Balance of Payments Accounts

Question 1

A surplus in a country's financial/capital account necessarily means

Aan inflationary economy

Ba recessionary economy

Ca country's exports exceeding its imports

Dflat real interest rates

Ea deficit in its current account

Question 2

Which of the following is an example of a financial/capital account transaction?

AForeign aid after a natural disaster

BSomeone in one country buying a government bond of another country

CA government paying annual interest to a foreigner who owns government bonds of the country

DAn emigrant to one country sending money to family back in his country of origin

EThe sale of machinery between two international companies

Question 3

Net unilateral transfers would be counted in a country's

Acapital account

Bfinancial account

Ccurrent account

Dnominal GDP

Ereal GDP

Question 4

Which of the following is an example of a current account transaction?

AA Canadian business sells $100 million in maple syrup to the United States.

BThe United States government purchases $20 million worth of British pounds.

CA South Korean company builds a factory in Bangladesh.

DA major American technology company buys out its largest rival.

EA Chinese firm purchases United States government bonds.

Question 5

Use the data from a nation's balance of payments below to answer the following question.

Exports $750 Imports $600 Net income from abroad -$225 Net unilateral transfers $30