Question 1

For at least the last decade, the United States has consistently run a surplus in services trade income.

Accepted Answer

A) True 
 B)False

Question 2

In 2016 the United States posted a current account deficit. The bulk of the negative value came from:

Accepted Answer

A)  a net transfer deficit. 
B)  an income balance deficit. 
C)  a goods trade deficit. 
D)  an income trade deficit. 
A)  a net transfer deficit. 
B)  an income balance deficit. 
C)  a goods trade deficit. 
D)  an income trade deficit.

Question 3

Under an international regime of fixed exchange rates, countries with a BOP ________ should consider ________ their currency while countries with a BOP ________ should consider ________ their currency.

Accepted Answer

A)  deficit, revaluing; surplus, revaluing 
B)  deficit, devaluing; surplus, devaluing 
C)  surplus, devaluing; deficit, revaluing 
D)  surplus, revaluing; deficit, devaluing 
A)  deficit, revaluing; surplus, revaluing 
B)  deficit, devaluing; surplus, devaluing 
C)  surplus, devaluing; deficit, revaluing 
D)  surplus, revaluing; deficit, devaluing

Question 4

An American tourist purchases a leather jacket while in Italy. Which of the following statements is true?

Accepted Answer

A)  The leather purchase would be considered an import for the U.S. BOP. 
B)  This transaction would be properly accounted for in the Current Account of the U.S. BOP. 
C)  The leather purchase is considered an import of a good, and thus, considered part of the balance of trade as well. 
D)  All of these statements are true. 
A)  The leather purchase would be considered an import for the U.S. BOP. 
B)  This transaction would be properly accounted for in the Current Account of the U.S. BOP. 
C)  The leather purchase is considered an import of a good, and thus, considered part of the balance of trade as well. 
D)  All of these statements are true.

Question 5

Of the following, which is NOT a part of J-Curve adjustment path?

Accepted Answer

A)  the currency contract period 
B)  the exchange rate pass-through period 
C)  the quantity adjustment period 
D)  Each of the above is part of the J-Curve adjustment path. 
A)  the currency contract period 
B)  the exchange rate pass-through period 
C)  the quantity adjustment period 
D)  Each of the above is part of the J-Curve adjustment path.

Question 6

Which of the following is NOT part of the Financial Account of the BOP?

Accepted Answer

A)  net foreign direct investment 
B)  net import/export of services 
C)  net portfolio investment 
D)  other Financial items 
A)  net foreign direct investment 
B)  net import/export of services 
C)  net portfolio investment 
D)  other Financial items

Question 7

Expenditures by U.S. tourists in foreign countries for foreign goods or services are factored into BOP calculations.

Accepted Answer

A) True 
 B)False

Question 8

An increase in GDP should lead to a decrease in imports.

Accepted Answer

A) True 
 B)False

Question 9

International debt security purchases and sales are defined as portfolio investments for financial account purposes because by definition debt securities do not provide the buyer with ownership or control.

Accepted Answer

A) True 
 B)False

Question 10

When the world went to a system of floating exchange rates, the Balance of Payments became a relic of a system of fixed exchange rates and is no longer watched by serious economic groups.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is NOT a major subaccount of the Balance of Payments?

Accepted Answer

A)  the financial account 
B)  the accounts payable 
C)  the capital account 
D)  the current account 
A)  the financial account 
B)  the accounts payable 
C)  the capital account 
D)  the current account

Question 12

This dollar-based fixed exchange rate system gave rise to a long period of economic recovery and growing openness of both international trade and capital flows in and out of more and more countries.

Accepted Answer

A)  The Gold Standard, 1860-1914 
B)  The Interwar Years , 1914-1945 
C)  The Bretton Woods Era, 1945-1971 
D)  The Floating Era, 1971-1997 
A)  The Gold Standard, 1860-1914 
B)  The Interwar Years , 1914-1945 
C)  The Bretton Woods Era, 1945-1971 
D)  The Floating Era, 1971-1997

Question 13

Significant amounts of United States Treasury issues are purchased by foreign investors; therefore, the U.S. must earn foreign currency to repay this debt.

Accepted Answer

A) True 
 B)False

Question 14

The authors identify a tip for understanding BOP accounting. They recommend that you "follow the cash flow."

Accepted Answer

A) True 
 B)False

Question 15

When categorizing investments for the financial account component of the balance of payments the ________ is an investment where the investor has no control whereas the ________ is an investment where the investor has control over the asset.

Accepted Answer

A)  direct investment; portfolio investment 
B)  direct investment; indirect investment 
C)  portfolio investment; indirect investment 
D)  portfolio investment; direct investment 
A)  direct investment; portfolio investment 
B)  direct investment; indirect investment 
C)  portfolio investment; indirect investment 
D)  portfolio investment; direct investment

Question 16

Balance of payment (BOP) data may be important for any of the following reasons:

Accepted Answer

A)  BOP data helps to forecast a country's market potential, especially in the short run. 
B)  The BOP is an important indicator of a country's foreign exchange rate. 
C)  Changes in a country's BOP may signal a change in controls over payment of dividends and interest. 
D)  all of the choices provided above 
A)  BOP data helps to forecast a country's market potential, especially in the short run. 
B)  The BOP is an important indicator of a country's foreign exchange rate. 
C)  Changes in a country's BOP may signal a change in controls over payment of dividends and interest. 
D)  all of the choices provided above

Question 17

If your company were to import and export textiles, the transactions would be recorded in the current account subcategory of:

Accepted Answer

A)  services trade. 
B)  income trade. 
C)  goods trade. 
D)  current transfers. 
A)  services trade. 
B)  income trade. 
C)  goods trade. 
D)  current transfers.

