Open-Economy Macroeconomics Quiz

One year a country has negative net exports. The next year it still has negative net exports and imports have risen more than exports.

• its trade surplus fell.

• its trade surplus rose.

• its trade deficit fell.

• its trade deficit rose

A country purchases $3 billion of foreign-produced goods and services and sells $2 billion dollars of domestically produced goods and services to foreign countries. It has

• exports of $3 billion and a trade surplus of $1 billion.

• exports of $3 billion and a trade deficit of $1 billion.

• exports of $2 billion and a trade surplus of $1 billion.

• exports of $2 billion and a trade deficit of $1 billion.

If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries, then it has

• $7.2 billion of exports and $4.8 billion of imports.

• $7.2 billion of imports and $4.8 billion of exports.

• $4.8 billion of exports and $2.4 billion of imports.

• $4.8 billion of imports and $2.4 billion of exports.

Refer to Table 31-1. What are Argentina's exports?

• $60 billion

• $35 billion

• $10 billion

• None of the above are correct.

If U.S. consumers increase their demand for apples from New Zealand, then other things the same New Zealand's

• imports and net exports rise.

• imports rise and net exports fall.

• exports and net exports rise.

• exports rise and net exports fall.

If a country had a trade surplus of $50 billion and then its exports rose by $30 billion and its imports rose by $20 billion, its net exports would now be

• $0 billion.

• $20 billion.

• $40 billion.

• $60 billion.

Suppose that foreign citizens decide to purchase more U.S. pharmaceuticals and U.S. citizens decide to buy more stock in foreign corporations. Other things the same, these actions

• raise both U.S. net exports and U.S. net capital outflows.

• raise U.S. net exports and lower U.S. net capital outflows.

• lower both U.S. net exports and U.S. net capital outflows.

• lower U.S. net exports and raise U.S. net capital outflows.

If a country changes its corporate tax laws so that foreign businesses build and manage more business in that country, then that net capital outflow of that country

• and the net capital outflow of other countries rise.

• rises and the net capital outflow of other countries fall.

• falls and the net capital outflow of other countries rise.

• None of the above are correct.

A U.S. firm buys bonds issued by a technology center in India. This purchase is an example of U.S.

• foreign portfolio investment. By itself it is an increase in U.S. holdings of foreign bonds and increases U.S. net capital outflow.

• foreign portfolio investment. By itself it is an increase in U.S. holdings of foreign bonds and decreases U.S. net capital outflow.

• foreign direct investment. By itself it is an increase in U.S. holdings of foreign bonds and increases U.S. net capital outflow.

• foreign direct investment. By itself it is an increase in U.S. holdings of foreign bonds and decreases U.S. net capital outflow.

Catherine, a citizen of Spain, decides to purchase bonds issued by Chile instead of ones issued by the United States even though the Chilean bonds have a higher risk of default. An economic reason for her decision might be that

• she dislikes U.S. foreign policy.

• the Chilean bonds pay a higher rate of interest.

• the U.S. government is more stable than the Chilean government.

• None of the above provide an economic reason for buying the riskier bond.