1. The current account in the balance of payments is a subset of the national income account. Which of the following accounts does NOT affect the national income account... Select one:

a. secondary income

b. trade balance account

c.primary income

d.capital and financial accounts

2. To hedge exchange rate fluctuations, players in the foreign exchange market....

a. do hedging

b. do a swap

c. do arbitrage

d. exercise options 3. Assume no change in other variables; an increase in interest rates will......

a. Tends to reduce domestic investment but does not affect net capital flows.

b. Tends to reduce net capital flows, but does not affect domestic investment.

c. Tends to reduce both domestic investment and net capital flows.

d. Does not reduce domestic investment or capital flows.

e. Tends to increase both domestic investment and net capital flows.