Exam 23: International Financial Transactions and Balance of Payments

For the foreseeable future, the U.S. and other major nations will work to keep the dollar strong.

A currency option obligates the option buyer to make or take delivery.

The purchase of real estate in the U.S. by a Group of Japanese investors will be recorded as a:

When a domestic corporation brings the earnings of its foreign affiliates back into the domestic economy this is called direct investment.

Credit items in the balance of payments accounts are uses of funds, adding to a nation's external buying power.

Nations that attempt to keep their currency's exchange value within a fixed range around the value of some other currency or basket of currencies are known as floaters.

One of the disadvantages of the gold standard is to limit the domestic policy options open to economic policymakers within each country.

In 2008 services exported out of the United States exceeded services imported into the United States by:

Please indicate whether each of the transactions below would represent a credit (+) or a debit (-) item in a nation's balance of payments.

Currency sterilization is a process by which a central bank attempts to fix or freeze the price of the home currency where the central bank is located.

With the introduction of the Euro, the proportion of U.S. dollars that make up all official currency holdings worldwide has dropped to less than half.

A straight currency swap facilitates the borrowing of foreign currency without currency risk.

A dual currency bond is a debt security in which the lender insists that the bond be retired in either one of two different currencies depending upon the lender's preference at the time a payment is to be made.

Gifts and grants flowing out of the U.S. typically exceed gifts and grants flowing into the U.S.

Where has most of the U.S. trade deficit come from?

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

The heart of the foreign exchange market in the U.S. is concentrated in:

To hedge against a loss due to currency fluctuations, a U.S. importer of Swiss chocolate should:

The five nations whose currencies and trade are used to establish the value of SDRs are Canada, the United States, Italy, Spain and the United Kingdom.

Short-term and long-term investment abroad would be recorded in the _____ of a nation's balance of payments accounts.