Question 1

The financial account consists COMPLETELY of which three components?

Accepted Answer

A)  stock investment, bond investment, and mutual fund investment 
B)  direct investment, stock investment, and bond investment 
C)  direct investment, portfolio investment, and other asset investment 
D)  mutual fund investment, portfolio investment, and stock investment 
A)  stock investment, bond investment, and mutual fund investment 
B)  direct investment, stock investment, and bond investment 
C)  direct investment, portfolio investment, and other asset investment 
D)  mutual fund investment, portfolio investment, and stock investment C

Question 2

Assume 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

Accepted Answer

A)  services trade. 
B)  income trade. 
C)  goods trade. 
D)  current transfers. 
A)  services trade. 
B)  income trade. 
C)  goods trade. 
D)  current transfers. B

Question 3

Which of the following is NOT an item to be considered in BOP calculations?

Accepted Answer

A)  A foreign resident purchases a U.S. Treasury Bill. 
B)  A U.S.-based firm manages the development of an oil field in Kazakhstan. 
C)  A consumer buys a VCR made in Korea from a Wal-Mart store. 
D)  A U.S. citizen living in Minnesota travels to Winnipeg, Canada and buys a case of LaBatt's Canadian beer. 
A)  A foreign resident purchases a U.S. Treasury Bill. 
B)  A U.S.-based firm manages the development of an oil field in Kazakhstan. 
C)  A consumer buys a VCR made in Korea from a Wal-Mart store. 
D)  A U.S. citizen living in Minnesota travels to Winnipeg, Canada and buys a case of LaBatt's Canadian beer. C

Question 4

Which of the following could be considered a typical BOP transaction?

Accepted Answer

A)  An American tourist purchases a hotel room in Guanajuato, Mexico. 
B)  Mountaineers from Colorado, USA, pay for guides for their assent of Mt. Everest. 
C)  General Electric Inc. pays for a new manufacturing facility in Chile. 
D)  All of the above are BOP transactions. 
A)  An American tourist purchases a hotel room in Guanajuato, Mexico. 
B)  Mountaineers from Colorado, USA, pay for guides for their assent of Mt. Everest. 
C)  General Electric Inc. pays for a new manufacturing facility in Chile. 
D)  All of the above are BOP transactions.

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

China's "double surplus" in the current account and the financial account is typical for large economies in the modern era.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  transfers via the usual international payments mechanism such as regular bank transfers 
B)  transfers via a physical bearer such as smuggling 
C)  the transfer of cash into collectibles 
D)  All of the above are mechanisms for moving capital from country to country. 
A)  transfers via the usual international payments mechanism such as regular bank transfers 
B)  transfers via a physical bearer such as smuggling 
C)  the transfer of cash into collectibles 
D)  All of the above are mechanisms for moving capital from country to country.

Question 8

The travel services provided to international travelers by United Airlines would be recorded in the current account subcategory of

Accepted Answer

A)  services trade. 
B)  income trade. 
C)  goods trade. 
D)  current transfers. 
A)  services trade. 
B)  income trade. 
C)  goods trade. 
D)  current transfers.

Question 9

________ has increasingly focused on cost reduction through imports from less costly (lower wage) foreign locations.

Accepted Answer

A)  Exchange rate management 
B)  Inflation rate management 
C)  Supply chain management 
D)  Interest rate management 
A)  Exchange rate management 
B)  Inflation rate management 
C)  Supply chain management 
D)  Interest rate management

Question 10

Which of the following is NOT part of the balance of payments account?

Accepted Answer

A)  the current account 
B)  the financial/capital account 
C)  the official reserves account 
D)  All of the above are BOP accounts. 
A)  the current account 
B)  the financial/capital account 
C)  the official reserves account 
D)  All of the above are BOP accounts.

Question 11

A positive current account balance (surplus) contributes directly to increasing the measure of GDP.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

When categorizing investments for the financial account component of the balance of payments the ________ is an investment where the investor has no control whereas the ________ is an investment where the investor has control over the asset.

