Module 5: Balance of Payments Flashcards
(16 cards)
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.
B) the value of all intermediate goods and services produced by its factors of production
and sold on the market in a given time period.
C) the value of all final goods produced by its factors of production and sold on the
market in a given time period.
D) the value of all final goods and services produced by its factors of production and sold
on the market.
E) 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.
Answer: A
For most macroeconomists
A) national income accounts is much more important than national output accounts.
B) it is impossible to tell whether national income accounts equal to national output
accounts.
C) national output accounts exceed national income accounts.
D) national income accounts exceed national output accounts.
E) national income accounts and national output accounts are equal to each other.
Answer: E
For most macroeconomists
A) gross national income exceeds gross national product.
B) it is hard to tell whether gross national income equals gross national product.
C) gross national product exceeds gross national income.
D) gross national product is much more important than gross national income.
E) gross national income and gross national product are the same.
Answer: E
The largest component of GNP is
A) the current account.
B) investment.
C) government purchases.
D) consumption.
E) trade
Answer: D
An example of how GNP accounts for services provided by foreign-owned capital
(and GDP does not) is
A) earnings of a Spanish factory with British owners counts only in Spain’s GDP.
B) earnings of a Spanish factory with British owners counts only in Britain’s GNP.
C) earnings of a Spanish factory counts in Spain’s GNP but are part of Britain’s GDP.
D) earnings of a Spanish factory counts in Spain’s GDP but are part of Britain’s
GNP.
E) earnings of a Spanish factory counts in Spain’s GNP but not in Britain’s GDP or GNP.
Answer: D
The sale of
A) a used textbook does enter GNP.
B) a used textbook does not enter GNP, but the sale of a used house does.
C) both a used textbook and a used house do not enter GNP.
D) a used house does not enter GNP, but the sale of a used book does.
E) the GNP does not include sale of used items priced below $1000.
Answer: C
Which one of the following statements is the MOST accurate?
A) The sale of a used textbook does generate income for factors of production.
B) The sale of a used textbook does not generate income for any factor of
production.
C) The sale of a used textbook sometimes does and sometimes does not generate income
for factors of production.
D) It is hard to tell whether a sale of a used textbook does or does not generate income
for factors of production.
E) The sale of a used textbook is a part of the GNP
Answer: B
Which one of the following statements is the MOST accurate?
A) GNP plus depreciation is called net national product (NNP).
B) GNP less depreciation is called net national product (NNP).
C) GNP less depreciation is called net factor product (NFP).
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D) GDP plus depreciation is called net national product (NNP).
E) GDP less depreciation is called net national product (NNP).
Answer: B
GNP equals GDP
A) minus net receipts of factor income from the rest of the world.
B) plus receipts of factor income from the rest of the world.
C) minus receipts of factor income from the rest of the world.
D) plus net receipts of factor income from the rest of the world.
E) minus depreciation.
Answer: D
In open economies
A) saving and investment are necessarily equal.
B) as in a closed economy, saving and investment are not necessarily equal.
C) saving and investment are not necessarily equal as they are in a closed economy.
D) saving and investment are necessarily equal contrary to the case of a closed economy.
E) investment always refers to the domestic stock market.
Answer: C
Investment is usually
A) more variable than consumption.
B) less variable than consumption.
C) as variable as consumption.
D) a larger component of the GNP than consumption.
E) It is hard to tell from the data whether investment is more or less variable than
consumption.
Answer: A
Which one of the following expressions is the MOST accurate?
A) CA = EX - IM
B) CA = IM - EX
C) CA = EX = IM
D) CA = EX + IM
E) CA - IM = EX
Answer: A
An open economy
A) can save only by building up its capital stock.
B) can save only by acquiring foreign wealth.
C) cannot save either by building up its capital stock or by acquiring foreign wealth.
D) can save either by building up its capital stock or by acquiring foreign wealth.
E) can save by avoiding excessive imports.
Answer: D
Government savings, Sg , is equal to
A) T - G.
B) T + G.
C) T = G.
D) T + G - I.
E) T - G = I.
Answer: A
Every international transaction automatically enters the balance of payments
A) once either as a credit or as a debit.
B) twice, once as a credit and once as a debit.
C) once as a credit.
D) twice, both times as debit.
E) three times, once as a credit, once as a debit, and once as an exchange.
Answer: B
Unilateral transfers between countries are
A) long-term loans.
B) part of national income, but not part of the current account
C) part of the current account, but not a part of national income.
D) known for reducing the income of capital owners.
E) international gifts or payments that do not correspond to the purchase of any
good, service, or asset.
Answer: E
