7 When the U.S, has a current account surplas, we know that it is also A) runnin
ID: 1161865 • Letter: 7
Question
7 When the U.S, has a current account surplas, we know that it is also A) running a balanced trade account B) lending to the rest of the world O borrowing from the rest of the world D) suffering from negative investment income 8) The difference between net capital flows and the current account deficit is called the B) capital account deficit C) international error D) statistical discrepancy 9) In a country like Saudi Arabia, which earns substantial income from holding the stocks and bonds of other countries, we would expect A) GNP to be larger than GDP B) a current account deficit. C) a current account surplus larger than GNP D) a current account surplus larger than GDP. 10 Which of the followving represents the domestc demand for goods? A) C+1+G B) C + I + G + X CC+1+G-IM/ D)C+1+G+X-M/Explanation / Answer
7. Option b.
If a country has current account surplus it means that it is exporting more than importing.
Hence if US has a current account surplus it means it is also lending to the rest of the world.
8. Option B.
Capital account deficit is the difference between net capital flows and the current account deficit.
It means that money is flowing out of the country and it is gaining more ownership on foreign goods.
9. Option A.
We know that GNP is used as a measure of a country's economic growth and wealth.
As countries like Saudi Arabia hold stock and bonds of other countries that are produced by foreign nations, the values of these are added to the GNP but not GDP.
Hence we expect GNP to be larger than GDP.
10. Option a.
C+I+G-IM/E+X represents the domestic demand for goods where C+I+G would be the demand for domestic goofs if the economy were closed.
Here C refers to consumption, I is investment and G refers to government spending.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.