Deck 11: The Trade Gap

Question 1

The United States is a "debtor nation." What does this mean?

A) The nation has a whole owes more money to foreign countries than foreign countries owe to the United States.
B) The U.S. government owes more money to foreign governments than foreign governments owe to the U.S. government.
C) Individual households in the United States owe more money to households in foreign countries than households in foreign countries owe to U.S. households.
D) U.S. businesses owe more money to foreign businesses than foreign businesses owe to U.S. businesses.

Answer 1

A

Question 2

For the past 30 years or so, the United States has

A) imported more goods and services than it exported.
B) exported more goods and services than it imported.
C) exported and imported approximately the same amount of goods and services.
D) imported more than exports only during recessions.

Answer 2

A

Question 3

How does the level of imports change over the business cycle?

A) Imports tend to fall during expansions and rise during contractions.
B) Imports tend to rise during expansions and fall during contractions.
C) Remain fairly constant over the business cycle.
D) Imports tend to fall during expansions and remain flat during a contraction.

Answer 3

B

Question 4

A U.S. trade deficit means that

A) more money is flowing into the United States than flowing out.
B) more money is flowing out of the United States than flowing in.
C) no money flows into the United States at all.
D) no money flows out of the United States at all.

Question 5

The main determinant of U.S .exports

A) is the level of aggregate demand in the United States.
B) is the level of aggregate demand in other countries.
C) is the level of imports.
D) is the level of U.S. consumer spending.

Question 6

A U.S. trade surplus means that

A) more money is flowing into the United States than flowing out.
B) more money is flowing out of the United States than flowing in.
C) no money flows into the United States at all.
D) no money flows out of the United States at all.

Question 7

A U.S. trade surplus means that

A) American firms have a growing inventory of unsold goods.
B) the U.S. economy is importing more goods and services than it exports.
C) the U.S. economy is exporting more goods and services than it imports.
D) the U.S. government has collected more in tax revenues than it is currently spending.

Question 8

A U.S. trade deficit means that

A) American firms have a declining inventory of unsold goods.
B) the U.S. economy is importing more goods and services than it exports.
C) the U.S. economy is exporting more goods and services than it imports.
D) the U.S. government has collected more in tax revenues than it is currently spending.

Question 9

What happens to the demand and price of imported raw materials over the business cycle?

A) At the beginning of an expansion, there is low demand and low prices.
B) At the beginning of an expansion, there is high demand and high prices.
C) At the beginning of an expansion, there is low demand and high prices.
D) At the beginning of an expansion, there is high demand and low prices.