Trade Balance Quiz

What is the balance of trade?

• Government expenditures that exceed revenues.

• The section of a nation's balance of payments that records its exports and imports of goods and services.

• The difference in value between a country's exports and imports.

• A contract that states the conditions under which one party (a person or institution) promises to pay another party cash at some point in the future.

What does a trade deficit indicate for the United States according to the text?

• The United States is losing jobs to other nations.

• It is a function of national saving and investment decisions.

• It is a clear indicator of the success of U.S. firms.

• It is a measure of the fairness of international trade.

What was the U.S. trade deficit for 2015?

What is a current account?

• The difference in value between a country's exports and imports.

• Government expenditures that exceed revenues.

• A resource with economic value that an individual, corporation, or country owns.

• The section of a nation's balance of payments that records its exports and imports of goods and services.

As of July 2016, what was the goods and services deficit in the U.S.?

• $23.2 billion

• $531.5 billion

• $39.5 billion

• $500.5 billion

What are the two subaccounts of a country's balance of payments?

• The current account and the capital account

• The trade account and the financial account

• The capital account and the services account

• The current account and the capital and financial account

When a country has positive net exports, what is the effect on the current account?

• The country has a trade surplus.

• The country has a trade deficit.

• The country's capital and financial account increases.

• The country's capital and financial account decreases.

What happens when the balance of payments must balance?

• A deficit in one account must be offset by a surplus in the same account.

• A deficit in one account must be offset by a surplus in another account.

• The national debt is increased to balance the accounts.

• The capital and financial account is always adjusted to zero.

In Case 1, when a Chinese firm spends $10 million on U.S. goods and services, how is it recorded?

• As a deficit in the U.S. current account.

• As a surplus in the U.S. capital and financial account.

• As a surplus in the U.S. current account.

• As a deficit in the U.S. capital and financial account.

In Case 2, when a Chinese firm invests $10 million in U.S. assets, what is the result on the U.S. balance of payments?

• A surplus on the current account and a deficit on the capital and financial account.

• A deficit on the current account and a surplus on the capital and financial account.

• A surplus on both the current account and the capital and financial account.

• Balanced trade with no surplus or deficit on either account.