Question 1

A farmer in Mexico purchases a tractor made in the U.S.This purchase is an example of
A)a U.S.import and a Mexican export
B)a U.S.export and a Mexican import
C)an export for both the U.S.and Mexico
D)an import for both Mexico and the U.S.

Accepted Answer

The purchase of a tractor made in the U.S. by a Mexican farmer is a U.S. export and a Mexican import. The tractor is being exported out of the U.S. and imported into Mexico.

Question 2

If Norway sold more goods and services abroad than it purchased from abroad,then it had
A)positive net exports which is a trade surplus.
B)positive net exports which is a trade deficit.
C)negative net exports which is a trade surplus.
D)negative net exports which is a trade deficit.

Accepted Answer

A positive net exports means that the value of exports is greater than the value of imports, resulting in a trade surplus.

Question 3

A country purchases more goods and services from residents of foreign countries than residents of foreign countries purchase from it.This country has
A)a trade surplus and positive net exports.
B)a trade surplus and negative net exports.
C)a trade deficit and positive net exports.
D)a trade deficit and negative net exports.

Accepted Answer

A trade deficit occurs when a country imports more goods and services than it exports, leading to negative net exports.

Question 4

Foreign-produced goods and services that are purchased domestically are called
A)imports.
B)exports.
C)net imports.
D)net exports.

Accepted Answer

Imports are goods and services that are produced in a foreign country and purchased domestically. This is different from exports, which are goods and services produced domestically and sold to foreign countries. Net imports and net exports are the difference between the value of imports and exports, and are not the correct answer to this question.

Question 5

If Germany purchased more goods and services abroad than it sold abroad last year,then it had
A)positive net exports which is a trade surplus.
B)positive net exports which is a trade deficit.
C)negative net exports which is a trade surplus.
D)negative net exports which is a trade deficit.

Accepted Answer

When a country purchases more goods and services from abroad than it sells abroad, it has negative net exports. This is also known as a trade deficit. Therefore, the best choice is D).

Question 6

One year a country has negative net exports.The next year it still has negative net exports and imports have risen more than exports.
A)its trade surplus fell.
B)its trade surplus rose.
C)its trade deficit fell.
D)its trade deficit rose

Accepted Answer

Negative net exports imply a trade deficit, and if imports rose more than exports in the following year, it means the trade deficit has increased. Therefore, the correct answer is D - its trade deficit rose.

Question 7

Paul,a Canadian citizen,purchases oranges grown in Florida.This purchase is an example of
A)a U.S.import and a Canadian export
B)a U.S.export and a Canadian import
C)an export for both the U.S.and Canada
D)an import for both Canada and the U.S.

Accepted Answer

This is because the oranges are being exported from the U.S. (Florida) to Canada, making it a U.S. export and a Canadian import.

Question 8

A country sells more goods and services to foreign countries than it buys from them.It has
A)a trade surplus and positive net exports.
B)a trade surplus and negative net exports.
C)a trade deficit and positive net exports.
D)a trade deficit and negative net exports.

Accepted Answer

A country with a trade surplus exports more goods and services than it imports, which means that it has positive net exports.

Question 9

Eric,a resident of Sweden,purchases a book printed in the U.S.Which country's exports increase?
A)Sweden's
B)the U.S.'s
C)Sweden's and the U.S.'s
D)neither Sweden's nor the U.S.'s

Accepted Answer

Since Eric purchased a book printed in the U.S., it means that the book was exported from the U.S. to Sweden. Therefore, the U.S.'s exports increase.

Question 10

Net exports of a country are the value of
A)goods and services imported minus the value of goods and services exported.
B)goods and services exported minus the value of goods and services imported.
C)goods exported minus the value of goods imported.
D)goods imported minus the value of goods exported.

Accepted Answer

Net exports is calculated by subtracting the value of goods and services imported from the value of goods and services exported. Therefore, the correct choice is B.

Question 11

One year a country has positive net exports.The next year it still has positive but larger net exports
A)its trade surplus fell.
B)its trade surplus rose.
C)its trade deficit fell.
D)its trade deficit rose

Accepted Answer

If a country's net exports are positive in both years and increased from the first to the second year, it means that its trade surplus has risen.

Question 12

If Saudi Arabia had negative net exports last year,then it
A)sold more abroad than it purchased abroad and had a trade surplus.
B)sold more abroad than it purchased abroad and had a trade deficit.
C)bought more abroad than it sold abroad and had a trade surplus.
D)bought more abroad than it sold abroad and had a trade deficit.

Accepted Answer

The definition of net exports is exports minus imports. If Saudi Arabia had negative net exports, that means its imports exceeded its exports, indicating a trade deficit. Therefore, the correct choice is D - bought more abroad than it sold abroad and had a trade deficit.

Question 13

The value of Austria's exports minus the value of Austria's imports is called
A)Austria's net exports.
B)Austria's net imports.
C)Austria's foreign portfolio investment
D)Austria's foreign direct investment.

