Question 1

If U.S. exports are $300 billion and U.S. imports total $350 billion, which of the following is correct?
A) The U.S. has a trade surplus of $350 billion.
B) The U.S. has a trade surplus of $50 billion.
C) The U.S. has a trade deficit of $350 billion.
D) The U.S. has a trade deficit of $50 billion.

Accepted Answer

The trade balance is calculated by subtracting the total value of imports from the total value of exports. In this case, the calculation would be $300 billion (exports) - $350 billion (imports) = -$50 billion. A negative number means the U.S. has a trade deficit, so the correct answer is D.

Question 2

If a country has net exports of $8 billion and sold $40 billion of goods and services abroad, then it has
A) $48 billion of imports and $40 billion of exports.
B) $48 billion of exports and $40 billion of imports.
C) $40 billion of imports and $32 billion of exports.
D) $40 billion of exports and $32 billion of imports.

Accepted Answer

Net exports = exports - imports
$8 billion = $40 billion (exports) - $32 billion (imports)
Therefore, the country has $40 billion of exports and $32 billion of imports.

Question 3

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

If Germany purchased more goods and services abroad than it sold abroad, it had negative net exports, which is a trade deficit.

Question 4

Peru has exports of $31.5 million and imports of $30 million. Peru
A) sells more overseas then it buys from overseas; it has a trade deficit.
B) sells more overseas then it buys from overseas; it has a trade surplus.
C) buys more from overseas then it sells overseas; it has a trade deficit.
D) buys more from overseas then it sells overseas; it has a trade surplus.

Accepted Answer

Peru has exports of $31.5 million which is more than its imports of $30 million. Therefore, it sells more overseas than it buys from overseas; it has a trade surplus.

Question 5

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?
A) $80 and $100
B) $-20 and $20
C) $20 and -$20
D) None of the above is correct.

Accepted Answer

Net exports of Oceania = value of exports - value of imports. 
Oceania exported $100 of wine to Escudia and imported $80 of wool from Escudia, resulting in net exports of $20 (positive).
Net exports of Escudia = value of exports - value of imports. 
Escudia exported $80 of wool to Oceania and imported $100 of wine from Oceania, resulting in net exports of -$20 (negative).

Question 6

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

If Norway sold more goods and services abroad than it purchased from abroad, it had a positive net export balance which means it has a trade surplus.

Question 7

Table 31-1
 
-Refer to Table 31-1. What are Bolivia's exports?
A) $60 billion
B) $35 billion
C) $10 billion
D) None of the above are correct.

Accepted Answer

According to Table 31-1, Bolivia's exports are valued at $35 billion.

Question 8

Paine Pharmaceuticals produces medicines in the U.S. Its overseas sales
A) are an export of the U.S. and increase U.S. net exports.
B) are an export of the U.S. and decrease U.S. net exports.
C) are an import of the U.S. and increase U.S. net exports.
D) are an import of the U.S. and decrease U.S. net exports.

Accepted Answer

Since Paine Pharmaceuticals is producing the medicines in the U.S. and selling them overseas, it is considered an export of the U.S. This means that it increases U.S. net exports, as it is a positive contribution to the overall balance of trade.

Question 9

A firm in the United Kingdom hires a firm in the U.S. to train its managers. By itself this transaction
A) increases U.S. imports and decreases U.S. net exports.
B) increases U.S. imports and increases U.S. net exports.
C) increases U.S. exports and decreases U.S. net exports.
D) increases U.S. exports and increases U.S. net exports.

Accepted Answer

The answer of A firm in the United Kingdom hires...

Question 10

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
A) $7.2 billion of exports and $4.8 billion of imports.
B) $7.2 billion of imports and $4.8 billion of exports.
C) $4.8 billion of exports and $2.4 billion of imports.
D) $4.8 billion of imports and $2.4 billion of exports.

Accepted Answer

The answer of If a country has $2.4 billion of...

Question 11

Egypt has exports of $500 million and imports of $750 million. Egypt
A) sells more overseas then it buys from overseas; it has a trade deficit.
B) sells more overseas then it buys from overseas; it has a trade surplus.
C) buys more from overseas then it sells overseas; it has a trade deficit.
D) buys more from overseas then it sells overseas; it has a trade surplus.

