Exam 23: International Financial Transactions and Balance of Payments

Heavily traded currency futures contracts in the U.S. and in other world financial centers include all of the following currencies except:

The balance of payments accounts make use of single-entry bookkeeping principles and must always "balance" in a statistical sense.

An international monetary system in which virtually all international transactions take place in convertible currencies with gold bullion little used for this purpose, but each currency is freely convertible into gold at a fixed rate (and into other currencies) is known as the:

In the forward currency markets, delivery of currencies normally occurs one, three or six months following an agreement to trade between buyer and seller.

Currency futures are traded in the majority of cases to reduce the risk associated with fluctuating currency prices.

A U.S. investor purchases foreign securities. The investor will lose money if the value of the dollar subsequently declines.

A contract which gives the buyer the right to buy or sell currency futures is called a(n):

General Dynamics sends a dividend check to an investor in the United Kingdom. This is a debit entry in the U.S. balance of payments.

Selective currency pricing involves invoicing a customer to whom a firm has sold goods in a more stable currency or in a currency believed easier to effectively hedge.

The United States can consume more than it produces, provided it _______________; for example, by issuing government and private securities to finance the consumption.

If the pound-dollar exchange rate increases from ≤/$ = 1.3500 to 1.400 by what percentage amount has the pound depreciated?

An official monetary reserve unit designed to settle international claims arising from transactions between the IMF, member governments, central banks and international agencies is known as:

The United States consume more than producers were provided it borrows from overseas, such as, by issuing government and private securities, to finance their consumption.

Significant debt forgiveness and reduced service and merchandise revenues, both effects of the recent global economic crisis, are reflected in the U.S. Balance of Payments current account deficit.

Blanchard Chocolatier imports Swiss chocolate into the U.S. This is reflected as a debit entry in the U.S. balance of payments.

Most developed nations use a "managed float" policy to determine the value of their currencies in international markets, which means that central banks or other government monetary authorities will intervene frequently to keep their currency values in a relatively fixed ratio to the value of major convertible currencies (especially the dollar).

For each pair of currencies, such as dollars and pounds, foreign-currency brokers and dealers post two different exchange rates.

All of the following items except one are debit entries in a nation's balance of payments. Which one is not a debit entry?

Debit items in the balance-of payments accounts are sources of funds, reducing a nation's external buying power.

When a central bank takes action to offset or nullify the effects of its currency trading on bank reserves and the money supply this action is known as: