Exchange Rates Move Both Directions

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

On this outline, what does the abbreviation GDP actually measure?

A. Output produced within a country's own borders, by anyone B. Output produced by a country's own citizens and companies, wherever they operate C. A country's total tax revenue collected in one year D. The value of a country's currency against a fixed benchmark

How sure are you?

Sure Fairly sure Guessing

Correct: A. GDP measures output produced within a country's own borders, by anyone.

B. That describes GNP, the ownership-based measure GDP is distinguished from.

C. Tax revenue is a fiscal-policy figure, not GDP.

D. Currency value against a benchmark is an exchange rate, unrelated to GDP.

Unit: SIE outline 1.3.3

Question 2Above the exam

A U.S. company's foreign subsidiary reports rising output at the same time a leading domestic indicator (building permits) turns upward. Which pair of statements is correct?

A. The subsidiary's output counts toward U.S. GNP, not U.S. GDP; and the building-permits rise signals a turn is coming, not one already underway B. The subsidiary's output counts toward U.S. GDP; and building permits confirm a turn that already happened C. The subsidiary's output counts toward neither GDP nor GNP; and building permits are a coincident indicator D. The subsidiary's output counts toward U.S. GNP; and building permits are a lagging indicator

How sure are you?

Sure Fairly sure Guessing

Correct: A. GNP is ownership-based, so a U.S. company's foreign subsidiary's output counts toward U.S. GNP, not GDP, which is location-based; building permits are a leading indicator, predicting a turn before it happens.

B. Reverses the GDP/GNP assignment; a U.S. company's foreign output is a GNP fact, since GDP is about where output is produced, inside U.S. borders.

C. The subsidiary's output does count toward GNP; it does not vanish from both measures.

D. Correctly assigns GNP, but mislabels building permits as lagging when the definition makes them leading.

Unit: SIE outline 1.3.3

Exchange Rates Move Both Directions

Now answer