Question 18

The Bretton Woods era realized a great expansion of international trade in goods and services.

Accepted Answer

A) True 
 B)False

Question 19

Long-term capital flows reflect the following factors EXCEPT:

Accepted Answer

A)  short-term interest rate differentials. 
B)  fundamental economic expectations. 
C)  growth prospects. 
D)  perceptions of political stability. 
A)  short-term interest rate differentials. 
B)  fundamental economic expectations. 
C)  growth prospects. 
D)  perceptions of political stability.

Question 20

Which of the following is NOT part of the balance of payments account?

Accepted Answer

A)  the current account 
B)  the financial/capital account 
C)  the official reserves account 
D)  All of the above are BOP accounts. 
A)  the current account 
B)  the financial/capital account 
C)  the official reserves account 
D)  All of the above are BOP accounts.

For at least the last decade, the United States has consistently run a surplus in services trade income.

In 2016 the United States posted a current account deficit. The bulk of the negative value came from:

Under an international regime of fixed exchange rates, countries with a BOP should consider their currency while countries with a BOP should consider their currency.

An American tourist purchases a leather jacket while in Italy. Which of the following statements is true?

Of the following, which is NOT a part of J-Curve adjustment path?

Which of the following is NOT part of the Financial Account of the BOP?

Expenditures by U.S. tourists in foreign countries for foreign goods or services are factored into BOP calculations.

An increase in GDP should lead to a decrease in imports.

International debt security purchases and sales are defined as portfolio investments for financial account purposes because by definition debt securities do not provide the buyer with ownership or control.

When the world went to a system of floating exchange rates, the Balance of Payments became a relic of a system of fixed exchange rates and is no longer watched by serious economic groups.

Which of the following is NOT a major subaccount of the Balance of Payments?

This dollar-based fixed exchange rate system gave rise to a long period of economic recovery and growing openness of both international trade and capital flows in and out of more and more countries.

Significant amounts of United States Treasury issues are purchased by foreign investors; therefore, the U.S. must earn foreign currency to repay this debt.

The authors identify a tip for understanding BOP accounting. They recommend that you "follow the cash flow."

When categorizing investments for the financial account component of the balance of payments the is an investment where the investor has no control whereas the is an investment where the investor has control over the asset.

Balance of payment (BOP) data may be important for any of the following reasons:

If your company were to import and export textiles, the transactions would be recorded in the current account subcategory of:

The Bretton Woods era realized a great expansion of international trade in goods and services.

Long-term capital flows reflect the following factors EXCEPT:

Which of the following is NOT part of the balance of payments account?

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives: Futures and Options

Interest Risk and Swaps

Foreign Exchange Rate Determination and Intervention

Transaction Exposure

Translation Exposure

Operating Exposure

Global Cost and Availability of Capital

Funding the Multinational Firm

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Exam 3: The Balance of Payments

For at least the last decade, the United States has consistently run a surplus in services trade income.

In 2016 the United States posted a current account deficit. The bulk of the negative value came from:

Under an international regime of fixed exchange rates, countries with a BOP ________ should consider ________ their currency while countries with a BOP ________ should consider ________ their currency.

An American tourist purchases a leather jacket while in Italy. Which of the following statements is true?

Of the following, which is NOT a part of J-Curve adjustment path?

Which of the following is NOT part of the Financial Account of the BOP?

Expenditures by U.S. tourists in foreign countries for foreign goods or services are factored into BOP calculations.

An increase in GDP should lead to a decrease in imports.

International debt security purchases and sales are defined as portfolio investments for financial account purposes because by definition debt securities do not provide the buyer with ownership or control.

When the world went to a system of floating exchange rates, the Balance of Payments became a relic of a system of fixed exchange rates and is no longer watched by serious economic groups.

Which of the following is NOT a major subaccount of the Balance of Payments?

This dollar-based fixed exchange rate system gave rise to a long period of economic recovery and growing openness of both international trade and capital flows in and out of more and more countries.

Significant amounts of United States Treasury issues are purchased by foreign investors; therefore, the U.S. must earn foreign currency to repay this debt.

The authors identify a tip for understanding BOP accounting. They recommend that you "follow the cash flow."

When categorizing investments for the financial account component of the balance of payments the ________ is an investment where the investor has no control whereas the ________ is an investment where the investor has control over the asset.

Balance of payment (BOP) data may be important for any of the following reasons:

If your company were to import and export textiles, the transactions would be recorded in the current account subcategory of:

The Bretton Woods era realized a great expansion of international trade in goods and services.

Long-term capital flows reflect the following factors EXCEPT:

Which of the following is NOT part of the balance of payments account?

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives: Futures and Options

Interest Risk and Swaps

Foreign Exchange Rate Determination and Intervention

Transaction Exposure

Translation Exposure

Operating Exposure

Global Cost and Availability of Capital

Funding the Multinational Firm

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Under an international regime of fixed exchange rates, countries with a BOP should consider their currency while countries with a BOP should consider their currency.

When categorizing investments for the financial account component of the balance of payments the is an investment where the investor has no control whereas the is an investment where the investor has control over the asset.