Question 1

Debt service

Accepted Answer

A) is rarely an issue for high-income countries. 
B) always makes a country worse off for having borrowed. 
C) is a problem when the amount of debt is small relative to the size of the economy. 
D) tends to benefit low- and middle-income countries at the expense of high-income countries. 
A) is rarely an issue for high-income countries. 
B) always makes a country worse off for having borrowed. 
C) is a problem when the amount of debt is small relative to the size of the economy. 
D) tends to benefit low- and middle-income countries at the expense of high-income countries.

Question 2

Which of the following is FALSE about the Highly Indebted Poor Countries initiative?

Accepted Answer

A) Most of the countries included are in sub-Saharan Africa. 
B) Countries qualify for debt relief partly based on their level of poverty. 
C) Countries do not have to have established a past track record of economic reform in order to qualify as long as they make future commitments. 
D) External debt levels must be high relative to exports in order to qualify. 
A) Most of the countries included are in sub-Saharan Africa. 
B) Countries qualify for debt relief partly based on their level of poverty. 
C) Countries do not have to have established a past track record of economic reform in order to qualify as long as they make future commitments. 
D) External debt levels must be high relative to exports in order to qualify.

Question 3

Which of the following is FALSE?

Accepted Answer

A) Current account deficits must be financed through inflows of capital. 
B) Loans from abroad add to a country's stock of external debt and generate debt service. 
C) Borrowed funds are always used in a manner that contributes to the expansion of the country's productive capability. 
D) Debt service can become an unsustainable burden that holds back development. 
A) Current account deficits must be financed through inflows of capital. 
B) Loans from abroad add to a country's stock of external debt and generate debt service. 
C) Borrowed funds are always used in a manner that contributes to the expansion of the country's productive capability. 
D) Debt service can become an unsustainable burden that holds back development.

Question 4

A country that runs out of official reserve assets

Accepted Answer

A) cannot settle international debts. 
B) is bankrupt. 
C) will have a current account deficit. 
D) will have a current account surplus. 
A) cannot settle international debts. 
B) is bankrupt. 
C) will have a current account deficit. 
D) will have a current account surplus.

Question 5

External debt is not usually a problem for high-income countries for which of the following reasons?

Accepted Answer

A) High-income countries take out loans denominated in their own currency. 
B) High-income countries do not need to borrow. 
C) High-income countries are too large to default on loans. 
D) High-income countries use loans to build infrastructure and create economic growth. 
A) High-income countries take out loans denominated in their own currency. 
B) High-income countries do not need to borrow. 
C) High-income countries are too large to default on loans. 
D) High-income countries use loans to build infrastructure and create economic growth.

Question 6

What were some of the consequences of the large current account deficits that the U.S.ran from the 1990s to 2007?

Accepted Answer

The housing boom of the 2000s and the co

Question 7

Technology transfer comes only from nations importing new capital goods in the current account.

Accepted Answer

A) True 
 B)False

Question 8

Briefly describe the factors that contributed to the U.S.current account deficits of the 1990s.

Accepted Answer

Rapid U.S.economic growth rais

Question 9

Global capital flows have completely broken the link between domestic savings and domestic investment.

Accepted Answer

A) True 
 B)False

Question 10

Capital inflows in the form of direct investment can provide ________; this is a ________ of capital inflows.

Accepted Answer

A) access to political power; cost 
B) access to political power; benefit 
C) increases in external debt; cost 
D) decreases in external debt; benefit 
A) access to political power; cost 
B) access to political power; benefit 
C) increases in external debt; cost 
D) decreases in external debt; benefit

Question 11

Purchases of stocks and bonds are recorded in the capital account.

Accepted Answer

A) True 
 B)False

Question 12

For countries such as the United States and the United Kingdom,it is important to have trade surpluses in order to service their external debts.

Accepted Answer

A) True 
 B)False

Question 13

Between 1972 and 1999,the majority of loans to HIPC countries went to regimes considered "not free," and between 1985 and 1995,to places that were considered "corrupt" by international organizations.

Accepted Answer

A) True 
 B)False

Question 14

The government budget deficit and the trade deficit are often called the "twin deficits." Explain why this name applies,and why it is not always accurate.

Accepted Answer

All other things equal,an increase in go

Question 15

All other things equal,an increase in government spending that is NOT funded by taxes will

Accepted Answer

A) have an undetermined effect on the current account. 
B) have no effect on the current account. 
C) increase the current account deficit. 
D) decrease the current account deficit. 
A) have an undetermined effect on the current account. 
B) have no effect on the current account. 
C) increase the current account deficit. 
D) decrease the current account deficit.

Question 16

In most of the financial crises of the last decade,there were large and sudden financial outflows as both home and foreign investors tried to avoid the expected crises.

