Q1. The current account balance (CA) equals:, A) NX + I − S, B)NX + NFP + NUT, C) NX − FA, D) NFP + FA, Q2. When U.S. residents buy shares in a German company, this is recorded as:, A) A financial inflow that increases the financial account balance, B) A financial outflow that decreases the financial account balance, C) An increase in net exports, D) An increase in net unilateral transfers, Q3. In an open economy, national saving can be used to:, A)Increase domestic investment and increase net foreign assets by lending abroad, B)Increase government purchases and taxes only, C)Increase consumption and imports only, D)Increase official reserve assets only, Q4.If absorption (C + I + G) is greater than output (Y), then:, A) Net exports are positive, B) Net exports are zero, C) Net exports are negative, D) National saving is greater than investment, Q5.A "small open economy" is one that:, A) Has a small population, B) Does not trade with other countries, C) Is too small to affect the world real interest rate, D) Has a current account deficit, Q6.A current account surplus implies:, A) A financial account surplus and a net decline in foreign assets, B)A financial account deficit and a net increase in holdings of foreign assets, C) A balance of payments deficit, No change, Q7. If the foreign country's desired saving rises (more desired lending), the world real interest rate will:, A) Rise, B) Fall, C) Stay unchanged, D) Become equal to zero, Q8. A country has a balance of payments surplus. This means the country is:, A) Increasing its net unilateral transfers, B) Increasing its official reserve assets, C) Running a current account deficit, D) Reducing its official reserve assets, Q9. Foreign direct investment (FDI) into the U.S.:, A) Decreases the financial account, B) Increases the financial account, C) Increases, D) Has no effect, Q10. A budget deficit caused by an increase in government purchases (G) will:, A) Increase the current account balance, B) Have no effect on national saving, C) Reduce national saving and the current account balance, D) Increase national saving

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