Question 1

Which of the following best describes how the Canadian economy has evolved over the past five decades?
A)It has become more closed.
B)It has become more open.
C)It has become less trade-oriented.
D)It has become more self-sufficient.

Accepted Answer

The Canadian economy has become more open over the past five decades, particularly due to the North American Free Trade Agreement (NAFTA) and other free trade agreements. These agreements have increased trade between Canada and other countries, leading to an increase in international investment and the export of Canadian goods and services.

Question 2

A country's exports are $600 billion,and imports are $700 billion.What is the country's trade balance?
A)$100 billion deficit
B)$100 billion surplus
C)$1300 billion deficit
D)$1300 billion surplus

Accepted Answer

The trade balance is calculated by subtracting the value of imports from the value of exports. In this case, the exports are $600 billion and imports are $700 billion. Therefore, the trade balance is $600 billion - $700 billion = -$100 billion, indicating a trade deficit because imports are greater than exports.

Question 3

Country A buys $150 of wine from country B,and B buys $30 of wool from A.Which of the following correctly indicates the two countries' net exports (in the order A,B)?
A)$180, $0
B)$150, $30
C)-$120, $120
D)$120, -$120

Accepted Answer

C

Question 4

Clear Brook Farms,a Canadian manufacturer of frozen vegetarian entrées,sells cases of its product to stores overseas.Which of the following correctly identifies the effects of these transactions?
A)They decrease Canadian exports but increase Canadian net exports.
B)They decrease both Canadian exports and Canadian net exports.
C)They increase both Canadian exports and Canadian net exports.
D)They increase Canadian exports but decrease Canadian net exports.

Accepted Answer

The answer of Clear Brook Farms,a Canadian manufacturer of frozen...

Question 5

Ivan,a Russian citizen,sells several hundred cases of Russian caviar to a restaurant chain in Canada.Which of the following correctly identifies the effects of this transaction?
A)It increases Canadian net exports and has no effect on Russian net exports.
B)It increases Canadian net exports and decreases Russian net exports.
C)It decreases Canadian net exports and has no effect on Russian net exports.
D)It decreases Canadian net exports and increases Russian net exports.

Accepted Answer

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

Question 6

How does international trade affect the standard of living?
A)It raises the standard of living in all trading countries.
B)It lowers the standard of living in all trading countries.
C)It raises the standard of living in the exporting country and lowers it in the importing country.
D)It raises the standard of living in the importing country and lowers it in the exporting country.

Accepted Answer

International trade allows countries to specialize in producing goods and services that they can produce efficiently and at a lower cost than other countries. This increases the efficiency of production and access to a wider range of goods and services, which ultimately raises the standard of living for consumers in all trading countries.

Question 7

Suppose that a country exports $200 million of goods and services and imports $80 million of goods and services.What is the value of that country's net exports?
A)$280 million
B)$200 million
C)$120 million
D)-$200 million

Accepted Answer

Net exports is calculated by subtracting imports from exports. Therefore, $200 million - $80 million = $120 million. The negative sign in option D indicates a trade deficit, which is not the case here.

Question 8

Roger lives in Iceland and purchases a snowmobile manufactured in Canada.Which of the following is this purchase?
A)both a Canadian and an Icelandic export
B)both a Canadian and an Icelandic import
C)a Canadian import and an Icelandic export
D)a Canadian export and an Icelandic import

Accepted Answer

The snowmobile is manufactured in Canada and purchased by Roger who lives in Iceland. Therefore, it is a Canadian export (from Canada's perspective) and an Icelandic import (from Iceland's perspective).

Question 9

In 2005,Canada had positive net exports.Which of the following does this fact imply?
A)Canada sold more abroad than it purchased abroad and had a trade surplus.
B)Canada sold more abroad than it purchased abroad and had a trade deficit.
C)Canada bought more abroad than it sold abroad and had a trade surplus.
D)Canada bought more abroad than it sold abroad and had a trade deficit.

