Exam 10: The Balance of Payments

The capital account of the balance of payments includes private-sector transactions as well as official-settlements transactions of the home country's central bank.

Services transactions on Canada's balance-of-payments statement would include Canadian ships transporting lumber to Japan,foreign tourists spending money in Canada,and Canadian engineers designing bridges in China.

If a country consistently realizes a current-account surplus in its balance of payments,it likely will become a "net debtor" in its balance of international indebtedness.

Unilateral transfers refer to two-sided transactions,reflecting the movement of goods and services in one direction with corresponding payments in the other direction.

Reducing a current account deficit requires a country to:

If the U.S.faces a balance-of-payments deficit on the current account,it must run a surplus on:

Reducing a current account surplus requires a country to:

According to researchers at the Federal Reserve,the loss of jobs associated with a deficit in the current account tends to be:

Although a net-debtor country may initially benefit from an inflow of savings from abroad,over the long run continued borrowing results in growing dividend payments to foreigners and a drain on the debtor-country's economic resources.

Consider Table 10.2.The U.S.balance of international indebtedness suggests that the United States is a net:

Reducing a current account deficit requires a country to:

Which balance-of-payments item does not directly enter into the calculation of the U.S.gross domestic product?

The United States would be a "net creditor" if the value of U.S.assets abroad exceeded the value of foreign assets in the United States.

Which of the following would call for inpayments to the United States?

The net-debtor status,that the United States achieved in its balance of international indebtedness by the mid-1980s,reflected the continuous current-account surplus that the United States attained in its balance of payments during the 1970s.

The U.S.balance of trade is determined by:

How do we measure the international investment position of the United States at any point in time? How did the U.S.become a net debtor nation so rapidly?

To reduce a current account deficit,a country should either decrease the budget deficit of its government or reduce investment spending relative to saving.

The "goods and services" account of the balance of payments shows the monetary value of international flows associated with transactions in goods,services,and unilateral transfers.

The burden of a current account deficit would be the least if a nation uses what it borrows to finance: