Question

1. When the United States imports goods and services from the rest of the world

		we increase our inflation rate.
		we receive payments from the rest of the world (+credit).
		we make payments to the rest of the world (-debit)
		we decrease our inflation rate.

2. When we export goods to foreign countries, we

		decrease our inflation rate.
		we make payments to the rest of the world (-debit)
		increase our inflation rate.
		we receive payments from the rest of the world (+credit).

3. Potential GDP is the

		the long-run sustainable maximum amount of production.
		current value of production in the economy.
		value of production when the economy is at a peak.
		value of production when the economy is in a recession.

4. Gross domestic product can be calculated

		by adding up the value of all intermediate goods used in the economy.
		by adding up the income tax returns of all members of the society.
		by adding up the personal consumption of all members of the society.
		either by valuing the nation's output of goods and services or by valuing the income generated in the production process.

5. Which of the following is included in GDP?

		"bads" such as pollution, congestion, and crime
		automobile manufacture
		production in the home
		the measurable effects of income distribution
		none of the above are included in real GDP calculations

6. Over the last 25 years, according to the United States balance of payments

		the official settlements balance fluctuates greatly from year to year.
		there is no clear relationship between the current account balance and the capital and financial account balance.
		the current account and the capital and financial account balances tend to move in the same direction.
		the current account and the capital and financial account balances tend to move in opposite directions.

Answer 1

Q1. C

When US is importing goods and servies from all across the globe, it means that US is making payments to the rest of the world (-debit). This causes reduction in the foreign exchange stock of US (if it is paying the amount in any other currency then $).