Accepted Answer

Positive net exports mean that the value of exports exceeded the value of imports, which indicates that Canada sold more goods and services abroad than it purchased from foreign countries. This leads to a trade surplus.

Question 10

How are net exports of a country determined?
A)the value of goods and services imported minus the value of goods and services exported
B)the value of goods and services exported minus the value of goods and services imported
C)the value of goods exported minus the value of goods imported
D)the value of goods imported minus the value of goods exported

Accepted Answer

Net exports of a country are determined by subtracting the value of goods and services imported from the value of goods and services exported. This calculation gives us the net balance of trade for a country, representing the difference between its exports and imports.

Question 11

What is the value of Peru's exports minus the value of Peru's imports called?
A)Peru's net capital inflow
B)Peru's foreign direct investment
C)Peru's net exports
D)Peru's net imports

Accepted Answer

The value of Peru's exports minus the value of Peru's imports is called Peru's net exports. It represents the difference between what Peru sells to other countries and what it buys from other countries.

Question 12

What are foreign-produced goods and services that are sold domestically called?
A)imports
B)exports
C)net imports
D)net exports

Accepted Answer

Foreign-produced goods and services that are sold domestically are called imports.

Question 13

A German company sells cameras to a retailer in Canada.Which of the following correctly identifies the effects of these transactions?
A)They have no effect on Canadian net exports, and they increase German net exports.
B)They decrease Canadian net exports and increase German net exports.
C)They increase Canadian and German net exports.
D)They increase Canadian net exports and decrease German net exports.

Accepted Answer

When a German company sells cameras to a retailer in Canada, it results in an increase in German exports and a decrease in Canadian exports. This is because the cameras are being produced in Germany and are being sold to Canada, which is a foreign country. Therefore, it is a transaction that involves the exchange of goods across borders, and it results in a decrease in Canada's net exports and an increase in Germany's net exports.

Question 14

In 2012,Denmark had net exports of $10 billion and sold $60 billion of goods and services abroad.What were Denmark's components of net exports?
A)$70 billion of exports and $50 billion of imports
B)$50 billion of exports and $70 billion of imports
C)$60 billion of exports and $50 billion of imports
D)$50 billion of exports and $60 billion of imports

Accepted Answer

Net exports are calculated by subtracting imports from exports. In this case, Denmark had net exports of $10 billion and sold $60 billion of goods and services abroad. Therefore, imports would be $50 billion ($60 billion -$10 billion). The components of net exports are exports minus imports, which would be $60 billion - $50 billion = $10 billion. Therefore, choice C is the correct answer.

Question 15

When Dee,a Canadian living in Canada purchases a designer dress made in Milan,which of the following is this purchase?
A)both a Canadian and an Italian import
B)a Canadian export and an Italian import
C)a Canadian import and an Italian export
D)both a Canadian and an Italian export

Accepted Answer

When Dee purchases a dress made in Milan, it is being exported from Italy (Italian export) and imported into Canada (Canadian import). Therefore, the correct choice is C - a Canadian import and an Italian export.

Question 16

A firm in India sells jackets to a Canadian department store chain.Which of the following correctly identifies the effects of this transaction?
A)It increases Canadian and Indian net exports.
B)It decreases Canadian and Indian net exports.
C)It increases Canadian net exports and decreases Indian net exports.
D)It decreases Canadian net exports and increases Indian net exports.

Accepted Answer

The answer of A firm in India sells jackets to...

Question 17

Mike,a Canadian citizen living in Canada,buys $30 of cheese from France.Which of the following correctly identifies the effects of this transaction?
A)It increases Canadian imports by $30 and increases Canadian net exports by $30.
B)It increases Canadian imports by $30 and decreases Canadian net exports by $30.
C)It increases Canadian exports by $30 and increases Canadian net exports by $30.
D)It increases Canadian exports by $30 and decreases Canadian net exports by $30.

