Question 1

________ is necessary to "balance" the BOP statement.

Accepted Answer

A) Reserve inflow 
B) Statistical discrepancy 
C) Debit transaction 
D) Credit transaction 
A) Reserve inflow 
B) Statistical discrepancy 
C) Debit transaction 
D) Credit transaction

Question 2

The current account can be defined as exports plus imports.

Accepted Answer

A) True 
 B)False

Question 3

With fixed exchange rates,central banks must finance trade deficits,allow a devaluation,or else use trade restrictions to restore equilibrium.

Accepted Answer

A) True 
 B)False

Question 4

The U.S.is the world's largest creditor.

Accepted Answer

A) True 
 B)False

Question 5

The current account must necessarily always be in balance.

Accepted Answer

A) True 
 B)False

Question 6

National saving minus investment equals the current account.

Accepted Answer

A) True 
 B)False

Question 7

Interest earned on foreign holdings of U.S.federal,state and local government debt are recorded in the

Accepted Answer

A) services account. 
B) merchandise account. 
C) transfers account. 
D) capital account. 
A) services account. 
B) merchandise account. 
C) transfers account. 
D) capital account.

Question 8

With flexible exchange rates,central banks do not have to finance deficits because BOP equilibrium is restored by changes in exchange rates.

Accepted Answer

A) True 
 B)False

Question 9

Explain how BOP disequilibrium is restored under
(a) flexible exchange rates.
(b) fixed exchange rates,after you define what a BOP disequilibrium means.

Accepted Answer

(a) It is restored by exchange

Question 10

The United States became a net international debtor in 1985 for the first time since World War I.

Accepted Answer

A) True 
 B)False

Question 11

A current account surplus 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 12

How are the following transactions entered into the U.S.balance of payments?
(a) The U.S.government sends $2,000 worth of food aid to Africa.
(b) A U.S.firm exports $10,000 worth of goods to the United Kingdom,payable in 3 months.
(c) A U.S.tourist in Amsterdam spends $200 for food and hotels.

Accepted Answer

(a) The United States debits unilateral

Question 13

________ indicates whether a country is a net borrower from or lender to the rest of the world.

Accepted Answer

A) The basic balance 
B) The liquidity balance 
C) The capital account 
D) The current account 
A) The basic balance 
B) The liquidity balance 
C) The capital account 
D) The current account

Question 14

In the mid 1980s,the massive current account deficits were related to massive U.S.government budget deficits.

Accepted Answer

A) True 
 B)False

Question 15

International Reserve assets are comprised of gold,foreign exchange,and IMF special drawing rights.

Accepted Answer

A) True 
 B)False

Question 16

The current account includes

Accepted Answer

A) the value of trade in merchandise. 
B) services. 
C) unilateral transfers. 
D) All of the above. 
A) the value of trade in merchandise. 
B) services. 
C) unilateral transfers. 
D) All of the above.

Question 17

Define the official settlements balance. Is there any difference between the United States and other countries in terms of what this balance measures? How does this affect the ability of the countries to run current account deficits?

Accepted Answer

For most countries it measures internati

Question 18

The payment of a dividend by an American company to a foreign 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 19

The Balance of Payments always balances.

Accepted Answer

A) True 
 B)False

Question 20

The excess of total credits over total debits in the current and private capital accounts is called the

Accepted Answer

A) BOP deficit. 
B) BOP surplus. 
C) official settlements account surplus. 
D) official settlements account deficit. 
A) BOP deficit. 
B) BOP surplus. 
C) official settlements account surplus. 
D) official settlements account deficit.

________ is necessary to "balance" the BOP statement.

The current account can be defined as exports plus imports.

With fixed exchange rates,central banks must finance trade deficits,allow a devaluation,or else use trade restrictions to restore equilibrium.

The U.S.is the world's largest creditor.

The current account must necessarily always be in balance.

National saving minus investment equals the current account.

Interest earned on foreign holdings of U.S.federal,state and local government debt are recorded in the

With flexible exchange rates,central banks do not have to finance deficits because BOP equilibrium is restored by changes in exchange rates.

Explain how BOP disequilibrium is restored under (a) flexible exchange rates. (b) fixed exchange rates,after you define what a BOP disequilibrium means.

The United States became a net international debtor in 1985 for the first time since World War I.

A current account surplus implies that

How are the following transactions entered into the U.S.balance of payments? (a) The U.S.government sends $2,000 worth of food aid to Africa. (b) A U.S.firm exports $10,000 worth of goods to the United Kingdom,payable in 3 months. (c) A U.S.tourist in Amsterdam spends $200 for food and hotels.

________ indicates whether a country is a net borrower from or lender to the rest of the world.

In the mid 1980s,the massive current account deficits were related to massive U.S.government budget deficits.

International Reserve assets are comprised of gold,foreign exchange,and IMF special drawing rights.

The current account includes

Define the official settlements balance. Is there any difference between the United States and other countries in terms of what this balance measures? How does this affect the ability of the countries to run current account deficits?

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

The Balance of Payments always balances.

The excess of total credits over total debits in the current and private capital accounts is called the

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

________ is necessary to "balance" the BOP statement.

The current account can be defined as exports plus imports.

With fixed exchange rates,central banks must finance trade deficits,allow a devaluation,or else use trade restrictions to restore equilibrium.

The U.S.is the world's largest creditor.

The current account must necessarily always be in balance.

National saving minus investment equals the current account.

Interest earned on foreign holdings of U.S.federal,state and local government debt are recorded in the

With flexible exchange rates,central banks do not have to finance deficits because BOP equilibrium is restored by changes in exchange rates.

Explain how BOP disequilibrium is restored under (a) flexible exchange rates. (b) fixed exchange rates,after you define what a BOP disequilibrium means.

The United States became a net international debtor in 1985 for the first time since World War I.

A current account surplus implies that

How are the following transactions entered into the U.S.balance of payments? (a) The U.S.government sends $2,000 worth of food aid to Africa. (b) A U.S.firm exports $10,000 worth of goods to the United Kingdom,payable in 3 months. (c) A U.S.tourist in Amsterdam spends $200 for food and hotels.

________ indicates whether a country is a net borrower from or lender to the rest of the world.

In the mid 1980s,the massive current account deficits were related to massive U.S.government budget deficits.

International Reserve assets are comprised of gold,foreign exchange,and IMF special drawing rights.

The current account includes

Define the official settlements balance. Is there any difference between the United States and other countries in terms of what this balance measures? How does this affect the ability of the countries to run current account deficits?

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

The Balance of Payments always balances.

The excess of total credits over total debits in the current and private capital accounts is called the

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