Question 1

A country has $60 million of saving and domestic investment of $40 million.Net exports are

Accepted Answer

The national saving and domestic investment equation is given by:
Saving = Investment + Net exports
Here, we have Saving = $60 million, Investment = $40 million.
Therefore, we can find the value of Net exports as:
Net exports = Saving - Investment
Net exports = $60 million - $40 million
Net exports = $20 million
Hence, the correct answer is A) $20 million.

Question 2

After the 1980s,U.S.net capital outflow was

Accepted Answer

The answer of After the 1980s,U.S.net capital outflow was
...

Question 3

The country of Freedonia has a GDP of $2,100,consumption of $1,200,and government purchases of $400.This implies that it has

Accepted Answer

The answer of The country of Freedonia has a GDP...

Question 4

A country has $30 billion of domestic investment and net capital outflows of -$20 billion.What is the country's saving?

Accepted Answer

Saving = Domestic investment - Net capital outflows
Saving = $30 billion - (-$20 billion)
Saving = $30 billion + $20 billion
Saving = $50 billion. However, the question asks for the country's saving, not its net capital flows. Therefore, the answer should be positive. Thus, the correct answer is C, $10 billion.

Question 5

The country of Wiknam has net capital outflow of $1,000,government purchases of $5,000 and consumption of $20,000.Which of the following is correct?

Accepted Answer

The answer of The country of Wiknam has net capital...

Question 6

After 1980 in the United States,

Accepted Answer

After 1980 in the United States, national saving fell below investment, meaning that the country was investing more than it was saving. This resulted in a large negative net capital outflow as domestic investment was being funded by foreign investment.

Question 7

The country of Sylvania has a GDP of $900,investment of $200,government purchases of $200,and net capital outflow of -$100.What is consumption?

Accepted Answer

The answer of The country of Sylvania has a GDP...

Question 8

A country has $100 million of net exports and $170 million of saving.Net capital outflow is

Accepted Answer

The answer of A country has $100 million of net...

Question 9

In an open economy,gross domestic product equals $2,450 billion,consumption expenditure equals $1,390 billion,government expenditure equals $325 billion,investment equals $510 and net capital outflow equals $225 billion.What is national saving?

Accepted Answer

National saving (S) equals investment (I) plus net capital outflow (NCO). 
S = I + NCO 
S = 510 + (-225) = 285 
Alternatively, national saving (S) equals GDP (Y) minus consumption expenditure (C) minus government expenditure (G). 
S = Y - C - G 
S = 2,450 - 1,390 - 325 = 735 
Therefore, the national saving is $735 billion, which is choice C.

Question 10

A country has $45 million of domestic investment and net capital outflow of -$60 million.What is its saving?

Accepted Answer

The answer of A country has $45 million of domestic...

Question 11

A country has $1.5 billion dollars of domestic investment and net exports of $2 billion.What is its saving?

Accepted Answer

Saving = Domestic Investment + Net Exports - Government Expenditure 
As there is no information about government expenditure, we cannot calculate the exact saving. However, we can use the given information to make an estimate. 
Saving = $1.5 billion + $2 billion - X (government expenditure) 
Since net exports are positive, the country is earning more from exports than it is spending on imports. Therefore, it is reasonable to assume that government expenditure is less than $2 billion. Let's assume it is $0.5 billion. 
Saving = $1.5 billion + $2 billion - $0.5 billion 
Saving = $3.5 billion

Question 12

From 1960 to about 1975 in the United States,net capital outflow was

Accepted Answer

During the 1960s and early 1970s, the United States experienced large and persistent current account deficits, which were financed by net capital inflows from abroad. However, there were periods during this time when net capital outflows occurred, such as during the Vietnam War and the oil crisis of the early 1970s, which resulted in negative net capital flows. Therefore, the net capital outflow during this period was sometimes negative and sometimes positive.

Question 13

Suppose the world had only two countries and domestic residents of country A purchased $50 billion of assets from country B and country B purchased $30 billion of from country A.What would the net capital outflows of both countries be?

Accepted Answer

Net capital outflow is calculated as the difference between the value of assets purchased from abroad and the value of domestic assets purchased by foreigners. For country A, it is $50 billion - $30 billion = $20 billion. For country B, it is $30 billion - $50 billion = -$20 billion.

Question 14

In an open economy,gross domestic product equals $1,850 billion,consumption expenditure equals $975 billion,government expenditure equals $225 billion,investment equals $500 billion,and net exports equals $150 billion.What is national savings?

Accepted Answer

National savings is equal to investment plus net exports minus consumption expenditure and government expenditure. Therefore, national savings equals $500 billion + $150 billion - $975 billion - $225 billion = $650 billion.

Question 15

From 1980 to 1987

Accepted Answer

From 1980 to 1987, foreigners were buying more capital assets from the United States than Americans were buying abroad. This means that the United States current account balance was negative, and it was going into debt. This is consistent with choice A.

Question 16

A country has $50 million of domestic investment and net capital outflow of $15 million.What is saving?

Accepted Answer

The answer of A country has $50 million of domestic...

Question 17

A country has $20 billion of domestic investment and net capital outflow of $10 billion.What is saving?

Accepted Answer

By definition, in a closed economy (where net capital outflow is zero), saving equals domestic investment. However, in an open economy (where net capital outflow is non-zero), saving equals domestic investment plus net capital outflow. 
Therefore, saving = domestic investment + net capital outflow = $20 billion + (-$10 billion) = $30 billion. Thus, option B is the correct answer.

Question 18

In an open economy,gross domestic product equals $1,950 billion,government expenditure equals $280 billion,investment equals $500,and net capital outflow equals $280 billion.What is consumption expenditure?

Accepted Answer

GDP = C + I + G + NX
Given, GDP = $1,950 billion
Government expenditure (G) = $280 billion
Investment (I) = $500 billion
Net capital outflow (NX) = -$280 billion (since it is an outflow)
Substituting the values in the equation, we get:
$1,950 billion = C + $500 billion + $280 billion - $280 billion
Simplifying, we get:
C = $1,950 billion - $500 billion - $280 billion + $280 billion
C = $890 billion

Question 19

In an open economy,gross domestic product equals $1,650 billion,government expenditure equals $250 billion,and savings equals $550 billion.What is consumption expenditure?

Accepted Answer

In an open economy, the equation of GDP is:

GDP = C + I + G + (X - M)

Where C represents consumption expenditure, I represents investment, G represents government expenditure, and (X-M) represents net exports.

From the information given, we know:

GDP = $1,650 billion
G = $250 billion
(X-M) = 0 (no information on net exports)

Therefore:

$1,650 billion = C + I + $250 billion

We also know:

Savings = $550 billion
Savings = GDP - C - G

Substituting the known values, we get:

$550 billion = $1,650 billion - C - $250 billion
$550 billion = $1,400 billion - C
C = $850 billion

Thus, consumption expenditure equals $850 billion.

Question 20

From 1980-1987,U.S.net capital outflow as a percent of GDP became a

Accepted Answer

Net capital outflow is the difference between the amount a country invests abroad and the amount foreigners invest in that country. A negative net capital outflow means that more capital is flowing into the country than out of it. Therefore, a larger negative number means that the US was investing more abroad than it was receiving from foreigners, indicating higher net capital outflow.

Quiz 31: Open-Economy Macroeconomics: Basic Concepts