Accepted Answer

Since Mike is a Canadian citizen living in Canada, his purchase of cheese from France counts as an import for Canada. Therefore, Canadian imports increase by $30. Net exports is calculated by subtracting imports from exports, so since there are no exports involved in this transaction, net exports decrease by the same amount as imports increase, which is $30.

Question 18

Sonya,a citizen of Denmark,sells Danish boots and shoes in Canada.Which of the following correctly identifies the effects of these sales on net exports?
A)They increase Canadian net exports and have no effect on Danish net exports.
B)They decrease Canadian net exports and have no effect on Danish net exports.
C)They increase Canadian net exports and decrease Danish net exports.
D)They decrease Canadian net exports and increase Danish net exports.

Accepted Answer

The answer of Sonya,a citizen of Denmark,sells Danish boots and...

Question 19

In 2012,Cote d'Ivore had $3 billion of net exports and bought $1 billion of goods from foreign countries.What were Cote d'Ivore's components of net exports?
A)$4 billion in exports and $1 billion in imports
B)$3 billion in imports and $2 billion in exports
C)$2 billion in exports and $3 billion in imports
D)$1 billion in imports and $3 billion in exports

Accepted Answer

Net exports are the difference between exports and imports, so in this scenario, Cote d'Ivore's components of net exports are $3 billion in exports minus $1 billion in imports, which equals $2 billion. Therefore, the correct answer is A - $4 billion in exports and $1 billion in imports.

Question 20

A country sells more to people overseas than it buys from them.Which of the following correctly identifies the effects of these transactions?
A)The country will have a trade surplus and positive net exports.
B)The country will have a trade surplus and negative net exports.
C)The country will have a trade deficit and positive net exports.
D)The country will have a trade deficit and negative net exports.

Accepted Answer

A country that sells more to people overseas than it buys from them will have a trade surplus, which means that it exports more than it imports. This leads to positive net exports as the country is earning more from exports than it is spending on imports.

Quiz 12: Open-Economy Macroeconomics: Basic Concepts

Which of the following best describes how the Canadian economy has evolved over the past five decades?

A country's exports are $600 billion,and imports are $700 billion.What is the country's trade balance?

Country A buys $150 of wine from country B,and B buys $30 of wool from A.Which of the following correctly indicates the two countries' net exports (in the order A,B) ?

Clear Brook Farms,a Canadian manufacturer of frozen vegetarian entrées,sells cases of its product to stores overseas.Which of the following correctly identifies the effects of these transactions?

Ivan,a Russian citizen,sells several hundred cases of Russian caviar to a restaurant chain in Canada.Which of the following correctly identifies the effects of this transaction?

How does international trade affect the standard of living?

Suppose that a country exports $200 million of goods and services and imports $80 million of goods and services.What is the value of that country's net exports?

Roger lives in Iceland and purchases a snowmobile manufactured in Canada.Which of the following is this purchase?

In 2005,Canada had positive net exports.Which of the following does this fact imply?

How are net exports of a country determined?

What is the value of Peru's exports minus the value of Peru's imports called?

What are foreign-produced goods and services that are sold domestically called?

A German company sells cameras to a retailer in Canada.Which of the following correctly identifies the effects of these transactions?

In 2012,Denmark had net exports of $10 billion and sold $60 billion of goods and services abroad.What were Denmark's components of net exports?

When Dee,a Canadian living in Canada purchases a designer dress made in Milan,which of the following is this purchase?

A firm in India sells jackets to a Canadian department store chain.Which of the following correctly identifies the effects of this transaction?

Mike,a Canadian citizen living in Canada,buys $30 of cheese from France.Which of the following correctly identifies the effects of this transaction?

Sonya,a citizen of Denmark,sells Danish boots and shoes in Canada.Which of the following correctly identifies the effects of these sales on net exports?

In 2012,Cote d'Ivore had $3 billion of net exports and bought $1 billion of goods from foreign countries.What were Cote d'Ivore's components of net exports?

A country sells more to people overseas than it buys from them.Which of the following correctly identifies the effects of these transactions?