Exam I_sol - Exam I Econ 457 Spring 2011 Name: UID:...

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Unformatted text preview: Exam I Econ 457 Spring 2011 Name: UID: Question s 1 18 are worth 4 points each. 1) A country's gross national product (GNP) is A) the value of all final goods and services produced by its factors of production and sold on the market in a given time period. the value of all intermediate goods and services produced by its factors of production and sold on the market in a given time period. the value of all final goods produced by its factors of production and sold on the market in a given time period. the value of all final goods and services produced by its factors of production and sold on the market. the value of all final goods and services produced by its factors of production, excluding land, and sold on the market in a given time period. An example of how GNP accounts for services provided by foreign- owned capital (and GDP does not) is earnings of Spanish factory with British owners counts only in Spain's GDP. earnings of Spanish factory with British owners counts only in Britain's GNP. earnings of Spanish factory counts in Spain's GNP but are part of Britain's GDP. earnings of Spanish factory counts in Spain's GDP but are part of Britain's GNP. N 3 GNP equals GDP minus net receipts of factor income from the rest of the world. plus receipts of factor income from the rest of the world. minus receipts of factor income from the rest of the world. plus net receipts of factor income from the rest of the world. None of the above. In open economie s, saving and investment are necessarily equal. as in a closed economy, saving and investment are not necessarily equal. saving and investment are not necessarily equal as they are in a closed economy. saving and investment are necessarily equal contrary to the case of a closed economy. N 5 Which of the following is true? A country with a current account surplus is earning more from its exports than it spends on imports. A country could finance a current account deficit by using previously accumulated foreign wealth to pay for its imports. A country with a current account deficit must be increasing its net foreign debts by the amount of the deficit. We can describe the current account surplus as the difference between income and absorption. All of the above are true. 6 An open economy can save only by building up its capital stock. can save only by acquiring foreign wealth. cannot save either by building up its capital stock or by acquiring foreign wealth. can save either by building up its capital stock or by acquiring foreign wealth. wealth....
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This note was uploaded on 08/01/2011 for the course ECON 457 taught by Professor Staff during the Spring '11 term at Iowa State.

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Exam I_sol - Exam I Econ 457 Spring 2011 Name: UID:...

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