ECONOMICS 353 (SECTION 2) L. Tesfatsion/Spring 01
EXERCISE SET 7: 5 POINTS TOTAL DUE: Tuesday, March 27, 2:10 P.M.
*IMPORTANT REMINDER: LATE ASSIGNMENTS CANNOT BE ACCEPTED -- NO EXCEPTIONS*
*NOTE:* Please FILL IN YOUR NAME, BIRTH DATE, AND ID (SOC SEC) No. on Side 1
of a BROWN bubble (answer) sheet and write "353 SECTION 2-EXERCISE SET 7" in
the top margin of Side 1. Use a #2 pencil to MARK YOUR ANSWERS on Side 1 of
the bubble sheet to the following five multiple choice questions:
1-2 In gross domestic product accounting, HC exports consist of all
purchases by ________ of goods and services produced ___________.
A. HC; within the borders of ROW
B B. ROW; within the borders of the HC
C. HC; using ROW-owned assets of production
D. ROW; using HC-owned assets of production
2-2 As conventionally defined in GDP national income accounting in the
United States, the _________ keeps track of __________________ .
A. current account; net trades in financial assets and existing real assets
B. capital account; net trades in newly produced goods and services
C C. current account; net exports, net factor payments, and net transfers
D. capital account; net exports, net factor payments, and net transfers
3-2 Which of the items below would be directly entered as items in the U.S.
CAPITAL account (KA):
A A. Purchase of the U.S. Empire State Building by a Saudi Arabian sheik
B Purchases by Libya of electronic wiretapping equipment newly produced
within the borders of the U.S.
C. Purchase of livestock by the U.S. government from private U.S. ranchers
D. Interest payments received by the U.S. government on foreign-issued bonds
E. All of the above
4-2 If the HC is running a current account SURPLUS, then HC national saving
_______ HC total investment and the HC is ___________ ROW.
A. is greater than; a net borrower from
B B. is greater than; a net lender to
C. is less than; a net lender to
D. is less than; a net borrower from
E. none of the above
5-2 Using the definitions for CA, KA, NKA, and BP introduced in the online
notes for Mishkin Chapter 19, the balance of payments ACCOUNTING IDENTITY for
the HC requires that the sum of _________ and ___________ equals _____________
A. CA; NKA; 0
B. CA; KA; BP
C. CA; NKA; BP
D. CA; KA; 0
E E. both C and D