Accepted Answer

The value of Austria's exports minus the value of Austria's imports is called Austria's net exports.

Question 14

When Jamie,a U.S.citizen,purchases a wool jacket made in Ireland,the purchase is
A)both a U.S.and Irish import.
B)a U.S.import and an Irish export.
C)a U.S.export and an Irish import.
D)neither an export nor an import for either country.

Accepted Answer

The wool jacket is an Irish export since it is being sold to a U.S. citizen, and it is a U.S. import since it is being bought by a U.S. citizen. Therefore, it is both a U.S. import and an Irish export.

Question 15

Dave,a U.S.citizen buys a bicycle manufactured in China.Dave's purchase is
A)both a U.S.and Chinese export.
B)both a U.S.and Chinese import.
C)a U.S.import and a Chinese export.
D)a U.S.export and a Chinese import.

Accepted Answer

As Dave, a U.S. citizen, is buying a bicycle manufactured in China, it is a Chinese export. However, since Dave is bringing the bicycle into the United States for his personal use, it is a U.S. import. Therefore, the purchase is both a U.S. import and a Chinese export.

Question 16

If France had positive net exports last year,then it
A)sold more abroad than it purchased abroad and had a trade surplus.
B)sold more abroad than it purchased abroad and had a trade deficit.
C)bought more abroad than it sold abroad and had a trade surplus.
D)bought more abroad than it sold abroad and had a trade deficit.

Accepted Answer

Positive net exports mean that the value of goods and services exported by France exceeded the value of goods and services imported into France. This indicates that France had a trade surplus, or in other words, sold more abroad than it purchased abroad.

Question 17

Which of the following both reduce net exports?
A)exports rise,imports rise
B)exports rise,imports fall
C)exports fall,imports rise
D)exports fall,imports fall

Accepted Answer

A decrease in exports implies a decrease in the purchase of domestic goods and services by foreigners, which reduces inflows of foreign currency. Conversely, an increase in imports implies an increase in the purchase of foreign goods and services by domestic residents, resulting in an outflow of foreign currency. Therefore, a decrease in exports and an increase in imports both reduce net exports.

Question 18

Bill,a U.S.citizen,pays a Spanish architect to design a metal casting factory.Which country's exports increase?
A)Spain's
B)the U.S.'s
C)Spain's and the U.S.'s
D)neither Spain's nor the U.S.'s

Accepted Answer

Since the service purchased (architectural design) was provided by a Spanish architect, this counts as an export from Spain, and therefore Spain's exports increase.

Question 19

The value of the goods and services Australia purchases from the U.S.are less than the value of goods and services the U.S.purchases from Australia.The U.S.has
A)positive net exports with Australia and a trade surplus with Australia.
B)positive net exports with Australia and a trade deficit with Australia.
C)negative net exports with Australia and a trade surplus with Australia.
D)negative net exports with Australia and a trade deficit with Australia.

Accepted Answer

The U.S. has negative net exports with Australia because it imports more from Australia than it exports to Australia, resulting in a trade deficit.

Question 20

A country's trade balance
A)must be zero.
B)must be greater than zero.
C)is greater than zero only if exports are greater than imports.
D)is greater than zero only if imports are greater than exports.

Accepted Answer

Trade balance refers to the difference between a country's exports and imports. If exports are greater than imports, then the trade balance is positive, indicating a surplus in trade. Therefore, option C is the correct answer. Options A and B are incorrect as the trade balance can be either positive (surplus) or negative (deficit). Option D is also incorrect as it is the opposite of option C.

Quiz 18: Open Economy Macroeconomics Basic Concepts: The International Flows of Goods and Capital

A farmer in Mexico purchases a tractor made in the U.S.This purchase is an example of

If Norway sold more goods and services abroad than it purchased from abroad,then it had

A country purchases more goods and services from residents of foreign countries than residents of foreign countries purchase from it.This country has

Foreign-produced goods and services that are purchased domestically are called

If Germany purchased more goods and services abroad than it sold abroad last year,then it had

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

Paul,a Canadian citizen,purchases oranges grown in Florida.This purchase is an example of

A country sells more goods and services to foreign countries than it buys from them.It has

Eric,a resident of Sweden,purchases a book printed in the U.S.Which country's exports increase?

Net exports of a country are the value of

One year a country has positive net exports.The next year it still has positive but larger net exports

If Saudi Arabia had negative net exports last year,then it

The value of Austria's exports minus the value of Austria's imports is called

When Jamie,a U.S.citizen,purchases a wool jacket made in Ireland,the purchase is

Dave,a U.S.citizen buys a bicycle manufactured in China.Dave's purchase is

If France had positive net exports last year,then it

Which of the following both reduce net exports?

Bill,a U.S.citizen,pays a Spanish architect to design a metal casting factory.Which country's exports increase?

The value of the goods and services Australia purchases from the U.S.are less than the value of goods and services the U.S.purchases from Australia.The U.S.has

A country's trade balance