Exam 10: The Balance of Payments

The merchandise-trade account on the balance-of-payments statement is defined the same way as "net exports" which constitutes part of the nation's gross domestic product.

In the balance-of-payments statement,statistical discrepancy is treated as part of the merchandise trade account because merchandise transactions are generally the most frequent source of error.

A current account deficit for the United States necessarily reduces the standard of living for American households.

The balance of payments includes international transactions of households and businesses,but not government.

The balance of payments refers to the stock of trade and investment transactions that exists at a particular point in time.

Although the United States has realized merchandise trade deficits since the early 1970s,its goods-and-services balance has always registered surplus.

Which of the following indicates the international investment position of a country at a given moment in time?

The U.S.unilateral-transfers balance has consistently registered surplus in the past two decades.

What are the components of the current account of the balance of payments?

Concerning the balance of payments,a current-account surplus means an excess of exports over imports of goods,services,investment income,and unilateral transfers.

Concerning a country's business cycle,____ is commonly associated with large or growing current account deficits:

A positive balance on the goods-and-services account of the balance of payments indicates an excess of exports over imports which must be added to the nation's gross domestic product.

Current-account transactions include direct foreign investment,purchases of foreign government securities,and commercial bank loans made abroad.

That U.S.charities donate funds to combat starvation in Africa constitutes a debit transaction on the U.S.balance of payments.

That U.S.importers purchase bananas from Brazil constitutes a debit transaction on the U.S.balance of payments.

In a country's balance of payments,which of the following transactions are debits?

If the current account of the balance of payments registers a deficit,the capital account registers a surplus,and vice versa.

Credit (+)items in the balance of payments correspond to anything that:

On the balance-of-payments statement,dividend and interest income are classified as capital-account transactions.

Concerning the balance of payments,the goods-and-services balance is commonly referred to as the "trade balance" by the news media.