Exam 4: The Balance of Payments

Under a fixed exchange rate,the government of a country officially declares that its currency is convertible into a fixed amount of some other currency.

Which of the following mechanisms for moving capital from one country to another are considered to be the easiest and the lowest cost?

Edita lives in a country that is experiencing rapidly expanding current account deficits. Which of the following is likely also happening simultaneously as a result of the inverse relationship between current and financial accounts?

Under a(n)____________ system,the government of a country possesses no responsibility to declare that its currency is convertible into a fixed amount of some other currency.

The World Bank is the international organization that collects balance of payments statistics for over 160 different countries around the world.

The _________ category of the financial account consists of various short-term and long-term trade credits,cross-border loans,currency and bank deposits,and other accounts receivable and payable related to cross-border trade.

The entire BOP of a single country:

Portfolio investment is the net balance of capital that flows in and out of the United States,but does not reach the 10 percent ownership threshold of direct investment.

____________ is the cross-border purchase of assets that are managed in a way that hides the movement of money and its ownership

The period between 1945 and 1971,also known as the __________ era,saw a great expansion of international trade in goods and services.

In recent years,U.S.manufacturing trade has grown,thanks in part to a weaker dollar,more rapid economic growth in Europe,and a substantial increase in agricultural exports.

The __________ is an account in the BOP statement that records transactions involving borrowing,lending,and investing across borders.

The ____________ account is the total currency and metallic reserves held by official monetary authorities within the country.

The BOP is often misunderstood because many people believe it to be a cash flow statement rather than a balance sheet.

Financial instruments that are linked to a specific instrument,indicator,or commodity are called:

All countries possess some amount of trade,most of which is merchandise.

Merchandise trade includes three major components: manufactured goods,agriculture,and:

The BOP is similar to a:

The __________ is an account in the BOP statement that records the results of transactions involving merchandise,services,and unilateral transfers between countries.

___________ refers to the cross-border purchase of assets that are then managed in a way that hides the movement of money and its ownership.