Accepted Answer

A) True 
 B)False

Question 17

If the residents of a country receive income from their foreign investments,it is counted as a

Accepted Answer

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

Question 18

Ultimate solutions to the problems of unsustainable debt must take into account the incentives for lenders to make loans.

Accepted Answer

A) True 
 B)False

Question 19

Technology transfer

Accepted Answer

A) is not encouraged by low-income countries. 
B) is not beneficial to high-income countries. 
C) is a consequence of direct investment. 
D) is a consequence of all foreign investment. 
A) is not encouraged by low-income countries. 
B) is not beneficial to high-income countries. 
C) is a consequence of direct investment. 
D) is a consequence of all foreign investment.

Question 20

An increase in government budget deficits will necessarily be associated with an worsening of the current account balance.

Accepted Answer

A) True 
 B)False

Debt service

Which of the following is FALSE about the Highly Indebted Poor Countries initiative?

Which of the following is FALSE?

A country that runs out of official reserve assets

External debt is not usually a problem for high-income countries for which of the following reasons?

What were some of the consequences of the large current account deficits that the U.S.ran from the 1990s to 2007?

Technology transfer comes only from nations importing new capital goods in the current account.

Briefly describe the factors that contributed to the U.S.current account deficits of the 1990s.

Global capital flows have completely broken the link between domestic savings and domestic investment.

Capital inflows in the form of direct investment can provide ; this is a of capital inflows.

Purchases of stocks and bonds are recorded in the capital account.

For countries such as the United States and the United Kingdom,it is important to have trade surpluses in order to service their external debts.

Between 1972 and 1999,the majority of loans to HIPC countries went to regimes considered "not free," and between 1985 and 1995,to places that were considered "corrupt" by international organizations.

The government budget deficit and the trade deficit are often called the "twin deficits." Explain why this name applies,and why it is not always accurate.

All other things equal,an increase in government spending that is NOT funded by taxes will

In most of the financial crises of the last decade,there were large and sudden financial outflows as both home and foreign investors tried to avoid the expected crises.

If the residents of a country receive income from their foreign investments,it is counted as a

Ultimate solutions to the problems of unsustainable debt must take into account the incentives for lenders to make loans.

Technology transfer

An increase in government budget deficits will necessarily be associated with an worsening of the current account balance.

The United States in a Global Economy

International Economic Institutions Since World War II

Comparative Advantage and the Gains From Trade

Comparative Advantage and Factor Endowments

Beyond Comparative Advantage

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

International Financial Crises

The United States in the World Economy

The European Union: Many Markets Into One

Trade and Policy Reform in Latin America

Export-Oriented Growth in East Asia

China and India in the World Economy

Filters

Exam 9: Trade and the Balance of Payments

Debt service

Which of the following is FALSE about the Highly Indebted Poor Countries initiative?

Which of the following is FALSE?

A country that runs out of official reserve assets

External debt is not usually a problem for high-income countries for which of the following reasons?

What were some of the consequences of the large current account deficits that the U.S.ran from the 1990s to 2007?

Technology transfer comes only from nations importing new capital goods in the current account.

Briefly describe the factors that contributed to the U.S.current account deficits of the 1990s.

Global capital flows have completely broken the link between domestic savings and domestic investment.

Capital inflows in the form of direct investment can provide ________; this is a ________ of capital inflows.

Purchases of stocks and bonds are recorded in the capital account.

For countries such as the United States and the United Kingdom,it is important to have trade surpluses in order to service their external debts.

Between 1972 and 1999,the majority of loans to HIPC countries went to regimes considered "not free," and between 1985 and 1995,to places that were considered "corrupt" by international organizations.

The government budget deficit and the trade deficit are often called the "twin deficits." Explain why this name applies,and why it is not always accurate.

All other things equal,an increase in government spending that is NOT funded by taxes will

In most of the financial crises of the last decade,there were large and sudden financial outflows as both home and foreign investors tried to avoid the expected crises.

If the residents of a country receive income from their foreign investments,it is counted as a

Ultimate solutions to the problems of unsustainable debt must take into account the incentives for lenders to make loans.

Technology transfer

An increase in government budget deficits will necessarily be associated with an worsening of the current account balance.

The United States in a Global Economy

International Economic Institutions Since World War II

Comparative Advantage and the Gains From Trade

Comparative Advantage and Factor Endowments

Beyond Comparative Advantage

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

International Financial Crises

The United States in the World Economy

The European Union: Many Markets Into One

Trade and Policy Reform in Latin America

Export-Oriented Growth in East Asia

China and India in the World Economy

Filters

Capital inflows in the form of direct investment can provide ; this is a of capital inflows.