Question 1

Oceania buys $100 of wine from Escudia and Escudia buys $80 of wool from Oceania.Suppose this is the only trade that these countries do.What are the net exports of Oceania and Escudia,in that order?

Accepted Answer

The answer of Oceania buys $100 of wine from Escudia...

Question 2

If a country has net exports of $8 billion and sold $40 billion of goods and services abroad,then it has

Accepted Answer

Net exports = Exports - Imports
Given, Net exports = $8 billion and Exports = $40 billion
Using the above formula, we can calculate Imports as follows:
$8 billion = $40 billion - Imports
Imports = $40 billion - $8 billion
Imports = $32 billion
Therefore, the country has $40 billion of exports and $32 billion of imports. Hence, option D is correct.

Question 3

A Texas ranch sells beef to a U.S.company that sells it to a grocery chain in Japan.These sales

Accepted Answer

When the U.S. company sells beef to a grocery chain in Japan, it counts as an export, increasing both U.S. exports and U.S. net exports.

Question 4

Peru has exports of $31.5 million and imports of $30 million.Peru

Accepted Answer

Peru has a positive balance of trade, which means it sells more goods overseas than it buys from overseas. Therefore, it has a trade surplus.

Question 5

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

Accepted Answer

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

Question 6

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

Accepted Answer

When Lydia sells scarves and purses to the U.S., it is considered an import for the U.S., which decreases U.S. net exports. Conversely, it is an export for Italy, increasing Italian net exports.

Question 7

Egypt has exports of $500 million and imports of $750 million.Egypt

Accepted Answer

Egypt's imports are greater than its exports, which means it buys more from overseas than it sells overseas. This indicates a trade deficit.

Question 8

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

Accepted Answer

When the Swiss company sells chocolates to the U.S., it is an import for the U.S., decreasing U.S. net exports, and an export for Switzerland, increasing Swiss net exports.

Question 9

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

Accepted Answer

When China sells toys to the U.S., it results in an import for the U.S., decreasing U.S. net exports. Conversely, it is an export for China, increasing Chinese net exports.

Question 10

Bob traps lobsters in Maine and sells them to a restaurant in Mexico.Other things the same,these sales

Accepted Answer

When Bob sells lobsters to a restaurant in Mexico, it increases U.S. exports (since he's selling goods to a foreign country) and decreases Mexican imports (since they're buying goods from a foreign country). Therefore, U.S. net exports increase (exports-imports) and Mexican net exports decrease (imports-exports).

Question 11

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

Accepted Answer

Export refers to the amount of domestically produced goods and services a country sells to foreign countries, whereas imports refer to the amount of foreign-produced goods and services a country purchases.

In this scenario, the country has exports of $2 billion (goods and services produced domestically and sold to foreign countries) and imports of $3 billion (foreign-produced goods and services purchased by the country).

Therefore, the country has a trade deficit of $1 billion, as its imports exceed its exports. Thus, the correct answer is D.

Question 12

A U.S.firm sells diesel locomotives to a German railroad.Other things the same,this sale

Accepted Answer

The sale of diesel locomotives by the U.S. firm to the German railroad represents an increase in U.S. exports, as the goods are leaving the U.S. and entering Germany. At the same time, it represents a decrease in German net exports, as the goods are entering Germany and leaving the U.S. Overall, this transaction does not increase net exports for both countries, but rather creates a trade surplus for the U.S. and a trade deficit for Germany.

Question 13

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

Accepted Answer

The U.S. firm is providing a service to the UK firm, which counts as an export for the U.S., thus increasing U.S. exports and net exports.

Question 14

Suppose that a country imports $90 million worth of goods and services and exports $80 million worth of goods and services.What is the value of net exports?

Accepted Answer

Net exports are calculated by subtracting the value of exports from the value of imports, therefore:
Net exports = exports - imports
Net exports = $80 million - $90 million
Net exports = -$10 million
The negative sign indicates that the country has a trade deficit, meaning that it imports more than it exports. Therefore, the correct answer is (D) -$10 million.

Question 15

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

Accepted Answer

Buying a new car built in Sweden increases imports from Sweden, which lowers U.S. net exports.

Question 16

If U.S.exports are $150 billion and U.S.imports are $100 billion,which of the following is correct?

Accepted Answer

The trade surplus is calculated by subtracting imports from exports. $150 billion - $100 billion = $50 billion. Therefore, the U.S. has a trade surplus of $50 billion.

Question 17

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

Accepted Answer

Net exports are calculated as exports minus imports. If net exports are $2.4 billion and imports are $4.8 billion, then exports must be $7.2 billion (since $7.2 billion - $4.8 billion = $2.4 billion).

Question 18

If U.S.exports are $300 billion and U.S.imports total $350 billion,which of the following is correct?

Accepted Answer

Trade surplus occurs when a country exports more than it imports, while a trade deficit occurs when a country imports more than it exports. Given that the U.S. exports $300 billion and imports $350 billion, it means that the U.S. has imported $50 billion more than it has exported, therefore, the U.S. has a trade deficit of $50 billion. The correct choice is D.

Question 19

Paine Pharmaceuticals produces medicines in the U.S.Its overseas sales

Accepted Answer

Overseas sales of medicines produced in the U.S. are considered exports, which contribute positively to the U.S. net exports.

Question 20

If the U.S.has exports of $1.5 trillion and imports of $2.2 trillion,then the U.S.

Accepted Answer

The U.S. has imports of $2.2 trillion, which exceeds its exports of $1.5 trillion. This means the U.S. is buying more from overseas than it is selling overseas, resulting in a trade deficit. Therefore, option C is correct. Options A and B are incorrect because they describe a trade surplus, which is the opposite of what is happening in this scenario. Option D is incorrect because it describes a trade surplus, which is not the case.

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