Question 1

When Honda,a Japanese auto maker,built a factory in Ohio,

Accepted Answer

A) it was engaged in foreign direct investment. 
B) it was engaged in portfolio investment. 
C) it was engaged in a cross-border acquisition. 
D) none of the above. 
A) it was engaged in foreign direct investment. 
B) it was engaged in portfolio investment. 
C) it was engaged in a cross-border acquisition. 
D) none of the above.

Question 2

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.This relationship is given by BCA  $\equiv$ X - M  $\equiv$ (S - I)+ (T - G).Given this,in order for a country to reduce a BCA deficit,which of the following must occur?

Accepted Answer

A) For a given level of S and I, the government budget deficit (T - G) must be reduced. 
B) For a given level of I and (T - G), S must be increased. 
C) For a given level of S and (T - G), I must fall. 
D) All of the above would work to reduce a BCA deficit. 
A) For a given level of S and I, the government budget deficit (T - G) must be reduced. 
B) For a given level of I and (T - G), S must be increased. 
C) For a given level of S and (T - G), I must fall. 
D) All of the above would work to reduce a BCA deficit.

Question 3

The capital account includes

Accepted Answer

A) the export and import of goods and services. 
B) all purchases and sales of assets such as stocks, bonds, bank accounts, real estate, and businesses. 
C) all purchases and sales of international reserve assets such as dollars, foreign exchanges, gold, and special drawing rights (SDRs). 
D) none of the above 
A) the export and import of goods and services. 
B) all purchases and sales of assets such as stocks, bonds, bank accounts, real estate, and businesses. 
C) all purchases and sales of international reserve assets such as dollars, foreign exchanges, gold, and special drawing rights (SDRs). 
D) none of the above

Question 4

Among IMF member countries,the dollar's dominant position in the world's reserve holdings may decline to a certain extent as the euro becomes a "known quantity" and its external value becomes more stable.In fact,the euro's share has increased

Accepted Answer

A) from zero percent in 1999 to 25.8 percent in 2006. 
B) from 13.5 percent in 1999 to 25.8 percent in 2006. 
C) from 13.5 percent in 1999 to 52.8 percent in 2006. 
D) none of the above 
A) from zero percent in 1999 to 25.8 percent in 2006. 
B) from 13.5 percent in 1999 to 25.8 percent in 2006. 
C) from 13.5 percent in 1999 to 52.8 percent in 2006. 
D) none of the above

Question 5

Suppose the InBev Corporation (a non-U.S.MNC)buys the Anheuser-Busch Corporation,paying the U.S.shareholders cash.

Accepted Answer

A) Payment by InBev will be recorded as a debit. 
B) The deposit of the funds by the sellers will be recorded as a debit. 
C) Payment by InBev will be recorded as a credit. 
D) The deposit of the funds by the buyer will be credit. 
A) Payment by InBev will be recorded as a debit. 
B) The deposit of the funds by the sellers will be recorded as a debit. 
C) Payment by InBev will be recorded as a credit. 
D) The deposit of the funds by the buyer will be credit.

Question 6

What is the correct label for the vertical axis in the J-curve?

Accepted Answer

A) Time 
B) Change in the Trade Balance 
C) Size of Trade Balance 
D) Size of Merchandise Trade Balance 
A) Time 
B) Change in the Trade Balance 
C) Size of Trade Balance 
D) Size of Merchandise Trade Balance

Question 7

The current account is divided into four finer categories:

Accepted Answer

A) merchandise trade, services, factor income, and statistical discrepancy. 
B) merchandise trade, services, factor income, and unilateral transfers. 
C) merchandise trade, services, portfolio investment, and unilateral transfers. 
D) merchandise trade, services, factor income, and direct investment. 
A) merchandise trade, services, factor income, and statistical discrepancy. 
B) merchandise trade, services, factor income, and unilateral transfers. 
C) merchandise trade, services, portfolio investment, and unilateral transfers. 
D) merchandise trade, services, factor income, and direct investment.

Question 8

The balance of payments identity is given by BCA + BKA + BRA = 0.Rearrange the identity for a country with a pure flexible exchange rate regime.

