27) Which of the following is NOT likely to occur in the quantity adjustment phase of the J-Curve adjustment path ? 27) ______ A) Exports become relatively less expensive. B) Imports become relatively more expensive. C) The balance of trade gets worse. D) All of the above are true. 28) The effect of an imbalance in the BOP is the same for countries on a fixed exchange rate regime as for those on a floating exchange rate regime. 28) ______ A) True B) False 29) Under a floating exchange rate system, the government bears the responsibility to ensure that the BOP is near zero. 29) ______ A) True B) False 30) Imports have the potential to lower a country's inflation rate because of each of the following EXCEPT: 30) ______ A) the higher prices of foreign goods spurs domestic competitors to cut prices. B) the import of lower priced services limits what domestic competitors can charge for services. C) the import of lower priced goods limits what domestic competitors can charge for goods. D) of all of the above 31) The BOP should always balance. 31) ______ A) True B) False 32) Which of the following statements about the balance of payments is NOT true? 32) ______ A) Although the BOP must always balance in theory, in practice there are substantial imbalances as a result of statistical errors and misreporting of current account and financial account flows. B) The BOP is the summary statement of all international transactions between one country and all other countries. C) The BOP is a flow statement, summarizing all international transactions that occur across the geographic borders over a period of time, typically a year. D) All of the above are true. 33) Significant amounts of United States Treasury issues are purchased by foreign investors, therefore the U.S. must earn foreign currency to repay this debt. 33) ______ A) True B) False 34) The financial account consists COMPLETELY of which three components? 34) ______ A) Direct investment, stock investment, and bond investment. B) Direct investment, portfolio investment, and other asset investment. C) Stock investment, bond investment, and mutual fund investment. D) Mutual fund investment, portfolio investment, and stock investment. 35) When categorizing investments for the financial account component of the balance of payments the ________ is an investment where the investor has no control whereas the ________ is an investment where the investor has control over the asset. 35) ______ A) direct investment; indirect investment B) portfolio investment; direct investment C) portfolio investment; indirect investment D) direct investment; portfolio investment