...

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first initial of last name: ECO 320L Fall 2010 Professor Beatrix Paal Midterm 3 Multiple Choice name: 11/22/2010 40 questions, 1.5 points each = 60 points total "The core values of The University of Texas at Austin are learning, discovery, freedom, leadership, individual opportunity, and responsibility. Each member of the University is expected to uphold these values through integrity, honesty, trust, fairness, and respect towards peers and community." Version A Page 1
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1. In goods market equilibrium in an open economy, A) the desired amount of national saving must equal the desired amount of domestic investment plus the amount lent abroad. B) the desired amount of national saving must equal the desired amount of domestic investment. C) the desired amount of exports must equal the desired amount of imports. D) the desired amount of exports must equal the desired amount of imports less the amount lent abroad. 2. Suppose output is $900 billion, government purchases are $250 billion, desired consumption is $800 billion, and desired investment is $200 billion. Suppose also that net factor payments from abroad are zero. Net foreign lending would be equal to A) $150 billion. B) $–350 billion. C) $350 billion. D) $–150 billion. 3. If a U.S. firm buys tulips from a Dutch firm and the Dutch firm uses the dollars it gets to buy U.S. stocks, the U.S. trade balance ___________ and the U.S. capital and financial account ___________. A) rises; falls B) falls; falls C) falls; rises D) rises; rises 4. The United States became a net debtor because A) it provided much foreign aid to other countries. B) it ran consistently large current account deficits. C) it ran consistently large current account surpluses. D) it lent a lot to people in foreign countries. 5. Total spending by domestic residents, businesses, and governments is called A) net domestic purchases. B) GDP. C) investment. D) absorption. 6. In a saving-investment diagram for a small open economy A) the saving curve is horizontal at some fixed interest rate. B) the interest rate is fixed at the world real interest rate. C) equilibrium requires that dd SI D) the saving curve is vertical at some fixed level of output. Version A Page 2
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7. A large open economy A) is physically larger than all small open economies. B) has a larger population than all small open economies. C) lends or borrows enough in international capital markets to influence the world real interest rate. D) dominates world trade in one or more products. 8. When there are two large open economies, the world real interest rate will be such that A) desired international borrowing will be the same in both countries. B) desired international lending by one country equals desired international borrowing by the other country.
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F2010_MT3_MC_VersionA - first initial of last name ECO 320L...

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