Accepted Answer

A) BCA + BKA + BRA = 0 
B) BCA = -BKA 
C) BCA + BKA = -BRA 
D) BRA = -BCA 
A) BCA + BKA + BRA = 0 
B) BCA = -BKA 
C) BCA + BKA = -BRA 
D) BRA = -BCA

Question 9

National income,or Gross National Product is given by

Accepted Answer

A) GNP $\equiv$ Y  $\equiv$ C + I + G + X + M 
B) GNP  $\equiv$ Y  $\equiv$ C + I + G + X - M 
C) GNP  $\equiv$ I  $\equiv$ C + Y + G + X - M 
D) GNP  $\equiv$ Y  $\equiv$ C + I + X + M - G 
A) GNP $\equiv$ Y  $\equiv$ C + I + G + X + M 
B) GNP  $\equiv$ Y  $\equiv$ C + I + G + X - M 
C) GNP  $\equiv$ I  $\equiv$ C + Y + G + X - M 
D) GNP  $\equiv$ Y  $\equiv$ C + I + X + M - G

Question 10

When a country's currency depreciates against the currencies of major trading partners,

Accepted Answer

A) the country's exports tend to rise and imports fall. 
B) the country's exports tend to fall and imports rise. 
C) the country's exports tend to rise and imports rise. 
D) the country's exports tend to fall and imports fall. 
A) the country's exports tend to rise and imports fall. 
B) the country's exports tend to fall and imports rise. 
C) the country's exports tend to rise and imports rise. 
D) the country's exports tend to fall and imports fall.

Question 11

If the United States imports more than it exports,then this means that

Accepted Answer

A) the supply of dollars is likely to exceed the demand in the foreign exchange market, ceteris paribus. 
B) the demand for dollars is likely to exceed the supply in the foreign exchange market, ceteris paribus. 
C) the U.S.dollar would be under pressure to appreciate against other currencies. 
D) both b) and c) are correct 
A) the supply of dollars is likely to exceed the demand in the foreign exchange market, ceteris paribus. 
B) the demand for dollars is likely to exceed the supply in the foreign exchange market, ceteris paribus. 
C) the U.S.dollar would be under pressure to appreciate against other currencies. 
D) both b) and c) are correct

Question 12

Statistical discrepancy,which by definition represents errors and omissions

Accepted Answer

A) cannot be calculated directly. 
B) is calculated by taking into account the balance-of-payments identity. 
C) probably has some elements that are honest mistakes, it can't all be money laundering and drugs. 
D) all of the above 
A) cannot be calculated directly. 
B) is calculated by taking into account the balance-of-payments identity. 
C) probably has some elements that are honest mistakes, it can't all be money laundering and drugs. 
D) all of the above

Question 13

The balance of payments records

Accepted Answer

A) only international trade, (exports and imports). 
B) only cross-border investments (FDI and portfolio investment). 
C) not only international trade, (exports and imports) but also cross-border investments. 
D) none of the above 
A) only international trade, (exports and imports). 
B) only cross-border investments (FDI and portfolio investment). 
C) not only international trade, (exports and imports) but also cross-border investments. 
D) none of the above

Question 14

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.Given this,which of the following is a true statement?

Accepted Answer

A) If (S - I) < 0, it implies that a country's domestic savings is insufficient to finance domestic investment. 
B) If (T - G) < 0, it implies that a country's tax revenue is insufficient to finance government spending. 
C) both a) and b) are true 
D) none of the above 
A) If (S - I) < 0, it implies that a country's domestic savings is insufficient to finance domestic investment. 
B) If (T - G) < 0, it implies that a country's tax revenue is insufficient to finance government spending. 
C) both a) and b) are true 
D) none of the above

Question 15

The United States is considered

Accepted Answer

A) a net creditor nation. 
B) a net debtor nation. 
A) a net creditor nation. 
B) a net debtor nation.

Question 16

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.This relationship is given by BCA  $\equiv$ X - M  $\equiv$ (S - I)+ (T - G).Given this,which of the following is a true statement?

Accepted Answer

A) If (S - I) < 0, it implies that a country's domestic savings is insufficient to finance domestic investment. 
B) If (T - G) < 0, it implies that a country's tax revenue is insufficient to finance government spending. 
C) When BCA is negative, it implies that government budget deficits and/or part of domestic investment are being finance with foreign-controlled capital. 
D) All of the above are true 
A) If (S - I) < 0, it implies that a country's domestic savings is insufficient to finance domestic investment. 
B) If (T - G) < 0, it implies that a country's tax revenue is insufficient to finance government spending. 
C) When BCA is negative, it implies that government budget deficits and/or part of domestic investment are being finance with foreign-controlled capital. 
D) All of the above are true

Question 17

Which of the following would not count as a foreign-exchange reserve held by a central bank?

