1. The "good and services" account of the balance of payments shows the monetary value of international flows associated with transactions in goods, services, and unilateral transfers.

A) True

B) False

2. The International Monetary Fund (IMF) study concludes that the risk of substantial domestic job loss due to offshore outsourcing is extremely high.

A) True

B) False

3. Answer based on the following: Interest rate on U.S. assets = 5%, interest rate on European assets = 12%, the spot rate of exchange = 0.90 Euros/$, the one year forward rate of exchange = 0.95 Euros/$. The dollar is expected to appreciate.

A) True

B) False

4. In a country's balance of payments, which of the following transactions are debits?

A) Domestic bank balances owed by foreigners are decreased

B) Foreign bank balances owned by domestic residents are decreased

C) Assets owned by domestic residents are sold to nonresidents

D) Securities are sold by domestic residents to nonresidents

5.

Transaction	Amount (billions of dollars)
Allocation of SDRs	10
Changes in U.S. assets abroad	100
Statistical discrepancy	-15
Merchandise imports	-400
Payments on foreign assets in U.S.	-20
Remittances, pensions, transfers	-60
Travel and transportation receipts, net	30
Military transactions, net	-10
Investment income, net	100
Merchandise exports	350
U.S. government grants (excluding military)	-20
Changes in foreign assets in the U.S.	190
Other services, net	80
Receipts on U.S. investments abroad	30
Compensation of employees	-10

Refer to Table 10.3. The unilateral-transfers balance registered a deficit of $40 billion.

A) True

B) False