Accepted Answer

Egypt buys more from overseas than it sells overseas, meaning it has a trade deficit. The difference between their exports and imports is $250 million.

Question 12

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
A) exports of $3 billion and a trade surplus of $1 billion.
B) exports of $3 billion and a trade deficit of $1 billion.
C) exports of $2 billion and a trade surplus of $1 billion.
D) exports of $2 billion and a trade deficit of $1 billion.

Accepted Answer

The country's exports are $2 billion while imports are $3 billion. Thus, it has a trade deficit of $1 billion, which means it is buying more from foreign countries than it is selling to them.

Question 13

A Texas ranch sells beef to a U.S. company that sells it to a grocery chain in Japan. These sales
A) decrease U.S. exports but increase U.S. net exports.
B) decrease both U.S. exports and U.S. net exports.
C) increase both U.S. exports and U.S. net exports.
D) increase U.S. exports but decrease U.S. net exports.

Accepted Answer

The answer of A Texas ranch sells beef to a...

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?
A) $170 million
B) $80 million
C) $10 million
D) -$10 million

Accepted Answer

Net exports equals exports minus imports. In this case, $80 million - $90 million = -$10 million, indicating that the country has a trade deficit.

Question 15

If the U.S. has exports of $1.5 trillion and imports of $2.2 trillion, then the U.S.
A) sells more overseas then it buys from overseas; it has a trade deficit.
B) sells more overseas then it buys from overseas; it has a trade surplus.
C) buys more from overseas then it sells overseas; it has a trade deficit.
D) buys more from overseas then it sells overseas; it has a trade surplus.

Accepted Answer

The U.S. has imports of $2.2 trillion, which is greater than its exports of $1.5 trillion. This means that the U.S. buys more from overseas than it sells overseas, resulting in a trade deficit.

Question 16

Table 31-1
 
-Refer to Table 31-1. What are Bolivia's imports?
A) $60 billion
B) $35 billion
C) $40 billion
D) None of the above are correct.

Accepted Answer

The answer of Table 31-1
 
-Refer to Table 31-1. What...

Question 17

Table 31-1
 
-Refer to Table 31-1. What are Bolivia's net exports?
A) $30 billion
B) $5 billion
C) -$5 billion
D) -$25 billion

Accepted Answer

The answer of Table 31-1
 
-Refer to Table 31-1. What...

Question 18

A U.S. firm sells diesel locomotives to a German railroad. Other things the same, this sale
A) increases U.S. net exports and decreases German net exports.
B) decreases U.S. net exports and increases German net exports.
C) increases U.S. and German net exports.
D) decreases U.S. and German net exports.

Accepted Answer

The sale of diesel locomotives from a U.S. firm to a German railroad would count as a U.S. export and a German import. Therefore, it increases U.S. net exports and decreases German net exports.

Question 19

If U.S. exports are $150 billion and U.S. imports are $100 billion, which of the following is correct?
A) The U.S. has a trade surplus of $100 billion.
B) The U.S. has a trade surplus of $50 billion.
C) The U.S. has a trade deficit of $100 billion.
D) The U.S. has a trade deficit of $50 billion.

Accepted Answer

To find the trade balance, we subtract imports from exports: $150 billion - $100 billion = $50 billion. Since exports exceed imports, the U.S. has a trade surplus of $50 billion.

Question 20

Bob traps lobsters in Maine and sells them to a restaurant in Mexico. Other things the same, these sales
A) increase U.S. net exports and have no effect on Mexican net exports.
B) increase U.S. net exports and decrease Mexican net exports.
C) decrease U.S. net exports and have no effect on Mexican net exports.
D) decrease U.S. net exports and increase Mexican net exports.

Accepted Answer

When Bob sells lobsters to a restaurant in Mexico, it counts as an export for the United States and an import for Mexico. This increases U.S. net exports and decreases Mexican net exports.

Quiz 18: Open-Economy Macroeconomics: Basic Concepts

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

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

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

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

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?

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

Table 31-1 -Refer to Table 31-1. What are Bolivia's exports?

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

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

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

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

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

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

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?

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

Table 31-1 -Refer to Table 31-1. What are Bolivia's imports?

Table 31-1 -Refer to Table 31-1. What are Bolivia's net exports?

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

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

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