Question 1

Based on Table 9.1,the balance on the financial account is

Accepted Answer

A) +100. 
B) +200. 
C) -100. 
D) -200. 
A) +100. 
B) +200. 
C) -100. 
D) -200.

Question 2

If the current account balance of a country is positive,the country's international investment position

Accepted Answer

A) is positive. 
B) is zero. 
C) is negative. 
D) could be positive, negative, or zero. 
A) is positive. 
B) is zero. 
C) is negative. 
D) could be positive, negative, or zero.

Question 3

Which of the following transactions would be recorded in the current account?

Accepted Answer

A) U)S. investors purchase bonds from Germany. 
B) A person living in the United States sends money home to her family in Cuba. 
C) The Fed increases its holdings of yen. 
D) The U.S. transfers a military base to another country. 
A) U)S. investors purchase bonds from Germany. 
B) A person living in the United States sends money home to her family in Cuba. 
C) The Fed increases its holdings of yen. 
D) The U.S. transfers a military base to another country.

Question 4

Technology transfer is not valuable to high-income countries.

Accepted Answer

A) True 
 B)False

Question 5

If there is a trade deficit,which of the following is true?

Accepted Answer

A) The current account balance could be positive, negative, or zero. 
B) There will be a current account deficit. 
C) There will be a current account surplus. 
D) There will be a financial account surplus. 
A) The current account balance could be positive, negative, or zero. 
B) There will be a current account deficit. 
C) There will be a current account surplus. 
D) There will be a financial account surplus.

Question 6

Use the following table to answer the next question. All values are measured as a percent of GNP.Table 9.2
  
-Based on Table 9.2,total savings,private plus public,is equal to

Accepted Answer

A) 3 percent of GNP. 
B) 18 percent of GNP. 
C) 16 percent of GNP. 
D) 20 percent of GNP. 
A) 3 percent of GNP. 
B) 18 percent of GNP. 
C) 16 percent of GNP. 
D) 20 percent of GNP.

Question 7

Which of the following is an example of a change in reserve assets?

Accepted Answer

A) Toyota builds an automobile plant in Ohio. 
B) The Bank of Japan buys dollars. 
C) A citizen of Japan buys stock in Microsoft. 
D) A citizen of Japan buys a U.S. government bond. 
A) Toyota builds an automobile plant in Ohio. 
B) The Bank of Japan buys dollars. 
C) A citizen of Japan buys stock in Microsoft. 
D) A citizen of Japan buys a U.S. government bond.

Question 8

Describe the political power cost of large capital flows into low-income countries.

Accepted Answer

The Odious Debt situation pointed out th

Question 9

Suppose that Mexico has external debt,and the value of the country's currency,the peso,falls.Which of the following is true?

Accepted Answer

A) The peso value of the loans will decrease as well. 
B) Mexico will find it easier to pay off its external debt. 
C) Mexico will declare bankruptcy. 
D) The cost of debt service will be higher. 
A) The peso value of the loans will decrease as well. 
B) Mexico will find it easier to pay off its external debt. 
C) Mexico will declare bankruptcy. 
D) The cost of debt service will be higher.

Question 10

Borrowing from other countries can lead to economic growth.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is FALSE?

Accepted Answer

A) In 2002, the United States imported more goods and services from foreign suppliers than it exported to foreign purchasers. 
B) Services are almost one-third of total exports and are a growing part of U.S. and world trade. 
C) The U.S. trade balance in services is in deficit. 
D) With the exception of the Gulf War period in 1991, the U.S. current account has been in deficit since the 1980s. 
A) In 2002, the United States imported more goods and services from foreign suppliers than it exported to foreign purchasers. 
B) Services are almost one-third of total exports and are a growing part of U.S. and world trade. 
C) The U.S. trade balance in services is in deficit. 
D) With the exception of the Gulf War period in 1991, the U.S. current account has been in deficit since the 1980s.

Question 12

Which of the following is an example of a financial derivative?

Accepted Answer

A) An option to purchase stock in the future 
B) A share of stock in Microsoft 
C) A U.S. government bond 
D) Monetary gold 
A) An option to purchase stock in the future 
B) A share of stock in Microsoft 
C) A U.S. government bond 
D) Monetary gold

Question 13

Which of the following is NOT a problem with excessive debt?

Accepted Answer

A) It worsens the central government's budget position by adding large debt service payments to other budget items. 
B) It reduces the quantity of resources available to invest in economic development. 
C) If debt service is substantial, schools, health clinics, roads, ports, other infrastructure, and social needs are less likely to be addressed. 
D) It can reduce the chance of a crisis. 
A) It worsens the central government's budget position by adding large debt service payments to other budget items. 
B) It reduces the quantity of resources available to invest in economic development. 
C) If debt service is substantial, schools, health clinics, roads, ports, other infrastructure, and social needs are less likely to be addressed. 
D) It can reduce the chance of a crisis.

Question 14

Which of the following is NOT part of the current account?

Accepted Answer

A) Dividends received on a foreign investment 
B) Purchase of a plane ticket on a foreign airline 
C) Shipment of food aid to a poor country 
D) Purchase of a foreign bond 
A) Dividends received on a foreign investment 
B) Purchase of a plane ticket on a foreign airline 
C) Shipment of food aid to a poor country 
D) Purchase of a foreign bond

Question 15

Based on Table 9.1,the statistical discrepancy is

Accepted Answer

A) +100. 
B) 0) 
C) -100. 
D) -200. 
A) +100. 
B) 0) 
C) -100. 
D) -200.

