Question 1

Nokia Inc,a Finnish company,hires a French consulting firm.This transaction will be recorded in Finland's balance of payments as

Accepted Answer

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

Question 2

Which of the following is true under a pure flexible exchange rate regime?

Accepted Answer

A) Balance of current account + Balance of capital account > 0 B) Balance of current account + Balance of capital account < 0 C) Balance of current account + Balance of capital account = 0 D) There is insufficient information to warrant any of the above answers A) Balance of current account + Balance of capital account > 0 B) Balance of current account + Balance of capital account < 0 C) Balance of current account + Balance of capital account = 0 D) There is insufficient information to warrant any of the above answers C

Question 3

Balance of payment

Accepted Answer

A) records a country's commerce with one other country 
B) provides detailed information concerning the demand and supply of a country's currency 
C) cannot be used to evaluate the performance of a country in international economic competition 
D) may or may not balance 
A) records a country's commerce with one other country 
B) provides detailed information concerning the demand and supply of a country's currency 
C) cannot be used to evaluate the performance of a country in international economic competition 
D) may or may not balance B

Question 4

A country's international transactions can be grouped into the following three main types:

Accepted Answer

A) current account, medium term account, and long term account 
B) current account, long term account, and capital account 
C) current account, capital account, and reserve account 
D) capital account, reserve account, trade account 
A) current account, medium term account, and long term account 
B) current account, long term account, and capital account 
C) current account, capital account, and reserve account 
D) capital account, reserve account, trade account

Question 5

Which of the following is true about Canada'a BCA in 2000-2005?

Accepted Answer

A) Canada had positive BCA 
B) Canada had negative BCA 
C) Canada's BCA was increasing during that period 
D) Canada's BCA was decreasing during that period 
A) Canada had positive BCA 
B) Canada had negative BCA 
C) Canada's BCA was increasing during that period 
D) Canada's BCA was decreasing during that period

Question 6

Portfolio investment refers to:

Accepted Answer

A) changes in Canadian holdings of noncontrolling equity in foreign companies 
B) changes in Canadian holdings of controlling equity in foreign companies 
C) changes in foreign holdings of controlling equity in Canadian companies 
D) changes in foreign holdings of controlling stock in Canadian companies 
A) changes in Canadian holdings of noncontrolling equity in foreign companies 
B) changes in Canadian holdings of controlling equity in foreign companies 
C) changes in foreign holdings of controlling equity in Canadian companies 
D) changes in foreign holdings of controlling stock in Canadian companies

Question 7

The balance on the reserves account (BRA),under the fixed exchange regime is:

Accepted Answer

A)    $44 billion 
B) $44 billion 
C) $216 billion 
D) none of these 
A)    $44 billion 
B) $44 billion 
C) $216 billion 
D) none of these

Question 8

Explain balance on capital account.

Accepted Answer

The capital account records the flow of

Question 9

Foreign direct investment (FDI)occurs:

Accepted Answer

A) when an investor acquires a measure of control of a foreign business 
B) when an investor buys foreign bonds directly 
C) with sales and purchases of foreign stocks and bonds that do not involve a transfer of control 
D) when a company buys foreign government bonds directly 
A) when an investor acquires a measure of control of a foreign business 
B) when an investor buys foreign bonds directly 
C) with sales and purchases of foreign stocks and bonds that do not involve a transfer of control 
D) when a company buys foreign government bonds directly

Question 10

The Ontario Teachers' Pension Fund buys shares in DaimlerChrylser.This transaction will be recorded in the balance of payments as

Accepted Answer

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

Question 11

If a country has a flexible exchange rate system and a deficit on current account

Accepted Answer

A) the balance of payments must be zero. 
B) The balance of payments must be positive. 
C) The balance on capital account must be negative. 
D) The balance on capital account must be positive. 
A) the balance of payments must be zero. 
B) The balance of payments must be positive. 
C) The balance on capital account must be negative. 
D) The balance on capital account must be positive.

Question 12

The reserve account of the Balance of Payments records:

Accepted Answer

A) the stock of foreign exchange held by the government 
B) changes in foreign exchange reserves held by the government 
C) the stock of gold held by foreign governments 
D) changes in foreign exchange reserves held by foreign governments 
A) the stock of foreign exchange held by the government 
B) changes in foreign exchange reserves held by the government 
C) the stock of gold held by foreign governments 
D) changes in foreign exchange reserves held by foreign governments

Question 13

A Chinese state-owned company buys a Canadian saw mill.This transaction will be recorded in the balance of payments as

Accepted Answer

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

Question 14

Why should the balance of payments always be zero for countries with flexible exchange rates?

Accepted Answer

If the currency of a country is flexible

Question 15

BMW,a German car manufacturer,opens a new subsidiary in China.This transaction will be recorded in China's balance of payments as

Accepted Answer

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

Question 16

Explain the J-curve effect.

Accepted Answer

The J-curve effect explains the reaction

Question 17

PetroCanada exports oil to New York.This transaction will be recorded in the balance of payments as

Accepted Answer

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

Question 18

Encana,a Canadian firm,buys equipment from Germany.This transaction will be recorded in the balance of payments as

Accepted Answer

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

Question 19

Can a country have a current account and a capital account surplus at the same time?

Accepted Answer

Yes.The balance of payments identity sta

Question 20

If a country has a flexible exchange rate system and a deficit on capital account

Accepted Answer

A) the balance of payments must be zero. 
B) The balance of payments must be positive. 
C) The balance on current account must be positive. 
D) The balance on current account must be negative. 
A) the balance of payments must be zero. 
B) The balance of payments must be positive. 
C) The balance on current account must be positive. 
D) The balance on current account must be negative.

Exam 3: Balance of Payments

Nokia Inc,a Finnish company,hires a French consulting firm.This transaction will be recorded in Finland's balance of payments as

Which of the following is true under a pure flexible exchange rate regime?

Balance of payment

A country's international transactions can be grouped into the following three main types:

Which of the following is true about Canada'a BCA in 2000-2005?

Portfolio investment refers to:

The balance on the reserves account (BRA),under the fixed exchange regime is:

Explain balance on capital account.

Foreign direct investment (FDI)occurs:

The Ontario Teachers' Pension Fund buys shares in DaimlerChrylser.This transaction will be recorded in the balance of payments as

If a country has a flexible exchange rate system and a deficit on current account

The reserve account of the Balance of Payments records:

A Chinese state-owned company buys a Canadian saw mill.This transaction will be recorded in the balance of payments as

Why should the balance of payments always be zero for countries with flexible exchange rates?

BMW,a German car manufacturer,opens a new subsidiary in China.This transaction will be recorded in China's balance of payments as

Explain the J-curve effect.

PetroCanada exports oil to New York.This transaction will be recorded in the balance of payments as

Encana,a Canadian firm,buys equipment from Germany.This transaction will be recorded in the balance of payments as

Can a country have a current account and a capital account surplus at the same time?

If a country has a flexible exchange rate system and a deficit on capital account

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

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