International Economic Problem Set

Topics: Balance of payments, Current account, Investment Pages: 4 (906 words) Published: June 27, 2013
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Problem Set 1-A

For National Income Accounting and the Balance of Payments

Multiple Choice Questions (Please read all the choices) (Each question is 3 points) Mark the correct answer

1) 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). D) GDP plus depreciation is called net national product (NNP). E) GDP less depreciation is called net national product (NNP).

2) GDP is supposed to measure
A) the volume of production within a country's borders.
B) the volume of services generated within a country's borders. C) the volume of production of a country's output.
D) GNP plus depreciation.
E) net unilateral transfers from foreigners.

3) 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.

4) 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.

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.

6) Which of the following is true?
A) A country with a current account surplus is earning more from its exports than it spends on...
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