Accepted Answer

A) The local currency 
B) U.S.dollars 
C) SDRs 
D) Euro 
A) The local currency 
B) U.S.dollars 
C) SDRs 
D) Euro

Question 18

The "one word that haunts the dollar" is

Accepted Answer

A) (Central bank) diversification. 
B) Reunification (Korean). 
C) Euro. 
D) (Current account) deficit. 
A) (Central bank) diversification. 
B) Reunification (Korean). 
C) Euro. 
D) (Current account) deficit.

Question 19

The balance of payments identity is given by BCA + BKA + BRA = 0.Rearrange the identity to solve for the statistical discrepancy.

Accepted Answer

A) The statistical discrepancy = (BCA + BK
A)  - BRA 
B) The statistical discrepancy = BCA - BKA + BRA 
C) The statistical discrepancy = BCA - BKA - BRA 
D) The statistical discrepancy = BCA + BKA + BRA 
A) The statistical discrepancy = (BCA + BK
A)  - BRA 
B) The statistical discrepancy = BCA - BKA + BRA 
C) The statistical discrepancy = BCA - BKA - BRA 
D) The statistical discrepancy = BCA + BKA + BRA

Question 20

As of 2007 gold accounting for

Accepted Answer

A) 90 percent of the total reserve assets held by IMF member countries. 
B) 70 percent of the total reserve assets held by IMF member countries. 
C) approximately 50 percent of the total reserve assets held by IMF member countries. 
D) less than 2 percent of the total reserve assets held by IMF member countries. 
A) 90 percent of the total reserve assets held by IMF member countries. 
B) 70 percent of the total reserve assets held by IMF member countries. 
C) approximately 50 percent of the total reserve assets held by IMF member countries. 
D) less than 2 percent of the total reserve assets held by IMF member countries.

When Honda,a Japanese auto maker,built a factory in Ohio,

The capital account includes

Among IMF member countries,the dollar's dominant position in the world's reserve holdings may decline to a certain extent as the euro becomes a "known quantity" and its external value becomes more stable.In fact,the euro's share has increased

Suppose the InBev Corporation (a non-U.S.MNC)buys the Anheuser-Busch Corporation,paying the U.S.shareholders cash.

What is the correct label for the vertical axis in the J-curve?

The current account is divided into four finer categories:

The balance of payments identity is given by BCA + BKA + BRA = 0.Rearrange the identity for a country with a pure flexible exchange rate regime.

National income,or Gross National Product is given by

When a country's currency depreciates against the currencies of major trading partners,

If the United States imports more than it exports,then this means that

Statistical discrepancy,which by definition represents errors and omissions

The balance of payments records

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.Given this,which of the following is a true statement?

The United States is considered

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.This relationship is given by BCA $\equiv$ X - M $\equiv$ (S - I)+ (T - G).Given this,which of the following is a true statement?

Which of the following would not count as a foreign-exchange reserve held by a central bank?

The "one word that haunts the dollar" is

The balance of payments identity is given by BCA + BKA + BRA = 0.Rearrange the identity to solve for the statistical discrepancy.

As of 2007 gold accounting for

Globalization and the Multinational Firm

International Monetary System

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters

Exam 3: Balance of Payments

When Honda,a Japanese auto maker,built a factory in Ohio,

The capital account includes

Among IMF member countries,the dollar's dominant position in the world's reserve holdings may decline to a certain extent as the euro becomes a "known quantity" and its external value becomes more stable.In fact,the euro's share has increased

Suppose the InBev Corporation (a non-U.S.MNC)buys the Anheuser-Busch Corporation,paying the U.S.shareholders cash.

What is the correct label for the vertical axis in the J-curve?

The current account is divided into four finer categories:

The balance of payments identity is given by BCA + BKA + BRA = 0.Rearrange the identity for a country with a pure flexible exchange rate regime.

National income,or Gross National Product is given by

When a country's currency depreciates against the currencies of major trading partners,

If the United States imports more than it exports,then this means that

Statistical discrepancy,which by definition represents errors and omissions

The balance of payments records

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.Given this,which of the following is a true statement?

The United States is considered

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.This relationship is given by BCA ≡\equiv≡ X - M ≡\equiv≡ (S - I)+ (T - G).Given this,which of the following is a true statement?

Which of the following would not count as a foreign-exchange reserve held by a central bank?

The "one word that haunts the dollar" is

The balance of payments identity is given by BCA + BKA + BRA = 0.Rearrange the identity to solve for the statistical discrepancy.

As of 2007 gold accounting for

Globalization and the Multinational Firm

International Monetary System

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.This relationship is given by BCA $\equiv$ X - M $\equiv$ (S - I)+ (T - G).Given this,which of the following is a true statement?