Exam 2: International Flow of Funds

​The International Development Association was established to promote economic development:

Which of the following is not a goal of the International Monetary Fund (IMF)?

​A high home inflation rate relative to other countries would ____ the home country's current account balance, other things being equal. High growth in the home income level relative to other countries would ____ the home country's current account balance, other things being equal.

The inception of the euro eliminated exchange rate risk on trade transactions between the U.S. and the eurozone.

The J-curve effect is the initial worsening of the U.S. trade balance due to a weakening dollar because of established trade relationships that are not easily changed; as the dollar weakens, the dollar value of imports initially rises before the U.S. trade balance is improved.

The United States typically has a balance-of-trade surplus in its trade with ____.

​Direct foreign investment into the United States represents a ____.

​The term "dumping" refers to the:

Outsourcing allows some MNCs to reduce costs but shifts jobs to other countries.

​The direct foreign investment positions by U.S. firms have generally ____ over time. Restrictions by governments on direct foreign investment have generally ___ over time.

A tariff is a maximum limit on imports.

U.S. government officials would likely prefer that China devalue the yuan against the dollar.

​The primary income component in a country's current account may reflect income received due to:

Outsourcing is the process of subcontracting to a third party in another country to provide supplies or services that were previously obtained internally.