Exam 4: The Balance of Payments

Balance of payment (BOP)data may be important for any of the following reasons:

In 2007 the United States posted a current account deficit of -$731 billion. The bulk of the negative value came from

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

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.

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

Because current and financial/capital account balances use double-entry bookkeeping it is unusual to find serious discrepancies in the debits and credits.

The two major concerns about foreign direct investment are:

What is the Official Reserves Account (ORA)and why is it more important for countries under a fixed exchange rate regime than for ones under a floating exchange rate regime?

The BOP should always balance.

The ________ of the balance of payments measures all international economic transactions of financial assets.

The subcategory that typically dominates the current account is ________.

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

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 ________.

Of the following, which is NOT a part of J-Curve adjustment path?

When a currency is devalued the immediate impact may be an increase in a country's trade deficit. However, this situation tend to correct itself in 2 to 5 weeks..

In general there is consensus that ________ should be free but there is no such consensus that ________ should be free.

Use the following terms for this question: C = consumption I = capital investment spending G = government spending X = exports of goods and services M = imports of goods and services BOP = balance of payments GDP = gross domestic product NPV = net present value INF = inflation R = real rate of return The static equation for the nations GDP is:

Imports have the potential to lower a country's inflation rate because of each of the following EXCEPT:

The ________ includes all international economic transactions with income or payment flows occurring within the year.

________ is the cross-border purchase of assets that are then managed in a way that hides the movement of money and its ownership.