Question 1

Global capital flows have completely broken the link between domestic savings and domestic investment.

Accepted Answer

A) True 
 B)False

Question 2

There are debt relief programs currently available for highly indebted poor countries.

Accepted Answer

A) True 
 B)False

Question 3

Use the following table to answer the next question(s).All values are measured as a percent of GNP.
Table 9.2
  
-Based on Table 9.2,the current account balance is

Accepted Answer

A) -2 percent of GNP. 
B) +2 percent of GNP. 
C) +4 percent of GNP. 
D) -4 percent of GNP. 
E) None of the above. 
A) -2 percent of GNP. 
B) +2 percent of GNP. 
C) +4 percent of GNP. 
D) -4 percent of GNP. 
E) None of the above.

Question 4

Which of the following is NOT part of the current account?

Accepted Answer

A) Dividends received on a foreign investment 
B) Purchase of a plane ticket on a foreign airline 
C) Shipment of food aid to a poor country 
D) Purchase of a foreign bond 
E) All of the above. 
A) Dividends received on a foreign investment 
B) Purchase of a plane ticket on a foreign airline 
C) Shipment of food aid to a poor country 
D) Purchase of a foreign bond 
E) All of the above.

Question 5

How do recent current account deficits compare to GNP and to past ratios?

Accepted Answer

It is over 6 percent of GNP,mu

Question 6

Direct foreign investment items have more liquidity than foreign portfolio investment items.

Accepted Answer

A) True 
 B)False

Question 7

What is the difference between the U.S.current account deficits of the 1980s and the 1990s?

Accepted Answer

In the 1980s,the government budget balan

Question 8

The United States international investment position is negative.

Accepted Answer

A) True 
 B)False

Question 9

A current account deficit implies that

Accepted Answer

A) the financial account is negative. 
B) the financial account is in surplus. 
C) exports of goods and services exceed imports of goods and services. 
D) unilateral transfers are positive. 
E) None of the above. 
A) the financial account is negative. 
B) the financial account is in surplus. 
C) exports of goods and services exceed imports of goods and services. 
D) unilateral transfers are positive. 
E) None of the above.

Question 10

If domestic savings is less than domestic investment,then

Accepted Answer

A) a trade deficit occurs. 
B) the government runs a budget deficit. 
C) there will be a negative foreign investment. 
D) a trade surplus must result. 
E) Both A and C. 
A) a trade deficit occurs. 
B) the government runs a budget deficit. 
C) there will be a negative foreign investment. 
D) a trade surplus must result. 
E) Both A and C.

Question 11

Your text identifies all of the following as reasons why unsustainable debt may occur except

Accepted Answer

A) when countries are dependent on one or two key export commodities,and there is a sudden drop in the price of those commodities. 
B) when natural disasters occur. 
C) when civil conflicts are resolved and a peace dividend occurs. 
D) when there are corrupt politicians and practices. 
E) when government officials try to buy votes with unsustainable spending. 
A) when countries are dependent on one or two key export commodities,and there is a sudden drop in the price of those commodities. 
B) when natural disasters occur. 
C) when civil conflicts are resolved and a peace dividend occurs. 
D) when there are corrupt politicians and practices. 
E) when government officials try to buy votes with unsustainable spending.

Question 12

Table 9.1
  
-Based on Table 9.1,if the information in the table is typical of current and financial account values over a long period,then it would be reasonable to infer that

Accepted Answer

A) the net international investment position is negative. 
B) the net international investment position is positive. 
C) national savings are less than domestic investment. 
D) government accounts are in deficit. 
E) the current account balance is greater than domestic investment. 
A) the net international investment position is negative. 
B) the net international investment position is positive. 
C) national savings are less than domestic investment. 
D) government accounts are in deficit. 
E) the current account balance is greater than domestic investment.

Question 13

Which of the following is FALSE?

Accepted Answer

A) In 2002,the United States imported more goods and services from foreign suppliers than it exported to foreign purchasers. 
B) Services are almost one-third of total exports and are a growing part of U.S.and world trade. 
C) The U.S.trade balance in services is in deficit. 
D) With the exception of the Gulf War period in 1991,the U.S.current account has been in deficit since the 1980s. 
A) In 2002,the United States imported more goods and services from foreign suppliers than it exported to foreign purchasers. 
B) Services are almost one-third of total exports and are a growing part of U.S.and world trade. 
C) The U.S.trade balance in services is in deficit. 
D) With the exception of the Gulf War period in 1991,the U.S.current account has been in deficit since the 1980s.

Question 14

What does a current account deficit do that is positive for a nation?

Accepted Answer

The deficit enables more inves

Question 15

Looking at the financial account data,it is possible to determine the total amount of official reserves available to a nation.

Accepted Answer

A) True 
 B)False

Question 16

During the 1990s,which of the following did NOT occur?

