GDP GDP and International Trade

Question 1

In the expenditure approach to GDP, net exports (NX) are calculated as:

Accepted Answer

Exports minus imports

Answer

Imports minus exports

Answer

Exports plus imports

Answer

Exports divided by imports

Question 2

If the United States imports more than it exports, what happens to GDP?

Accepted Answer

GDP is reduced because net exports are negative

Answer

GDP is unaffected by trade flows

Answer

GDP increases because imports add to domestic spending

Answer

GDP increases because more money flows into the economy

Question 3

Which component of GDP directly reflects the impact of international trade?

Accepted Answer

Net exports (X – M)

Answer

Government spending (G)

Answer

Investment (I)

Answer

Consumption (C)

Question 4

A U.S. consumer buys a Japanese-made television. How does this transaction affect U.S. GDP?

Accepted Answer

It is counted in consumption but offset by the import deduction in net exports

Answer

It directly increases U.S. GDP because it was purchased in the U.S.

Answer

It has no effect on GDP

Answer

It increases U.S. net exports

Question 5

When a foreign company purchases U.S.-made aircraft, this transaction:

Accepted Answer

Increases U.S. exports and raises U.S. GDP

Answer

Decreases U.S. GDP because money leaves the country

Answer

Has no effect because the payment is made in dollars

Answer

Counts only as U.S. investment

Question 6

A trade deficit means a country's:

Accepted Answer

Imports exceed its exports

Answer

Exports exceed its imports

Answer

GDP is negative

Answer

Government is running a budget deficit