Question
Part 1. OTE: Please EXPLAIN your choice of the multiple-choice questions. 6 - If a country has a current account surplus, what is the net
Part 1.
OTE: Please EXPLAIN your choice of the multiple-choice questions.
6 - If a country has a current account surplus, what is the net investment position?
A) Net foreign investments are negative
B) Foreign liabilities are growing faster than foreign assets
C) Country is net debtor
D) Impossible to decide without knowing the financial account balance
E) Country is a net creditor
7- Which of the following best defines the international trade part within the scope of international economics?
A) Money is included within the international trade analysis
B) International trade constitutes the real side of international economics
C) International trade constitutes the monetary side of international economics.
D) International trade analysis includes the cost of foreign exchange rate transactions
E) Importance of international trade part is decreasing
8- Which of the following best completes the sentence below?
"The value of a domestic currency against foreign currencies corrected fort he purchasing power is called............"
A) Nominal Exchange rate
B) Domestic price index
C) Cross foreign Exchange rate
D) Real foreign Exchange rate
E) None of them
9- Which of the following is used by the short term capital flows as an investment tool?
A) Housing
B) Physical assets
C) Gold
D) Real assets
E) Financial assets
10 - What is the principle that explains the result of the balance of payments as zero?
A) Equilibrium in the foreign exchange market
B) Equality between capital inflows and outflows
C) Double entry system
D) Balance in international trade
E) Balance of foreign exchange receipts and expenses.
Part ii.
1. Credit items on the U.S. balance-of-payments statement result in
a.
a deficit on the current account of the United States.
b.
a deficit on the capital and financial account of the United States.
c.
an inflow of foreign exchange for the United States.
d.
an outflow of foreign exchange for the United States.
12. If Japanese investors purchase Treasury bills of the U.S. government, this results in a
a.
debit transaction in the U.S. current account.
b.
credit transaction in the U.S. current account.
c.
debit transaction in the U.S. capital and financial account.
d.
credit transaction in the U.S. capital and financial account.
13. If U.S. investors purchase Treasury bills of the British government, this results in a
a.
debit transaction in the U.S. current account.
b.
credit transaction in the U.S. current account.
c.
debit transaction in the U.S. capital and financial account.
d.
credit transaction in the U.S. capital and financial account.
14. A deficit in the U.S. current account is offset by a surplus
a.
in the U.S. trade account.
b.
in the U.S. balance-of-payments.
c.
in the U.S. capital and financial account.
d.
in the U.S. official reserve assets.
15. A debit in the U.S. current account would be represented by
a.
earnings on U.S. investments abroad flowing into the United States.
b.
gifts that Americans make to the poor in Africa.
c.
Chinese investors purchasing the securities of the U.S. government.
d.
exports of Boeing jetliners to South Korea.
16. When the United States imports goods and services from other countries, the United States
a.
makes payments to other countries.
b.
receives payments from other countries.
c.
becomes a net lender to other countries.
d.
receives interest income from other countries.
17. Mary Smith, a resident of Denver, Colorado, purchases a Swiss watch in Chicago. On the U.S. balance-of-payments statement, this transaction appears on the
a.
official reserve asset account.
b.
net borrowing and lending account.
c.
current account.
d.
services account.
18. A positive balance in the capital and financial account suggests that a country
a.
is realizing a surplus on its current account.
b.
is realizing a deficit on its current account.
c.
is lending to the rest of the world.
d.
exports more goods and services than it imports.
19. If the United States has a negative balance on its current account, it
a.
is a net lender to the rest of the world.
b.
is a net borrower from the rest of the world.
c.
realizes a negative balance on its capital and financial account.
d.
runs a surplus in the budget of the federal government.
20. If Germany has invested over its history more in other countries than other countries have invested in Germany, then Germany is a
a.
net creditor nation.
b.
net debtor nation.
c.
net importer of goods and services.
d.
net exporter of stocks and bonds.
21. If an American receives dividends from the shares of stock she or he owns in Toyota, Inc., a Japanese firm, the transaction would be recorded on the U.S. balance-of-payments as a
a.
capital account debit.
b.
capital account credit.
c.
current account debit.
d.
current account credit.
22. If the United States government sells military hardware to Saudi Arabia, the transaction would be recorded on the U.S. balance-of-payments as a
a.
current account debit.
b.
current account credit.
c.
capital account debit.
d.
capital account credit.
23. The U.S. balance of trade position is in part determined by
a.
exchange rates.
b.
growth of foreign consumers' incomes.
c.
relative prices in world markets.
d.
All of these are correct.
24. A country that is a net international debtor initially experiences
a.
an augmented savings pool available to finance domestic spending.
b.
a higher interest rate, which leads to lower domestic investment.
c.
a loss of funds to trading partners overseas.
d.
a decrease in its services exports to other countries.
25. Credit (+) items in the balance-of-payments correspond to anything that
a.
involves receipts from foreigners.
b.
involves payments to foreigners.
c.
decreases the domestic money supply.
d.
increases the demand for foreign exchange.
26. Debt (-) items in the balance-of-payments correspond to anything that
a.
involves receipts from foreigners.
b.
involves payments to foreigners.
c.
increases the domestic money supply.
d.
decreases the demand for foreign exchange.
27. Reducing a current account surplus requires a country to
a.
increase the government's deficit and increase private investment relative to saving.
b.
increase the government's deficit and decrease private investment relative to saving.
c.
decrease the government's deficit and increase private investment relative to saving.
d.
decrease the government's deficit and decrease private investment relative to saving.
28. Which of the following transactions would result in a credit for the United States?
a.
U.S. households importing beer from German breweries
b.
Chinese investors purchasing securities of the U.S. government
c.
German tourists visiting Yellowstone National Park
d.
U.S. construction firms contracting with Japanese architects to design their buildings
29. A Canadian lumber company purchases a sawmill in the state of Washington. On the U.S. balance-of-payments statement, this transaction appears in the
a.
current account.
b.
net exports account.
c.
net imports account.
d.
capital and financial account.
30. If the United States is a net borrower from, or lender to, the rest of the world, this is best indicated by the U.S.
a.
balance-of-payments position.
b.
current account balance.
c.
merchandise trade balance.
d.
net export balance.
Section B.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started