Q Principles of Macroeconomics Pop Quiz #5 1. From Mankiw's Why It Matters: Buying Cheese Can Be More Complicated than You Though in ch 31, why do things get more interesting if you buy the French brie instead of Vermont cheddar? 2. In the ConceptClip: Imports and Exports in ch 31, the narrator mentioned that Imports and exports are easy to define, but the true importance of the concepts is a little bit more subtle. Please explain why it is. 3. After reviewing the Case Study: Is the U.S. Trade Deficit a National Problem? in Section 31-1e Summing Up, ch 31, explain why the trade deficit is or isn't a national problem. Your answer should include some comments on national saving/investment and net capital outflow. 4. Show how each of the following transactions affects U.S. exports, imports, and net exports. You can use the Video Problem Walk-Through: Determining the Impact of Various Transactions on Imports, Exports, and Net Exports in ch 31 to find similar cases. 1) A Chinese farmer sells rice to a U.S. grocery store. 2) A German student pays tuition and fees at a U.S. college. 3) An American auto manufacturer buys auto parts from Mexico to build cars in a U.S. assembly plant. 4) A U.S. citizen purchases a Picasso's painting at an auction market in Paris, France. 5. For each of the following, determine whether each involves foreign direct investment or foreign portfolio investment, and then determine the transaction's effect on net capital outflow in the U.S. Video Problem Walk-Through: Determining the Impact of Various Transactions on Foreign Direct Investment, Foreign Portfolio Investment, and Net Capital Outflow in ch 31 to find some hints. 1) Apple, a U.S. technology company, opens a new assembly plant in China. 2) Merrill Lynch, a famous American investment company, buys the stocks of Saudi Aramco (one of the world's largest oil companies) at the Saudi stock exchange. 3) Hyundai, a Korean automaker, opens a new facility in Alabama. 4) A British citizen purchases Amazon.com stocks on the U.S. stock exchange.