Accepted Answer

A) Private savings fell. 
B) Investment rose. 
C) Public savings increased. 
D) The United States received capital inflows. 
E) Private savings was greater than investment for most of the 1990s. 
A) Private savings fell. 
B) Investment rose. 
C) Public savings increased. 
D) The United States received capital inflows. 
E) Private savings was greater than investment for most of the 1990s.

Question 17

It is important to compare debt levels of low- and middle-income countries to exports because countries must earn foreign exchange in order to service their debts.

Accepted Answer

A) True 
 B)False

Question 18

If the residents of a country receive income from their foreign investments,it is counted as a

Accepted Answer

A) credit in the current account. 
B) debit in the current account. 
C) credit in the capital account. 
D) debit in the capital account. 
E) debit in either the capital or current account,depending on the type of investment income. 
A) credit in the current account. 
B) debit in the current account. 
C) credit in the capital account. 
D) debit in the capital account. 
E) debit in either the capital or current account,depending on the type of investment income.

Question 19

If a country runs a current account surplus and national private savings equals domestic investment,then the combined governmental accounts

Accepted Answer

A) must be balanced. 
B) must be positive. 
C) must be negative. 
D) could be either negative or positive,depending on the capital account. 
E) could be either negative or positive,depending on the net international investment position. 
A) must be balanced. 
B) must be positive. 
C) must be negative. 
D) could be either negative or positive,depending on the capital account. 
E) could be either negative or positive,depending on the net international investment position.

Question 20

Describe how a sudden stop leads to a financial crisis.

Accepted Answer

A sudden shit from positive to negative

Global capital flows have completely broken the link between domestic savings and domestic investment.

There are debt relief programs currently available for highly indebted poor countries.

Use the following table to answer the next question(s).All values are measured as a percent of GNP. Table 9.2 -Based on Table 9.2,the current account balance is

Which of the following is NOT part of the current account?

How do recent current account deficits compare to GNP and to past ratios?

Direct foreign investment items have more liquidity than foreign portfolio investment items.

What is the difference between the U.S.current account deficits of the 1980s and the 1990s?

The United States international investment position is negative.

A current account deficit implies that

If domestic savings is less than domestic investment,then

Your text identifies all of the following as reasons why unsustainable debt may occur except

Table 9.1 -Based on Table 9.1,if the information in the table is typical of current and financial account values over a long period,then it would be reasonable to infer that

Which of the following is FALSE?

What does a current account deficit do that is positive for a nation?

Looking at the financial account data,it is possible to determine the total amount of official reserves available to a nation.

During the 1990s,which of the following did NOT occur?

It is important to compare debt levels of low- and middle-income countries to exports because countries must earn foreign exchange in order to service their debts.

If the residents of a country receive income from their foreign investments,it is counted as a

If a country runs a current account surplus and national private savings equals domestic investment,then the combined governmental accounts

Describe how a sudden stop leads to a financial crisis.

The United States in a Global Economy

International Economic Institutions Since World War Ii

Comparative Advantage and the Gains From Trade

Comparative Advantage and Factor Endowments

Beyond Comparative Advantage

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

International Financial Crises

The United States in the World Economy

The European Union: Many Markets Into One

Trade and Policy Reform in Latin America

Export-Oriented Growth in East Asia

The Bric Countries in the World Economy

Filters

Exam 9: Trade and the Balance of Payments

Global capital flows have completely broken the link between domestic savings and domestic investment.

There are debt relief programs currently available for highly indebted poor countries.

Use the following table to answer the next question(s).All values are measured as a percent of GNP. Table 9.2 -Based on Table 9.2,the current account balance is

Which of the following is NOT part of the current account?

How do recent current account deficits compare to GNP and to past ratios?

Direct foreign investment items have more liquidity than foreign portfolio investment items.

What is the difference between the U.S.current account deficits of the 1980s and the 1990s?

The United States international investment position is negative.

A current account deficit implies that

If domestic savings is less than domestic investment,then

Your text identifies all of the following as reasons why unsustainable debt may occur except

Table 9.1 -Based on Table 9.1,if the information in the table is typical of current and financial account values over a long period,then it would be reasonable to infer that

Which of the following is FALSE?

What does a current account deficit do that is positive for a nation?

Looking at the financial account data,it is possible to determine the total amount of official reserves available to a nation.

During the 1990s,which of the following did NOT occur?

It is important to compare debt levels of low- and middle-income countries to exports because countries must earn foreign exchange in order to service their debts.

If the residents of a country receive income from their foreign investments,it is counted as a

If a country runs a current account surplus and national private savings equals domestic investment,then the combined governmental accounts

Describe how a sudden stop leads to a financial crisis.

The United States in a Global Economy

International Economic Institutions Since World War Ii

Comparative Advantage and the Gains From Trade

Comparative Advantage and Factor Endowments

Beyond Comparative Advantage

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

International Financial Crises

The United States in the World Economy

The European Union: Many Markets Into One

Trade and Policy Reform in Latin America

Export-Oriented Growth in East Asia

The Bric Countries in the World Economy

Filters