Please answer all the questions. Thank you. 1. You are shown the statements below. Which of them is/are true? Statement 1: The business cycle is always measured using the gross national product (GNP) rather than gross domestic product (GDP). Statement 2: Purchases of new equipment (gross fixed capital formation) are a major component of investment. Statement 3: Investment is less stable than consumption spending by households. A.All three statements are true. B. Only Statement 3 is true. C. Statements 1 and 3 are true. D. Statements 2 and 3 are true. E. None of the statements is true. 2. You are shown the statements below. Which of them is/are true? Statement 1: When the financial account balances, the merchandise trade balance will be the same as the current account balance. Statement 2: Exports of goods and services are recorded in the financial account of the balance of payments. Statement 3: Income derived from holding financial investments flow through the current account. A. Statement 1 and Statement 2 B. Statement 1 and Statement 3 C. Statement 1 D. Statement 3 E. Statement 1, Statement 2, and Statement 3 3. A South African bank buys British government bonds from the UK treasury, A. the South African financial account is debited and Britain’s financial account is credited. B. the South African current account is debited. C. the South African financial account is debited. D. Britain’s financial account is credited. E. the South African current account is credited.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please answer all the questions. Thank you.

1. You are shown the statements below. Which of them is/are true?

Statement 1: The business cycle is always measured using the gross national product (GNP) rather than gross domestic product (GDP).
Statement 2: Purchases of new equipment (gross fixed capital formation) are a major component of investment.
Statement 3: Investment is less stable than consumption spending by households.

A.All three statements are true.
B. Only Statement 3 is true.
C. Statements 1 and 3 are true.
D. Statements 2 and 3 are true.
E. None of the statements is true.

2. You are shown the statements below. Which of them is/are true?

Statement 1: When the financial account balances, the merchandise trade balance will be the same as the current account balance.
Statement 2: Exports of goods and services are recorded in the financial account of the balance of payments.
Statement 3: Income derived from holding financial investments flow through the current account.

A. Statement 1 and Statement 2
B. Statement 1 and Statement 3
C. Statement 1
D. Statement 3
E. Statement 1, Statement 2, and Statement 3

3. A South African bank buys British government bonds from the UK treasury,

A. the South African financial account is debited and Britain’s financial account is credited.
B. the South African current account is debited.
C. the South African financial account is debited.
D. Britain’s financial account is credited.
E. the South African current account is credited.

Definition Definition Difference in value of a country's net exports and net imports for goods and services in a given period. A positive balance of trade is called a surplus and coincides with more net cash inflows into a country; a negative balance of trade deficit is a deficit and results in net cash outflows. A balance of trade surplus or deficit doesn't necessarily indicate a positive or negative situation for a country.

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