BAIB3004 Week 5 24/25

What does a trade deficit indicate?

• Exports exceed imports

• Imports exceed exports

• Exports equal imports

• No international trade occurs

Which of the following is NOT a component of the Balance of Payments?

• Current Account

• Capital Account

• Financial Account

• Trade Account

How does Gross National Product (GNP) differ from Gross Domestic Product (GDP)?

• GNP includes income from abroad, GDP doesn't

• GDP includes income from abroad, GNP doesn't

• GNP only measures goods, GDP measures goods and services

• There is no difference

What is the effect of capital depreciation on Net National Product (NNP)?

• It increases NNP

• It decreases NNP

• It has no effect on NNP

• It multiplies NNP

In the context of international trade, structural unemployment often results from:

• Seasonal changes in demand

• Cyclical economic downturns

• Shifts in comparative advantage

• Natural disasters

How might a country's trade balance affect its exchange rate?

• A trade surplus typically leads to currency depreciation

• A trade deficit typically leads to currency appreciation

• A trade surplus typically leads to currency appreciation

• Trade balance has no effect on exchange rates

What does an increase in a country's money supply typically do to its price level?

• Decreases it

• Increases it

• Has no effect

• Causes it to fluctuate randomly

Which of the following would be recorded in the Capital Account of the Balance of Payments?

• Export of goods

• Foreign direct investment

• Debt forgiveness

• Dividend payments to foreign investors

How does a country's GNP per capita differ from its total GNP?

• GNP per capita is always higher

• GNP per capita accounts for population size

• Total GNP excludes services

• There is no difference

What effect might a persistent trade deficit have on a country's economy?

• It always leads to economic growth

• It can lead to increased foreign ownership of domestic assets

• It has no long-term effects

• It always leads to currency appreciation