Title: QUIZ: International Trade: Making Sense of the Trade Deficit -- Page One Economics®
Course: Recommended Resources for AP Macro from FRE > Section: Unit 6: Open Economy--International Trade and Finance

Q: All of a country’s transactions with the world are summarized in what is called the country’s
- current account.
- balance of payments.
- financial account.
- capital payments.
A: balance of payments.

Q: The two subaccounts that make up a country’s balance of payments are
- current account & noncurrent account.
- capital account & financial account.
- financial assets and real assets.
- current account and capital and financial account.
A: current account and capital and financial account.

Q: When exports are greater than imports, a country has a
- trade deficit.
- trade equilibrium.
- trade surplus.
- trade debt.
A: trade surplus.

Q: The capital and financial account includes
- all the country’s trade in both financial and real assets.
- all the country’s exports to foreign countries.
- all the country’s imports from foreign countries.
- only financial assets traded between countries.
A: all the country’s trade in both financial and real assets.

Q: When a country imports more than it exports there is a
- trade deficit.
- trade equilibrium.
- trade surplus.
- trade debt.
A: trade deficit.

Q: The current account includes
- financial assets traded between countries.
- real assets traded between countries.
- the goods and services traded between countries.
- financial assets purchased within a country.
A: the goods and services traded between countries.

Q: With regard to the balance of payments, the net outflow of funds on the goods and services side can be offset by
- a net inflow of goods and services the following year.
- a net inflow of funds on the asset side of the ledger.
- importing more goods than are exported.
- Americans increasing the amount they save.
A: a net inflow of funds on the asset side of the ledger.

Q: When the current account is added to the capital and financial account, it must be equal to
- a positive number.
- a negative number.
- either a positive or negative number.
- zero.
A: zero.

Q: Economists often attribute the trade deficit to
- flawed trade policy and unfair foreign competition.
- currency manipulation by foreign countries.
- national saving and investment decisions.
- the U.S. producing inferior goods.
A: national saving and investment decisions.

Q: The total level of U.S. investment can exceed the total savings of U.S. citizens because
- the U.S. can print more money to make up the difference.
- the difference is made up by foreigners investing in U.S. assets.
- the U.S. runs a trade deficit, which allows the investment to exceed savings.
- the capital and financial account plus the current account equals a positive number.
A: the difference is made up by foreigners investing in U.S. assets.