ECO372 Principles of Macroeconomic Week 5 Macro Quiz answer key

THIS IS AN INDIVIDUAL ASSIGNMENT.  It is a violation of the academic code of conduct to solicit or accept help from any outside source, including a tutor, online assistance, or any other resource.  Evidence of cheating on the quiz will be met with very dire consequences. You may use your textbook, video lessons, and class discussion.  Clearly mark your answers by changing the color of your choices, using highlighting, or bold. 

Section One:  Multiple Choice – select the best response; each response is worth 1 point

1.         Goods and services produced in the U.S. and consumed in Canada are ________ for the U.S. and ________ for Canada.

            a.         exports; imports                                 

            b.         exports; exports

            c.         imports; exports                                 

            d.         imports; imports

2.         The economic argument for free trade is based on the principle of:

            a.         comparative advantage.

            b.         absolute advantage.

            c.         increasing opportunity cost.

            d.         tariffs and quotas.

3.         When a country imports more than it exports, it is:

            a.         experiencing a trade deficit.

            b.         experiencing a trade surplus.

            c.         maintaining a balance of trade.

            d.         not specializing according to comparative advantage.

4.         All of the following would be recorded in the current account except:

            a.         foreign aid to other countries.

            b.         the purchase or sale of goods and services internationally.

            c.         the purchase or sale of long-term assets internationally.

            d.         the payment of interest and dividends on U.S. assets held by foreigners.

5.         When a U.S. corporation sends a dividend check to a stockholder residing in Ireland, the transaction is recorded as a:

a.         credit on current account.

b.         debit on current account.

c.         credit on capital account.

d.         debit on capital account.

6.         Which of the following tends to cause the U.S. dollar to appreciate in value?

a.         Rapid income growth in foreign countries

b.         An increase in U.S. prices above foreign prices

c.         A fall in U.S. interest rates below foreign levels

d.         An increase in the level of U.S. income