Question

During some year a country had exports of $105 billion, imports of $140 billion, and domestic investment of $200 billion. Therefore its saving during the year was $165 billion.

Select one:

True

False

n the United States before 1980, national saving and domestic investment were very close, and so net capital outflow was large (in absolute value terms).         

Select one:

True

False

If both domestic investment and net capital outflow decrease then national saving must increase.

Select one:

True

False

Question text

If a country changes its corporate tax laws so that foreign businesses build and manage less business in that country, then the net capital outflow of that country rises and the net capital outflow of other countries fall.

Select one:

True

False

Question text

Over the last 40 to 50 years U.S. exports and imports have increased. As a percentage of GDP, U.S. imports have increased at a faster rate than U.S. exports.

Select one:

True

False

Answer 1

Question1 ) TRUE

Savings = Net exports + Investment

Savings = Exports - Imports + Investment = 105 - 140 + 200 = $165 Billion

Question 2) TRUE

Savings = Net exports + Investment

Because Net Exports equal Net capital outflow are equal so it can be written there ( By exporting in surplus you get something in return either foreign currency or foreign asset or debt payment obliation , all these are foreign assets you are now owner of , so you have floweed your capital out to purchase these assets )

Savings = Net Capital outflow + Investment

When savings and investment are close that would mean NCO is small

Question 3) FALSE

IF both NCO and investment decrease , savings being equal to sum of these would also decrease

Question 4) TRUE

As the country becomes less business friendly , businesses will sell their capital and take it back. This marks net capital outflow from the country , so NCO of the country in question will rise and this capital going to another country will mark inflow so NCO in that country will fall

Question 5) TRUE

According to data of exports and imports of US as % of GDP , imports have increased at a faster rate than exports