GDP: Where. GNP: Who.

2 questions on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.

Question 1Exam level

A country buys more from abroad than it sells abroad. What is that called on its balance of payments, and what is the reverse case called?

A. A deficit; the reverse is a surplus B. A surplus; the reverse is a deficit C. A recession; the reverse is an expansion D. A tariff; the reverse is a subsidy

How sure are you?

Sure Fairly sure Guessing

Correct: A. Buying more than it sells is a deficit; selling more than it buys is a surplus.

B. Reverses the two terms; buying more than selling is a deficit, not a surplus.

C. Recession and expansion are business-cycle phases, not balance-of-payments terms.

D. Tariffs and subsidies are trade-policy tools, not descriptions of a payments balance.

Unit: SIE outline 1.3.3

Question 2Above the exam

A country runs a balance-of-payments surplus this year while its currency simultaneously weakens against its major trading partner's currency. Which pair of effects follows for that country's own exporters and importers?

A. Exporters are helped by the weaker currency; importers face higher prices for foreign goods, independent of the surplus itself B. The surplus alone guarantees a stronger currency, so exporters are hurt C. A weaker currency always erases a balance-of-payments surplus within the same year D. Importers are helped and exporters are hurt, since a weaker currency lowers import prices

How sure are you?

Sure Fairly sure Guessing

Correct: A. The exchange-rate effect (a weaker currency helps exporters and raises import prices) operates on its own terms; the balance-of-payments surplus is a separate fact, and the outline draws no rule tying the two together within a single year.

B. Invents a guaranteed link between a surplus and currency strength that the outline never states.

C. Invents a rule that a weaker currency erases a surplus, unsupported by either named fact.

D. Reverses the exchange-rate effect; a weaker currency makes imports more expensive, not cheaper, and helps exporters, not importers.

Unit: SIE outline 1.3.3

Now answer