1.If a French citizen buys 100 shares of IBM stock on the New York Stock Exchange, the transaction will be recorded as

A.a surplus item in the capital account

B.a surplus item in the current account

C.a deficit item in the current account

D. a decrease in France's GDP

2.Our country's net exports will increase if

A. there is an increase in domestic inflation

B. domestic interest rates rise due to expansionary fiscal policy

C.there is an increase in domestic income

D.many of our trade partners experience inflation

3.If an increase in national income has a negative effect on the trade balance, we should expect that

A.domestic interest rates will fall, causing an outflow of funds

B.the central bank will expand money supply

C..domestic interest rates will rise, attracting foreign funds

D.the central bank will buy foreign currency thus increasing its reserves