International Economic Problem Set

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. 5) A country’s current account A) balance equals the change in its net foreign wealth. B) balance equals the change in its foreign wealth. C) surplus equals the change in its foreign wealth. D) deficit equals the change in its foreign wealth. E) balance equals its GNP.

International Economic Problem Set By Pinyin A) A country with a current account surplus is earning more from its exports than it spends on imports. B) A country could finance a current account deficit by using previously accumulated foreign wealth to pay for its imports. C) A country with a current account deficit must be increasing its net foreign debts by the amount of the deficit. D) We can describe the current account surplus as the difference between income and absorption. E) All of the above are true of current account balances. ) Which of

A) SP=Y-T-C B) Unlike private saving decisions, government saving decisions are often made with an eye toward their effect on output and employment. C) Total savings (S) = SP + So. D) The national income identity can help us to analyze the channels through which government saving decisions influence macroeconomic conditions. E) None of the above; all statements are true. 8) In a closed economy, private saving, SP, is equal to 9) Arcadian equivalence argues that when the government cuts taxes and raises its efficient, A) consumers anticipate that they will face lower taxes later to pay for the resulting government debt.

B) consumers anticipate that they will higher services from the government. C) consumers anticipate that they will face higher taxes later to pay for the resulting government debt. D) consumers anticipate it will affect their future taxes, in general in the direction of lowering future taxes. E) consumers anticipate that the low tax rates will continue. 10) An American buys a Japanese car, paying by writing a check on an account with a bank in New York. How would this be accounted for in the balance of payments?

A) current account, a Japanese good import B) current account, a U. S. Good import C) financial account, a U. S. Asset import D) financial account, a U. S. Asset export E) a current account as a U. S. Good import and a financial account, a U. S. Asset export. 1 1) The United States issues a $10,000 debt forgiveness to Argentina. How is this accounted for in the balance of payments? A) financial account, U. S. Asset import B) current account, Argentina transfer payment C) current account, U. S. Revive export E) current account, Argentina good import 12) The German government carries out an official foreign exchange intervention in which it uses dollars held in an American bank to buy French currency from its citizens. How is this accounted for in the balance of payments? A) current account, French good export B) current account, German good import C) financial account, French asset export D) financial account, German asset export E) financial account, German asset import Short Answer Questions and Problems (Each question is 10 points) Please show your ark clearly.

Make sure your writing is readable. 1) Fill in the following table. 3) Textbook chap 13 (peg. 318) question 11. 4) During the mid- to late sass, the United States experienced an increase in investment, and the U. S. Government budget went from a deficit to budget surplus. All else equal, how would this affect the U. S. Current account? Explain why and how this budget surplus affects domestic savings relative to domestic investment. 5) Textbook chap 13 (peg. 318) question 6 6) Explain the concept of “global imbalances”. Is it sustainable or not?