Question 1

What is a country's balance of (merchandise)trade, and why is it so widely reported in the financial and popular press?

Accepted Answer

The balance of trade (BOT)is the largest

Question 2

The largest single component of the United States current account is:

Accepted Answer

A) current transfers. 
B) income payments and receipts. 
C) goods (merchandise)imports and exports. 
D) services imports and exports. 
A) current transfers. 
B) income payments and receipts. 
C) goods (merchandise)imports and exports. 
D) services imports and exports.

Question 3

A ________ is any restriction that limits or alters the rate or direction of capital movement into or out of a country.

Accepted Answer

A) capital budget 
B) capital control 
C) balance of trade deficit 
D) balance of trade surplus 
A) capital budget 
B) capital control 
C) balance of trade deficit 
D) balance of trade surplus

Question 4

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.

Question 5

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 6

The biggest problem that China faces in maintaining a stable value for their currency, the yuan, is their lack of foreign exchange reserves.

Accepted Answer

A) True 
 B)False

Question 7

The financial account consists COMPLETELY of which four components?

Accepted Answer

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

Question 8

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

Accepted Answer

A) capital account 
B) current account 
C) financial account 
D) IMF account 
A) capital account 
B) current account 
C) financial account 
D) IMF account

Question 9

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 10

An American tourist purchases a leather jacket while in Italy. Which of the following statements is true?

Accepted Answer

A) The leather purchase would be considered an import for the U.S. BOP. 
B) This transaction would be properly accounted for in the Current Account of the U.S. BOP. 
C) The leather purchase is considered an import of a good, and thus, considered part of the balance of trade as well. 
D) All of these statements are true. 
A) The leather purchase would be considered an import for the U.S. BOP. 
B) This transaction would be properly accounted for in the Current Account of the U.S. BOP. 
C) The leather purchase is considered an import of a good, and thus, considered part of the balance of trade as well. 
D) All of these statements are true.

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

China is currently experiencing a surplus in its current account and its capital/financial accounts. Which of the following is NOT a contributing factor for this unusual situation?

Accepted Answer

A) The exceptional growth in the Chinese economy contributes to the current account surplus. 
B) The positive prospects for China's continued growth contribute to the capital/financial account surplus. 
C) China's inevitable acquisition of Taiwan is driving the market for Chinese investment. 
D) All of the above are contributing factors for China's twins surpluses. 
A) The exceptional growth in the Chinese economy contributes to the current account surplus. 
B) The positive prospects for China's continued growth contribute to the capital/financial account surplus. 
C) China's inevitable acquisition of Taiwan is driving the market for Chinese investment. 
D) All of the above are contributing factors for China's twins surpluses.

Question 13

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

Accepted Answer

A) the import of lower priced goods limits what domestic competitors can charge for goods. 
B) the import of lower priced services limits what domestic competitors can charge for services. 
C) the higher prices of foreign goods spurs domestic competitors to cut prices. 
D) all of the above 
A) the import of lower priced goods limits what domestic competitors can charge for goods. 
B) the import of lower priced services limits what domestic competitors can charge for services. 
C) the higher prices of foreign goods spurs domestic competitors to cut prices. 
D) all of the above

Question 14

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 15

Which of the following is NOT part of the Financial Account of the BOP?

Accepted Answer

A) net foreign direct investment 
B) net import/export of services 
C) net portfolio investment 
D) other Financial items 
A) net foreign direct investment 
B) net import/export of services 
C) net portfolio investment 
D) other Financial items

Question 16

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 17

The Bretton Woods era realized a great expansion of international trade in goods and services.

Accepted Answer

A) True 
 B)False

Question 18

The BOP should always balance.

Accepted Answer

A) True 
 B)False

Question 19

The balance of payments:

Accepted Answer

A) determines the eligibility of countries for IMF aid. 
B) adds up the value of all assets and liabilities of a country on a specific date. 
C) records all international transactions for a country over a period of time. 
D) all of the above 
A) determines the eligibility of countries for IMF aid. 
B) adds up the value of all assets and liabilities of a country on a specific date. 
C) records all international transactions for a country over a period of time. 
D) all of the above

Question 20

Significant amounts of United States Treasury issues are purchased by foreign investors, therefore the U.S. must earn foreign currency to repay this debt.

Accepted Answer

A) True 
 B)False

What is a country's balance of (merchandise)trade, and why is it so widely reported in the financial and popular press?

The largest single component of the United States current account is:

A ________ is any restriction that limits or alters the rate or direction of capital movement into or out of a country.

The subcategory that typically dominates the current account is:

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

The biggest problem that China faces in maintaining a stable value for their currency, the yuan, is their lack of foreign exchange reserves.

The financial account consists COMPLETELY of which four components?

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

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

An American tourist purchases a leather jacket while in Italy. Which of the following statements is true?

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

China is currently experiencing a surplus in its current account and its capital/financial accounts. Which of the following is NOT a contributing factor for this unusual situation?

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

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

Which of the following is NOT part of the Financial Account of the BOP?

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.

The Bretton Woods era realized a great expansion of international trade in goods and services.

The BOP should always balance.

The balance of payments:

Significant amounts of United States Treasury issues are purchased by foreign investors, therefore the U.S. must earn foreign currency to repay this debt.

Current Multinational Challenges and the Global Economy

Corporate Ownership, Goals, and Governance

The International Monetary System

The Continuing Global Financial Crisis

The Foreign Exchange Theory and Markets

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Portfolio Theory and Diversification

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Working Capital Management

International Trade Finance

Filters

Exam 4: The Balance of Payments

What is a country's balance of (merchandise)trade, and why is it so widely reported in the financial and popular press?

The largest single component of the United States current account is:

A ________ is any restriction that limits or alters the rate or direction of capital movement into or out of a country.

The subcategory that typically dominates the current account is:

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

The biggest problem that China faces in maintaining a stable value for their currency, the yuan, is their lack of foreign exchange reserves.

The financial account consists COMPLETELY of which four components?

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

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

An American tourist purchases a leather jacket while in Italy. Which of the following statements is true?

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

China is currently experiencing a surplus in its current account and its capital/financial accounts. Which of the following is NOT a contributing factor for this unusual situation?

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

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

Which of the following is NOT part of the Financial Account of the BOP?

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.

The Bretton Woods era realized a great expansion of international trade in goods and services.

The BOP should always balance.

The balance of payments:

Significant amounts of United States Treasury issues are purchased by foreign investors, therefore the U.S. must earn foreign currency to repay this debt.

Current Multinational Challenges and the Global Economy

Corporate Ownership, Goals, and Governance

The International Monetary System

The Continuing Global Financial Crisis

The Foreign Exchange Theory and Markets

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction Exposure

Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Raising Equity and Debt Globally

Multinational Tax Management

International Portfolio Theory and Diversification

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

Working Capital Management

International Trade Finance

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.