Exam 23: International Financial Transactions and Balance of Payments

A nation should acquire goods and services from those sources, foreign or domestic, which result in the lowest cost of its own resources. This statement exemplifies the principle of:

Any economic transaction which involves domestic residents only and is carried out in the home currency could not appear in the home country's balance of payments accounts.

The five IMF nations whose currency values and exports are used as the basis for valuing SDRs are:

The international financial markets perform the same basic function as do the domestic financial markets, bringing international lenders of funds into contact with borrowers.

Investors committing their funds to foreign securities would normally employ a selling hedge in the currency futures market.

Using the the description or the definition below, identify each of the key terms and concepts presented in this chapter a. A double-entry bookkeeping system for recording a nation's transactions with the rest of the world. b. A component of a nation's balance of payments that tracks purchases and sales of goods and services. c. A record of flows of short-term and long-term funds into and out of a nation. d. A system of payments between countries in which each nation agrees to accept paper money or coins in return for gold bullion at predetermined prices. e. Each nation selects its own exchange rate policy.

A debt issue that has principal and interest denominated in two different currencies is called:

The major transactions captured in a nation's balance of payments accounts include all the following except:

If Americans are importing more goods from abroad than they are able to sell to their overseas customers, there will be an excess supply of U.S. dollars in foreign hands.

If a business headquartered inside the United States establishes affiliated companies in Europe and Japan, but gathers the net income from these affiliated companies and returns it to the United States, this is known as:

The market for immediate delivery of a foreign currency is known as the spot market; the term "immediate delivery" normally means "within one or two business days."

Debt securities whose principal and interest are payable in two different currencies are known as:

The purchase of one currency in a certain market and the sale of that currency in another market in response to differences in prices between the two markets is known as:

The U.S. balance of payments accounts are prepared and published quarterly by the:

When is a balance-of-payment deficit potentially a "bad" sign? In what sense can such deficits represent a "good" indicator?

All economic and financial transactions between residents of one nation and the rest of the world during a specific time period are recorded in the:

Risk-adjusted pricing benefits countries with _____ and hurts countries with _____.

When and where was the so-called modified exchange standard created? Explain how this particular monetary system worked in order to stabilize the value of different foreign currencies.

The purchase of tulip bulbs from a Dutch grower by a nursery in the U.S. is an import of merchandise.

The foreign-exchange market is largely an exchange, rather than an over-the counter market.