Question 16

All of the following are true about foreign direct investment (FDI)and portfolio investment except

Accepted Answer

A) increases in the flow of portfolio investments increase the likelihood of financial crisis. 
B) both portfolio investments and FDI are the same in that they both give their holders a claim on the future output of the foreign economy. 
C) FDI is relatively illiquid compared to portfolio investment. 
D) portfolio investments have been on the decline in recent years (or decades). 
A) increases in the flow of portfolio investments increase the likelihood of financial crisis. 
B) both portfolio investments and FDI are the same in that they both give their holders a claim on the future output of the foreign economy. 
C) FDI is relatively illiquid compared to portfolio investment. 
D) portfolio investments have been on the decline in recent years (or decades).

Question 17

Which of the following is NOT true about this national income equation:

Accepted Answer

A) For the current account, CA, to improve, we may have to invest less than otherwise would be the case. 
B) For the current account, CA, to improve, we may have to save less to maintain the same amount of investment that includes foreign saving. 
C) For the current account, CA, to improve, the government may have to run budget surplus. 
D) A reduction in the trade deficit with one country will simply show up as an increase in a trade deficit with another country. 
A) For the current account, CA, to improve, we may have to invest less than otherwise would be the case. 
B) For the current account, CA, to improve, we may have to save less to maintain the same amount of investment that includes foreign saving. 
C) For the current account, CA, to improve, the government may have to run budget surplus. 
D) A reduction in the trade deficit with one country will simply show up as an increase in a trade deficit with another country.

Question 18

The international investment position is defined as

Accepted Answer

A) the total of all domestic assets owned by foreigners minus the total of all foreign assets owned by residents of the home country. 
B) the total of all domestic assets owned by foreigners plus the total of all foreign assets owned by residents of the home country. 
C) the total of all foreign assets owned by residents of the home country minus the total of all domestic assets owned by foreigners. 
D) the total of all foreign assets owned by residents of the home country times the total of all domestic assets owned by foreigners. 
A) the total of all domestic assets owned by foreigners minus the total of all foreign assets owned by residents of the home country. 
B) the total of all domestic assets owned by foreigners plus the total of all foreign assets owned by residents of the home country. 
C) the total of all foreign assets owned by residents of the home country minus the total of all domestic assets owned by foreigners. 
D) the total of all foreign assets owned by residents of the home country times the total of all domestic assets owned by foreigners.

Question 19

Capital inflows that take the form of direct investment may be particularly beneficial if they bring new technologies,new management techniques,and new ideas to the host country.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is NOT true about the national income identity given by the equation: S + (T -G)= I + CA?

Accepted Answer

A) If CA is positive, national saving finances the purchase of our goods by foreign users. 
B) If CA is negative, our investment is less than our national savings. 
C) A negative CA may imply that foreigners have confidence in the U.S. economy. 
D) If CA is negative and large, a country risks foreigners owning a large piece of its assets. 
A) If CA is positive, national saving finances the purchase of our goods by foreign users. 
B) If CA is negative, our investment is less than our national savings. 
C) A negative CA may imply that foreigners have confidence in the U.S. economy. 
D) If CA is negative and large, a country risks foreigners owning a large piece of its assets.

Based on Table 9.1,the balance on the financial account is

If the current account balance of a country is positive,the country's international investment position

Which of the following transactions would be recorded in the current account?

Technology transfer is not valuable to high-income countries.

If there is a trade deficit,which of the following is true?

Use the following table to answer the next question. All values are measured as a percent of GNP.Table 9.2 -Based on Table 9.2,total savings,private plus public,is equal to

Which of the following is an example of a change in reserve assets?

Describe the political power cost of large capital flows into low-income countries.

Suppose that Mexico has external debt,and the value of the country's currency,the peso,falls.Which of the following is true?

Borrowing from other countries can lead to economic growth.

Which of the following is FALSE?

Which of the following is an example of a financial derivative?

Which of the following is NOT a problem with excessive debt?

Which of the following is NOT part of the current account?

Based on Table 9.1,the statistical discrepancy is

All of the following are true about foreign direct investment (FDI)and portfolio investment except

Which of the following is NOT true about this national income equation:

The international investment position is defined as

Capital inflows that take the form of direct investment may be particularly beneficial if they bring new technologies,new management techniques,and new ideas to the host country.

Which of the following is NOT true about the national income identity given by the equation: S + (T -G)= I + CA?

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

Based on Table 9.1,the balance on the financial account is

If the current account balance of a country is positive,the country's international investment position

Which of the following transactions would be recorded in the current account?

Technology transfer is not valuable to high-income countries.

If there is a trade deficit,which of the following is true?

Use the following table to answer the next question. All values are measured as a percent of GNP.Table 9.2 -Based on Table 9.2,total savings,private plus public,is equal to

Which of the following is an example of a change in reserve assets?

Describe the political power cost of large capital flows into low-income countries.

Suppose that Mexico has external debt,and the value of the country's currency,the peso,falls.Which of the following is true?

Borrowing from other countries can lead to economic growth.

Which of the following is FALSE?

Which of the following is an example of a financial derivative?

Which of the following is NOT a problem with excessive debt?

Which of the following is NOT part of the current account?

Based on Table 9.1,the statistical discrepancy is

All of the following are true about foreign direct investment (FDI)and portfolio investment except

Which of the following is NOT true about this national income equation:

The international investment position is defined as

Capital inflows that take the form of direct investment may be particularly beneficial if they bring new technologies,new management techniques,and new ideas to the host country.

Which of the following is NOT true about the national income identity given by the equation: S + (T -G)= I + CA?

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