Exam 4: The Balance of Payments

China, as of May 2007, had the largest official foreign exchange reserves of any nation.

The subcategory that typically dominates the current account is ________.

Which of the following would NOT be considered a direct investment either into or from the United States?

What is the Official Reserves Account (ORA) and why is it more important for countries under a fixed exchange rate regime than for ones under a floating exchange rate regime?

The BOP must be in balance but the current account need not be.

It is possible that the J-curve path for BOT adjustments may be be elongated or even inapplicable if exports are NOT predominately priced in the domestic currency and/or imports are NOT predominately priced in the foreign currency.

Anaconda Copper Inc. created a subsidiary in Chile last year to mine copper ore. The proportion of net income paid back to the parent company as a dividend would be recorded in the current account subcategory of ________.

The J-curve adjustment path for trade balance adjustments assumes that ________ products are predominantly priced in the domestic currency and that ________ products are predominantly priced in the foreign currency

The United States, as of May 2007, had the largest official foreign exchange reserves of any nation.

In general, a country's exports decrease as foreign income decreases.

Portfolio investment is capital invested in activities that are ________ rather than made for ________.

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

Which of the following does NOT represent a possible mechanism by which capital can be moved from country to country?

In general, as a country's income increases, so does the demand for imports.

An excess of merchandise exports over merchandise imports results in a balance of trade deficit.

In general, the United States goods trade balance has grown increasingly positive over the last 3 years.

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

If most major economies are operating under a regime of fixed exchange rates, then a ________ in a country's balance of payments suggests that the country should ________ its currency.

Because current and financial/capital account balances use double-entry book keeping it is unusual to find serious discrepancies in the debits and credits.

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