Exam 9: The Exchange Rate and the Balance of Payments

Item Billions of dollars Exports of goods 1000 Imports of goods -665 Exp orts of services 410 Imports of services -590 Net interest income 0 Net transfers -15 U S . investment abroad -600 Foreign investment in 400 the United States Official settlements account 60 -The data in the table above are the U.S. balance of payments. The sum of the current account plus capital and financial account plus official settlements account is equal to

Component Amount (billions of dollars) Government expenditure,G 700 Net taxes, T 600 Investment ,I 350 Savings, S 500 -In the table above, what do net exports equal?

The government sector balance is equal to________ .

If the interest rate on Japanese yen assets falls, the

-Using the above figure, which of the following is correct?

If the interest rate on Swiss franc assets increases, the

What is the relationship between net borrower, net lender, debtor nation, and creditor nation?

Item Billions of dollars Imports of goods and services, M 275 Net taxes, T 300 Government exp enditure, G 250 Savings, S 125 Investment ,I 100 -The table above gives some of the entries in the national income and product accounts. The government sector has a________ , and the private sector has a ________ .

In 2010, the U.S. current account had a

If the Federal Reserve raises the U.S. interest rate, foreignersʹ

Item Billions of dollars Exp orts of goods and services, X Imports of goods and services, M 1,000 Net taxes, T Government exp enditure, G 1,300 Saving, S Investment, I 650 -Using the data in the above table, if saving equals $650 billion and exports are greater than imports,

Suppose the United States initially has a trade deficit. Then U.S. firms increase their imports from Canada, financing that increase by borrowing from Canada. The current account deficit is now And the capital and financial account surplus is now .

ʺIf the official settlements balance is zero, a current account surplus must equal the capital account deficit.ʺ Is the previous statement correct or incorrect? Briefly explain your answer.

-In the above figure, suppose the economy is initially at point A. People come to expect the future U.S. exchange rate to be lower. As a result, there is a change from point A to a point such as__________

Which of the following is included in a nationʹs current account? I. the import of services II. a change of foreign currency holdings III. net transfers, such as foreign aid payments

Balance of payments accounts include

How do the capital account and the current account differ?

If the equilibrium exchange rate for the dollar is 110 yen per dollar and the current exchange rate is 120 yen per dollar, then the

X is exports, M is imports, T is net taxes, G is government expenditure, C is consumption expenditure, S is saving, and I is investment. The government sector balance is equal to

When we export goods to foreign countries, we