6- purchases of US assets by foreign residents are tabulated in the US balance o

Question

6- purchases of US assets by foreign residents are tabulated in the US balance of payments as a (an): a- capital inflow b- capital outflow c- current account outflow d- unilateral transfer e-imports f- exports 7- suppose a monopolist charges a price corresponding to the intersection of the marginal cost and marginal revenue curves. if this price is between its average variable cost and average total cost curves, the firm will: a- earn an economic profit b- stay in operation in the short run, but shut down in the long run if demand remains the same c- shut down d- none of the above 8- suppose the United States imports wheat from a foreign country, and if the US government levies tariff on wheat imports, the probable result is that the price of wheat will: a- fall in foreign countries b- rise in the United States c- rise in foreign countries d- rise faster in the United States than in foreign countries 9- which of the following are the same at all levels of output under perfect competition? a- marginal cost and marginal revenue b- price and marginal revenue e- price and marginal cost d- all of the above 10- which of the following is true for the a- economic profit is possible in the long run b- marginal revenue is less than the price charged c- profit maximizing or loss minimizing occurs when marginal revenue equals marginal cost d- all of the above are true e- none of the above is true 11- which of the following would cause a decrease in the demand for euros by those holding US dollars? a- inflation in the United States, but not in France b- inflation in France, but not in the United States c-an increase in the real rate of interest on investment in France above the real rate of interest on investment in the United States d- none of the above

Explanation / Answer

6. When Foreigner's purchase US asset then Money flows in. This is known as Capital Inflow. Answer is option A.

Capital outflow is when US citizen buy foreign asset.

Current account outflow is income payment.

Unilateral transfer is one side transfer from one country to another. In this case nothing is received by the transferring country in exchange of money, goods and services.

Import: This means buying some good or service from foreign nation. Thus outflow.

Export: It means selling some good or service to foreign country in exchange of money. Here the goods and services are exported.

7. When Price lies in between Average Variable Cost and Average Total Cost then in the short run the firm must continue it's production and produce the quantity that equates MR=MC. Incur Economic loss less than Fixed Cost.

Option B is correct.

8. Due to tariff imposed by US government the price of wheat will increase in US. Option B

9. B. Price and marginal revenue.

Since, all the firms are price takers and no firm has market power therefore marginal revenue is always equal to price under perfect competition.

10. D. All of the above are correct.

11. B. Inflation in France, but not in United States.

An increase in the relative price of Euro causes Dollar to appreciate and demand for Euro decreases.

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