Exam 5: Saving and Investment in the Open Economy

An economy in which output exceeds absorption

If a Canadian company imports 10 Toyotas from Japan at $15,000 each, and the Japanese company buys airline tickets on a Canadian airline with the money, how does this affect the Canadian balance of payments accounts?

Consider a small open economy in equilibrium with a zero current account balance. What happens to national saving, investment, and the current account balance in equilibrium if a. future income rises? b. business taxes rise? c. government expenditures decline temporarily? d. the future marginal product of capital rises?

If Canada acquired net foreign assets of $50 billion in one year, this would be the equivalent of

The best weather in a decade has given Australia a bumper wheat crop. Australia is a small open economy. Based on this information alone, you would expect that

Suppose a country has the following balance of payments data: Merchandise exports 100 Merchandise imports 130 Service exports 60 Service Imports 50 Investment income receipts 75 Investment income payments 100 Transfers to other countries 15 Increase in home country assets abroad 130 Increase in foreign assets in home country 190 a. Calculate the current account balance. b. Calculate the capital account balance. c. Calculate the trade balance. d. Calculate net factor payments.

Suppose a wealthy Saudi Arabian prince donates 2000 camels to the San Diego Zoo. The Canadian trade balance ________ and the current account balance ________.

Which of the following would be part of the nation's capital account?

If there is an increase in the future marginal product of capital in a small open economy, it causes the current account to ________ and saving to ________.

If a French company sells 1000 gallons of Perrier to a Canadian company at 25 francs per gallon and uses the money to buy stock in a Spanish cork company, how does this affect the French balance of payments accounts?

If all international factor payment flows are investment income, then net investment income from abroad equals

If a country's merchandise exports exceed its merchandise imports,

If there is an increase in the future marginal product of capital in a large open economy, it causes the current account to ________ and saving to ________.

An innovation will enable Haitian sugar cane farmers to harvest the sugar cane twice as efficiently in the future. Haiti is a small open economy. Based on this information alone, you would expect that

If France has a trade deficit, then

If the Bank of Canada buys $3 billion worth of Japanese yen, $4 billion of German marks, and $2 billion of French francs, and sells $5 billion of British pounds, how does this affect the official settlements balance?

Real domestic interest rates would increase in a large open economy if

A small open economy is an economy that

Assume that Costa Rica, a small open economy, has increased the government budget deficit by 10 million colon, reducing the current account balance in the process. All else being equal, you would expect this action to cause

If Canada donates footballs to Japan, how is the transaction recorded on the Canadian balance of payments accounts?