Ch23 International Trade – Capital Flows

Answer: B Reference:

Explanation:

Type: Multiple Choice

*62. *A country’s current national savings and investment identity is expressed in algebraic terms as (M – X) = I – S – (T – G). In this instance:

A. domestic investment is higher than domestic savings.
B. domestic savings exceed domestic investment.
C. the country is experiencing a trade surplus.
D. government savings are excluded.

Answer: A Reference:

Explanation:

Type: Multiple Choice

*63. *A country’s current national savings and investment identity is expressed in algebraic terms as X – M = S + (G – T) – I. In this instance:

A. there is an inflow of capital investment from the rest of the world economy.
B. there is no connection from domestic savings and investment to the trade balance.
C. the trade balance is determined by performance of certain sectors of the economy.
D. private and public domestic savings are higher than domestic investment.

Answer: D Reference:

Explanation:

Type: Multiple Choice

*64. *A country’s current national savings and investment identity is expressed in algebraic terms as I – S – (T – G) = (M – X). Assume that the level of domestic investment in a country rises, while the level of private and public saving remains unchanged. In this instance, the rise in domestic: investment will mean

A. a higher trade surplus.
B. a lower trade surplus.
C. a higher trade deficit.
D. trade will be perfectly balanced.

Answer: C Reference:

Explanation:

Type: Multiple Choice

*65. *A country’s current national savings and investment identity is expressed in algebraic terms as I – S – (T – G) = (M – X). Assume that the level of domestic savings rises, while the level of domestic investment and private saving remains unchanged. In this instance:

A. less foreign financial capital is required to meet investment needs.
B. government policy will involve increasing private savings.
C. the country’s trade deficit will decline.
D. all of the above

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