Exam 23: International Financial Transactions and Balance of Payments

Please supply a brief definition of each of the following terms associated with the balance of payments accounts:

The balance of payments accounts reflect stocks rather than flows.

Changes in government holdings of foreign currency, gold and special drawing rights at the International Monetary Fund would be reflected in the _____ on a nation's balance of payments accounts.

Lloyd's of London provides insurance to a U.S. corporation. This will be recorded as a:

An importer of goods into the U.S. will suffer a loss if the value of the dollar declines.

American gift giving and charitable contributions overseas are recorded in which balance of payments accounts?

The U.S. and other major nations all agree that intervention in the foreign exchange markets is costly and unproductive.

The agency which establishes rules for settling international balance-of-payments accounts between nations is known as the:

There are approximately 50 different monetary units around the world.

When a company borrows money in a foreign currency and then immediately reverses the transaction by swapping the foreign currency into its home currency with a counterparty it has participated in a currency swap.

In 2008 the U.S. service balance surplus was almost $150 billion.

Gold is still considered to be an international monetary medium, according to your text.

A sale of currency futures contracts followed later by a purchase of futures contracts in an equivalent amount is known as a:

The five member nations represented in the valuation of SDRs include Germany, France, Japan, the United Kingdom and the United States.

The price of oil barrels are more often than not valued and priced in:

The international monetary system in which foreign currency prices are linked to the U.S. dollar and gold, the dollar is tied to gold at a fixed price and central banks are obligated to intervene in the currency markets to keep their home currency's exchange rate with the dollar within a narrowly defined band is called the:

Private insurers have stopped offering exchange-risk insurance because currency values have become so unpredictable.

The majority of American balance of payments deficits in recent years have been financed through changes in official reserve assets.

Using the the description or the definition below, identify each of the key terms and concepts presented in this chapter a. A market that makes it possible to acquire or sell foreign currencies in order to cover currency risk exposure. b. Actions taken by a central bank to offset the impact on bank reserves, deposits and interest rates of government purchases and sales of currencies. c. An agreement to deliver a specified amount of currencies, securities or other goods or services at a set price on a given future date. d. A condition prevailing in international markets where the interest-rate differential between two nations matches the forward discount or premium on their two currencies.

A rise in the value of Japanese yen, assuming all currency values are unchanged, will reduce the official value assigned to an SDR.