Accepted Answer

A)  direct investment; portfolio investment 
B)  direct investment; indirect investment 
C)  portfolio investment; indirect investment 
D)  portfolio investment; direct investment 
A)  direct investment; portfolio investment 
B)  direct investment; indirect investment 
C)  portfolio investment; indirect investment 
D)  portfolio investment; direct investment

Question 14

International debt security purchases and sales are defined as portfolio investments for financial account purposes because by definition debt securities do not provide the buyer with ownership or control.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following would NOT be considered a typical BOP transaction?

Accepted Answer

A)  Toyota U.S.A. is a U.S. distributor of automobiles manufactured in Japan by its parent company. 
B)  The U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich. 
C)  A U.S. tourist purchases gifts at a museum in London. 
D)  All are example of BOP transactions. 
A)  Toyota U.S.A. is a U.S. distributor of automobiles manufactured in Japan by its parent company. 
B)  The U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich. 
C)  A U.S. tourist purchases gifts at a museum in London. 
D)  All are example of BOP transactions.

Question 16

It is possible that the J-curve path for BOT adjustments may 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.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

The two major concerns about foreign direct investment are

Accepted Answer

A)  national defense and taxes. 
B)  who controls the assets and who receives the profits. 
C)  who receives the profits and taxes. 
D)  who pays the taxes and who receives the taxes. 
A)  national defense and taxes. 
B)  who controls the assets and who receives the profits. 
C)  who receives the profits and taxes. 
D)  who pays the taxes and who receives the taxes.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

The subcategory that typically dominates the current account is

Accepted Answer

A)  goods (merchandise) trade. 
B)  services trade. 
C)  income trade. 
D)  transfer accounts. 
A)  goods (merchandise) trade. 
B)  services trade. 
C)  income trade. 
D)  transfer accounts.

The financial account consists COMPLETELY of which three components?

Assume 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

Which of the following is NOT an item to be considered in BOP calculations?

Which of the following could be considered a typical BOP transaction?

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

China's "double surplus" in the current account and the financial account is typical for large economies in the modern era.

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

The travel services provided to international travelers by United Airlines would be recorded in the current account subcategory of

________ has increasingly focused on cost reduction through imports from less costly (lower wage) foreign locations.

Which of the following is NOT part of the balance of payments account?

A positive current account balance (surplus) contributes directly to increasing the measure of GDP.

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

When categorizing investments for the financial account component of the balance of payments the is an investment where the investor has no control whereas the is an investment where the investor has control over the asset.

International debt security purchases and sales are defined as portfolio investments for financial account purposes because by definition debt securities do not provide the buyer with ownership or control.

Which of the following would NOT be considered a typical BOP transaction?

It is possible that the J-curve path for BOT adjustments may 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.

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

The two major concerns about foreign direct investment are

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

The subcategory that typically dominates the current account is

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

Exam 3: The Balance of Payments

The financial account consists COMPLETELY of which three components?

Assume 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

Which of the following is NOT an item to be considered in BOP calculations?

Which of the following could be considered a typical BOP transaction?

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

China's "double surplus" in the current account and the financial account is typical for large economies in the modern era.

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

The travel services provided to international travelers by United Airlines would be recorded in the current account subcategory of

________ has increasingly focused on cost reduction through imports from less costly (lower wage) foreign locations.

Which of the following is NOT part of the balance of payments account?

A positive current account balance (surplus) contributes directly to increasing the measure of GDP.

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

When categorizing investments for the financial account component of the balance of payments the ________ is an investment where the investor has no control whereas the ________ is an investment where the investor has control over the asset.

International debt security purchases and sales are defined as portfolio investments for financial account purposes because by definition debt securities do not provide the buyer with ownership or control.

Which of the following would NOT be considered a typical BOP transaction?

It is possible that the J-curve path for BOT adjustments may 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.

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

The two major concerns about foreign direct investment are

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

The subcategory that typically dominates the current account is

Multinational Financial Management: Opportunities and Challenges

The International Monetary System

Financial Goals and Corporate Governance

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Trade Finance

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Filters

When categorizing investments for the financial account component of the balance of payments the is an investment where the investor has no control whereas the is an investment where the investor has control over the asset.