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 36) In general there is consensus that ________ should be free but there is no such consensus that ________ should be free. 36) ______ A) international trade; international goods trade B) international investment; international goods trade C) international trade; international investment D) international investment; international trade 37) The two major concerns about foreign direct investment are: 37) ______ A) national defense and taxes. B) who pays the taxes and who receives the taxes. C) who receives the profits and taxes. D) who controls the assets and who receives the profits. 38) Portfolio investment is capital invested in activities that are ________ rather than made for ________. 38) ______ A) profit motivated; control B) long term; profit C) control motivated; profit D) short term; the long term 39) Under an international regime of fixed exchange rates, countries with a BOP ________ should consider ________ their currency while countries with a BOP ________ should consider ________ their currency. 39) ______ A) surplus, revaluing; deficit, devaluing B) deficit, devaluing; surplus, devaluing C) deficit, revaluing; surplus, revaluing D) surplus, devaluing; deficit, revaluing 40) If your company were to import and export textiles, the transactions would be recorded in the current account subcategory of ________. 40) ______ A) goods trade B) services trade C) current transfers D) income trade 41) The travel services provided to international travelers by United Airlines would be recorded in the current account subcategory of ________. 41) ______ A) current transfers B) goods trade C) income trade D) services trade 42) Anaconda Copper Inc. created a subsidiary in Chile last year to mine copper ore. The proportion of net income paid back to the parent company as a dividend would be recorded in the current account subcategory of ________. 42) ______ A) current transfers B) services trade C) goods trade D) income trade 43) The subcategory that typically dominates the current account is ________. 43) ______ A) income trade B) goods (merchandise) trade C) services trade D) transfer accounts 44) In 2007 the United States posted a current account deficit of -$731 billion. The bulk of the negative value came from 44) ______ A) a goods trade deficit. B) an income trade deficit. C) a net transfer deficit. D) an income balance deficit. 45) Over the last two decades the surplus on U.S. services trade has typically been ________ the deficit on U.S. goods trade. 45) ______ A) greater than B) less than C) equal to D) The relationship is constantly shifting from greater than to less than.

46) The BOP must be in balance but the current account need not be. 46) ______

A) True B) False

47) Expenditures by U.S. tourists in foreign countries for foreign goods or services are factored into BOP calculations. 47) ______

A) False B) True

48) Balance of payment (BOP) data may be important for any of the following reasons: 48) ______

A) The BOP is an important indicator of a country's foreign exchange rate.

B) Changes in a country's BOP may signal a change in controls over payment of dividends and interest.

C) BOP data helps to forecast a country's market potential, especially in the short run.

D) all of the above

49) From an effect point of view, a country experiencing a serious BOP ________ is more likely to see exports ________ than otherwise. 49) ______

A) deficit; expand B) surplus; expand C) surplus; contract D) none of the above

50) Which of the following would NOT be considered a typical BOP transaction? 50) ______

A) A U.S. tourist purchases gifts at a museum in London.

B) The U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich.

C) Toyota U.S.A. is a U.S. distributor of automobiles manufactured in Japan by its parent company.

D) All are example of BOP transactions.

51) Which of the following is NOT a part of the Current Account of BOP? 51) ______

A) Net export/import of services. B) Net portfolio investment.

C) Balance of Trade. D) Net export/import of goods.

52) Which of the following is NOT part of the Financial Account of the BOP? 52) ______

A) Net portfolio investment. B) Net import/export of services.

C) Net foreign direct investment. D) Other Financial items.

53) Which of the following is NOT an item to be considered in BOP calculations? 53) ______

A) A consumer buys a VCR made in Korea from a Florida Wal-Mart store.

B) A U.S.-based firm manages the development of an oil field in Kazakhstan.

C) A U.S. citizen living in Minnesota travels to Winnipeg, Canada and buys a case of LaBatt's Canadian beer.

D) Purchase of a U.S. Treasury Bill by a foreign resident.

54) The balance of payments 54) ______

A) records all international transactions for a country over a period of time.

B) determines the eligibility of countries for IMF aid.

C) adds up the value of all assets and liabilities of a country on a specific date.

D) all of the above

55) Regime structures like the gold standard required no cooperative policies among countries, only the assurance that all would abide by the "rules of the game." 55) ______

A) True B) False