Question 1

An increase in U.S. sales of movies to other countries raises U.S.
A)exports and so raises the U.S. trade balance.
B)exports and so reduces the U.S. trade balance.
C)imports and so raises the U.S. trade balance.
D)imports and so reduces the U.S. trade balance.

Accepted Answer

An increase in U.S. sales of movies to other countries raises U.S. exports. As a result, it will increase the U.S. trade balance.

Question 2

A firm in China sells toys to a U.S. department store chain. Other things the same, these sales
A)increase U.S. net exports and decrease Chinese net exports.
B)decrease U.S. net exports and increase Chinese net exports.
C)increase U.S. and Chinese net exports.
D)decrease U.S. and Chinese net exports.

Accepted Answer

When a firm in China sells toys to a U.S. department store chain, it is exporting toys to the U.S., which decreases U.S. net exports. At the same time, it increases Chinese net exports as it is earning revenue from exporting toys. Therefore, the correct choice is B, which states that these sales decrease U.S. net exports and increase Chinese net exports.

Question 3

A company in Panama pays for a U.S. architect to design a factory building. By itself this transaction
A)increases U.S. exports and so increases the U.S. trade balance.
B)increases U.S. exports and so decreases the U.S. trade balance.
C)increases U.S. imports and so increases the U.S. trade balance.
D)increases U.S. imports and so decreases the U.S. trade balance.

Accepted Answer

The answer of A company in Panama pays for a...

Question 4

U.S. international trade has
A)decreased because of a decrease in the trade of goods with a high value per pound.
B)decreased because of an increase in the trade of goods with a high value per pound.
C)increased because of a decrease in trade of goods with a high value per pound.
D)increased because of an increase in trade of goods with a high value per pound.

Accepted Answer

Trade of goods with a high value per pound, such as vehicles, electronics and pharmaceuticals, has been increasing in the U.S. This has led to an overall increase in international trade.

Question 5

A firm in the United Kingdom hires a firm in the U.S. to train its managers. By itself this transaction
A)increases U.S. imports and decreases U.S. net exports.
B)increases U.S. imports and increases U.S. net exports.
C)increases U.S. exports and decreases U.S. net exports.
D)increases U.S. exports and increases U.S. net exports.

Accepted Answer

The answer of A firm in the United Kingdom hires...

Question 6

Which of the following is correct? Since 1950
A)U.S. exports and U.S. imports each about doubled.
B)U.S. exports and U.S. imports each about tripled.
C)U.S. exports about doubled and U.S. imports about tripled.
D)U.S. exports about tripled and U.S. imports about doubled.

Accepted Answer

The answer of Which of the following is correct? Since...

Question 7

Ivan, a Russian citizen, sells several hundred cases of caviar to a restaurant chain in the United States. By itself, this sale
A)increases U.S. net exports and decreases Russian net exports.
B)increases U.S. net exports and has no effect on Russian net exports.
C)decreases U.S. net exports and increases Russian net exports.
D)decreases U.S. net exports and has no effect on Russian net exports.

Accepted Answer

The answer of Ivan, a Russian citizen, sells several hundred...

Question 8

Lydia, a citizen of Italy, produces scarves and purses that she sells to department stores in the United States. Other things the same, these sales
A)increase U.S. net exports and have no effect on Italian net exports.
B)decrease U.S. net exports and have no effect on Italian net exports.
C)increase U.S. net exports and decrease Italian net exports.
D)decrease U.S. net exports and increase Italian net exports.

Accepted Answer

The answer of Lydia, a citizen of Italy, produces scarves...

Question 9

If a country had a trade deficit of $20 billion and then its exports rose by $7 billion and its imports fell by $10 billion, its net exports would now be
A)$37 billion
B)$3 billion
C)-$3 billion
D)-$37 billion

Accepted Answer

The answer of If a country had a trade deficit...

Question 10

Over the past five decades, the U.S. economy has become
A)more closed.
B)more open.
C)less trade-oriented.
D)more self-sufficient.

Accepted Answer

The U.S. economy has become more open over the past five decades, with an increase in international trade and globalization.

Question 11

If a country had a trade deficit of $10 billion and then its exports rose by $20 billion and its imports rose by $10 billion, its net exports would now be
A)$0
B)$10 billion.
C)-$10 billion.
D)-$20 billion.

Accepted Answer

The answer of If a country had a trade deficit...

Question 12

If a country had a trade surplus of $100 billion and then its exports rose by $40 billion and its imports rose by $30 billion, its net exports would now be
A)$110 billion
B)$90 billion.
C)$70 billion.
D)$60 billion.

Accepted Answer

The answer of If a country had a trade surplus...

Question 13

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
A)$0 billion.
B)$20 billion.
C)$40 billion.
D)$60 billion.

Accepted Answer

Initially, the country had a trade surplus of $50 billion.

When the exports rose by $30 billion, the total exports became $50 billion + $30 billion = $80 billion.

When the imports rose by $20 billion, the total imports became $50 billion + $20 billion = $70 billion.

Therefore, the new net exports can be calculated as:

Net exports = Exports - Imports 
Net exports = $80 billion - $70 billion 
Net exports = $10 billion

However, the question asks for the new net exports compared to the old net exports.

The old net exports were $50 billion (given in the first sentence), and the new net exports are $10 billion.

Therefore, the change in net exports is:

Change in net exports = New net exports - Old net exports 
Change in net exports = $10 billion - $50 billion 
Change in net exports = -$40 billion

Since the change in net exports is negative (-$40 billion), it means that the net exports have decreased.

