Question 1

The balance of trade records

Accepted Answer

A) trade in financial assets. 
B) the current account plus long-term capital. 
C) the value of merchandise exports minus imports. 
D) short-term capital plus the basic balance. 
A) trade in financial assets. 
B) the current account plus long-term capital. 
C) the value of merchandise exports minus imports. 
D) short-term capital plus the basic balance. C

Question 2

In basic terms,the current account is equal to

Accepted Answer

A) imports plus exports. 
B) savings minus consumption. 
C) exports minus imports. 
D) savings plus exports. 
A) imports plus exports. 
B) savings minus consumption. 
C) exports minus imports. 
D) savings plus exports. C

Question 3

It is possible for every nation to have BOP surpluses.

Accepted Answer

A) True 
 B)False  False

Question 4

Answer the following questions briefly.
(a) Is it possible for each nation to have BOP surpluses? Explain.
(b) What is the "statistical anomaly" that imparts a bias to trade balances?
(c) Is it correct to argue that deficit countries are harmed while surplus countries benefit by international free trade?
(d) How is the balance of payments linked to national saving and investment?

Accepted Answer

(a) No. There is a globally balanced tra

Question 5

Which of the following is included in the capital account in the BOP?

Accepted Answer

A) US-owned assets abroad 
B) US-owned assets in the US 
C) Unilateral transfers 
D) All are included in the capital account. 
A) US-owned assets abroad 
B) US-owned assets in the US 
C) Unilateral transfers 
D) All are included in the capital account.

Question 6

Current account surpluses are offset by

Accepted Answer

A) the liquidity balances. 
B) capital account deficits. 
C) unilateral transfers. 
D) balance of trade surpluses. 
A) the liquidity balances. 
B) capital account deficits. 
C) unilateral transfers. 
D) balance of trade surpluses.

Question 7

A current account deficit implies that

Accepted Answer

A) the country is a net lender with the rest of the world. 
B) the country is running a net capital account surplus. 
C) foreign investment in domestic securities is at very low levels. 
D) All of the above. 
A) the country is a net lender with the rest of the world. 
B) the country is running a net capital account surplus. 
C) foreign investment in domestic securities is at very low levels. 
D) All of the above.

Question 8

Security purchases by citizens of the United States on foreigners markets is

Accepted Answer

A) a credit item in the current account. 
B) a debit item in the capital account. 
C) a credit item in the capital account. 
D) a debit item in the current account. 
A) a credit item in the current account. 
B) a debit item in the capital account. 
C) a credit item in the capital account. 
D) a debit item in the current account.

Question 9

Direct investment and security purchases are included in

Accepted Answer

A) current account items. 
B) capital account items. 
C) basic balance account items. 
D) unilateral transfers. 
A) current account items. 
B) capital account items. 
C) basic balance account items. 
D) unilateral transfers.

Question 10

________ is the largest international debtor in the world.

Accepted Answer

A) Brazil 
B) Mexico 
C) Italy 
D) The United States 
A) Brazil 
B) Mexico 
C) Italy 
D) The United States

Question 11

Debit entries on the Balance of Payments are the entries that would

Accepted Answer

A) mean a loss of foreign exchange. 
B) bring foreign exchange into the country. 
C) indicate a surplus exists. 
D) exist at the bottom line after all accounts are totaled. 
A) mean a loss of foreign exchange. 
B) bring foreign exchange into the country. 
C) indicate a surplus exists. 
D) exist at the bottom line after all accounts are totaled.

Question 12

The payment of a dividend by a foreign company to an American stockholder represents

Accepted Answer

A) a debit in the U.S. capital account. 
B) a credit in the U.S. current account. 
C) a credit in the U.S. official reserve account. 
D) a debit in the U.S. current account. 
A) a debit in the U.S. capital account. 
B) a credit in the U.S. current account. 
C) a credit in the U.S. official reserve account. 
D) a debit in the U.S. current account.

Question 13

The current account is equal to

Accepted Answer

A) S - I. 
B) C + I + G + X. 
C) I + X. 
D) T - G. 
A) S - I. 
B) C + I + G + X. 
C) I + X. 
D) T - G.

Question 14

Merchandise exports minus imports equal the

Accepted Answer

A) basic balance. 
B) liquidity balance. 
C) official settlements balance. 
D) balance of trade. 
A) basic balance. 
B) liquidity balance. 
C) official settlements balance. 
D) balance of trade.

