International Economics- Theory and Policy Chapter 13 Exam Questions with Verified Answers (Rated A+)

International Economics- Theory and Policy Chapter 13 Exam Questions with Verified Answers (Rated A+) national income accounts - Answers records the value of national income that results from production and expenditure national income - Answers total income earned by a nations factors of production Gross National Product (GNP) - Answers The total value of goods and services, including income received from abroad, produced by the residents of a country within a specific time period, usually one year. Factors of Production - Answers - workers (labour services) - physical capital (buildings and equipment) - natural resources GNP formula - Answers GDP + net factor income from abroad * in an open economy GNP = GDP Depreciation - Answers subtracted from GNP to adjust GNP for precision Unilateral transfers - Answers payments of expatriate workers sent to their home countries, foreign aid and pension payments sent to expatriate retirees Gross Domestic Product (GDP) - Answers Measures the final value of all goods and services that are produced within a country in a given period GDP equation - Answers GDP = C + I + G + (X-M) or GDP = GNP - payments from foreign countries for factors of production + payments to foreign countries for factors of production when production > domestic expenditure, exports> imports: current account > 0 and trade balance > 0 - Answers country earns more income from exports than it spends on imports, net foreign wealth is increasing when production < domestic expenditure, exports < imports: current account < 0 and trade balance < 0 - Answers country earns less income from exports than it spends on imports, net foreign wealth is decreasing National saving equation - Answers S = (Y - T - C) + (T - G) OR S = private saving + government saving OR S = Y - C - G OR S = I + CA National Saving - Answers the total income in the economy that remains after paying for consumption and government purchases, an open economy can save by building up capital stock or by acquiring foreign wealth Private saving - Answers the part of disposable income that is saved rather than consumed private saving equation - Answers Sp = Y - T - C government saving - Answers is tax revenue government saving equation - Answers Sg = T - G The US current account and net international investment position - Answers a string of current account deficits starting in the early 1980s reduced americas net foreign wealth until by the 21st century the country had accumulates a substantial net foreign debt balance of payments accounts - Answers A country's balance of payments accounts are a summary of the country's transactions with other countries. each transaction enters the account twice: once as a credit (+) once as a debit (-) current account - Answers in the balance of payments, records transactions involving the export or import of goods and services: net unilateral transfers - merchandise