To get the new net exports, we need to add the change in net exports to the old net exports:

New net exports = Old net exports + Change in net exports 
New net exports = $50 billion - $40 billion 
New net exports = $10 billion + $50 billion 
New net exports = $60 billion

Therefore, the new net exports are $60 billion, which means that the correct answer is D) $60 billion.

Question 14

The increase in international trade in the United States is partly due to
A)improvements in transportation.
B)advances in telecommunications.
C)increased trade of goods with a high value per pound.
D)All of the above are correct.

Accepted Answer

All three options contribute to the increase in international trade in the United States. Improvements in transportation such as containerization and intermodal transportation have made it easier to move goods across borders. Advances in telecommunications have facilitated communication between businesses across the globe. Increased trade of goods with a high value per pound, such as electronics and machinery, have led to a greater volume of international trade.

Question 15

You buy a new car built in Sweden. Other things the same, your purchase by itself
A)raises both U.S. exports and U.S. net exports.
B)raises U.S. exports and lowers U.S. net exports.
C)raises both U.S. imports and U.S. net exports.
D)raises U.S. imports and lowers U.S. net exports.

Accepted Answer

Buying a new car built in Sweden will increase U.S. imports, as the car is coming from Sweden. This will, in turn, lower U.S. net exports, as net exports are calculated as exports minus imports.

Question 16

A Swiss company sells chocolates to a retailer in the United States. These sales by themselves
A)decrease U.S. net export and Swiss net exports.
B)decrease U.S. net exports and increase Swiss net exports.
C)increase U.S. and Swiss net exports.
D)increase U.S. net exports and decrease Swiss net exports.

Accepted Answer

The answer of A Swiss company sells chocolates to a...

Question 17

Which of the following is correct?
A)U.S. exports as a percentage of GDP have about tripled since 1950. The U.S. currently has a trade deficit.
B)U.S. exports as a percentage of GDP have about tripled since 1950. The U.S. currently has a trade surplus.
C)U.S. exports as a percentage of GDP have about doubled since 1950. The U.S. currently has a trade deficit.
D)U.S. exports as a percentage of GDP have about doubled since 1950. The U.S. currently has a trade surplus.

Accepted Answer

According to the statement, U.S. exports as a percentage of GDP have tripled since 1950. This indicates that the U.S. has increased its export activities significantly over time. The statement also mentions that the U.S. currently has a trade deficit, which means that the country is importing more goods than it is exporting. Therefore, Option A is the correct choice.

Question 18

Mike, a U.S. citizen, buys $1,000 worth of olives from Greece. By itself this purchase
A)increases U.S. imports by $1,000 and increases U.S. net exports by $1,000.
B)increases U.S. imports by $1,000 and decreases U.S. net exports by $1,000.
C)increases U.S. exports by $1,000 and increases U.S. net exports by $1,000.
D)increases U.S. exports by $1,000 and decreases U.S. net exports by $1,000.

Accepted Answer

Mike's purchase of olives from Greece increases U.S. imports by $1,000. Net exports are calculated as exports minus imports, so since there are no exports in this scenario, U.S. net exports decrease by the same $1,000.

Question 19

If U.S. consumers increase their demand for apples from New Zealand, then other things the same New Zealand's
A)imports and net exports rise.
B)imports rise and net exports fall.
C)exports and net exports rise.
D)exports rise and net exports fall.

Accepted Answer

The answer of If U.S. consumers increase their demand for...

Question 20

If U.S. consumers decrease their demand for cell phones from Finland, then other things the same Finland's
A)exports and net exports fall.
B)exports fall and net exports rise.
C)imports and net exports fall.
D)imports fall and net exports rise.

Accepted Answer

When U.S. consumers decrease their demand for cell phones from Finland, Finland's exports will fall as they are selling fewer phones. This will also impact Finland's net exports because if exports fall and imports remain the same, net exports will also fall.

Quiz 31: Open-Economy Macroeconomics: Basic Concepts

An increase in U.S. sales of movies to other countries raises U.S.

A firm in China sells toys to a U.S. department store chain. Other things the same, these sales

A company in Panama pays for a U.S. architect to design a factory building. By itself this transaction

U.S. international trade has

A firm in the United Kingdom hires a firm in the U.S. to train its managers. By itself this transaction

Which of the following is correct? Since 1950

Ivan, a Russian citizen, sells several hundred cases of caviar to a restaurant chain in the United States. By itself, this sale

Lydia, a citizen of Italy, produces scarves and purses that she sells to department stores in the United States. Other things the same, these sales

If a country had a trade deficit of $20 billion and then its exports rose by $7 billion and its imports fell by $10 billion, its net exports would now be

Over the past five decades, the U.S. economy has become

If a country had a trade deficit of $10 billion and then its exports rose by $20 billion and its imports rose by $10 billion, its net exports would now be

If a country had a trade surplus of $100 billion and then its exports rose by $40 billion and its imports rose by $30 billion, its net exports would now be

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

The increase in international trade in the United States is partly due to

You buy a new car built in Sweden. Other things the same, your purchase by itself

A Swiss company sells chocolates to a retailer in the United States. These sales by themselves

Which of the following is correct?

Mike, a U.S. citizen, buys $1,000 worth of olives from Greece. By itself this purchase

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

If U.S. consumers decrease their demand for cell phones from Finland, then other things the same Finland's