Question 15

If domestic saving exceeds investment,there will be a current account surplus.

Accepted Answer

A) True 
 B)False

Question 16

International free trade always hurts the nations that run deficits,and benefits the nations that run surpluses.

Accepted Answer

A) True 
 B)False

Question 17

Current account deficits are offset by

Accepted Answer

A) the liquidity balances. 
B) capital account surpluses. 
C) the basic balance. 
D) balance of trade surpluses. 
A) the liquidity balances. 
B) capital account surpluses. 
C) the basic balance. 
D) balance of trade surpluses.

Question 18

The United States finances current account deficits largely with dollars and,as a result,faces almost no constraint on its ability to run deficits.

Accepted Answer

A) True 
 B)False

Question 19

In international finance,what does SDR stand for?

Accepted Answer

A) Special Drawing Rights. 
B) Single Deposit Reserve. 
C) Savings Deposit Ratio. 
D) Single Demand Remittance. 
A) Special Drawing Rights. 
B) Single Deposit Reserve. 
C) Savings Deposit Ratio. 
D) Single Demand Remittance.

Question 20

Credit entries on the Balance of Payments are the entries that would

Accepted Answer

A) mean a loss of foreign exchange. 
B) bring foreign exchange into the country. 
C) indicate a surplus exists. 
D) exist at the bottom line after all accounts are totaled. 
A) mean a loss of foreign exchange. 
B) bring foreign exchange into the country. 
C) indicate a surplus exists. 
D) exist at the bottom line after all accounts are totaled.

The balance of trade records

In basic terms,the current account is equal to

It is possible for every nation to have BOP surpluses.

Which of the following is included in the capital account in the BOP?

Current account surpluses are offset by

A current account deficit implies that

Security purchases by citizens of the United States on foreigners markets is

Direct investment and security purchases are included in

________ is the largest international debtor in the world.

Debit entries on the Balance of Payments are the entries that would

The payment of a dividend by a foreign company to an American stockholder represents

The current account is equal to

Merchandise exports minus imports equal the

If domestic saving exceeds investment,there will be a current account surplus.

International free trade always hurts the nations that run deficits,and benefits the nations that run surpluses.

Current account deficits are offset by

The United States finances current account deficits largely with dollars and,as a result,faces almost no constraint on its ability to run deficits.

In international finance,what does SDR stand for?

Credit entries on the Balance of Payments are the entries that would

An Introduction to International Trade

Tools of Analysis for International Trade Models

The Classical Model of International Trade

The Heckscher-Ohlin Model

Tests of Trade Models: the Leontief Paradox and Its Aftermath

Tariffs

Nontariff Barriers and Arguments for Protection

Commercial Policy: History and Practice

Preferential Trade Agreements

International Trade and Economic Growth

The Foreign Exchange Market

International Monetary Systems

Exchange Rates in the Short Run

Exchange Rates in the Long Run

Theories of the Current Account Balance

Open Economy Macroeconomics

International Banking, debt and Risk

Filters

Exam 11: The Balance of Payments

The balance of trade records

In basic terms,the current account is equal to

It is possible for every nation to have BOP surpluses.

Which of the following is included in the capital account in the BOP?

Current account surpluses are offset by

A current account deficit implies that

Security purchases by citizens of the United States on foreigners markets is

Direct investment and security purchases are included in

________ is the largest international debtor in the world.

Debit entries on the Balance of Payments are the entries that would

The payment of a dividend by a foreign company to an American stockholder represents

The current account is equal to

Merchandise exports minus imports equal the

If domestic saving exceeds investment,there will be a current account surplus.

International free trade always hurts the nations that run deficits,and benefits the nations that run surpluses.

Current account deficits are offset by

The United States finances current account deficits largely with dollars and,as a result,faces almost no constraint on its ability to run deficits.

In international finance,what does SDR stand for?

Credit entries on the Balance of Payments are the entries that would

An Introduction to International Trade

Tools of Analysis for International Trade Models

The Classical Model of International Trade

The Heckscher-Ohlin Model

Tests of Trade Models: the Leontief Paradox and Its Aftermath

Tariffs

Nontariff Barriers and Arguments for Protection

Commercial Policy: History and Practice

Preferential Trade Agreements

International Trade and Economic Growth

The Foreign Exchange Market

International Monetary Systems

Exchange Rates in the Short Run

Exchange Rates in the Long Run

Theories of the Current Account Balance

Open Economy Macroeconomics

International Banking, debt and Risk

Filters