Exam 20: International Finance

A country's balance of trade is the difference between its:

Which items are usually cheaper in poorer countries?

Portfolio investment takes place in the United States when foreigners:

"Expansionary monetary policy can be used to reduce a country's trade deficit in the short run,but not in the long run." Explain this statement.

Purchasing power parity is limited by:

The fact that the United States has a trade deficit with China is not,taken alone,special cause for worry.

The U.S.dollar is considered a safe haven currency.What does this do to the value of the dollar?

When a foreign business buys stock in a U.S.company,the U.S.capital account will:

Many governments and central banks hold dollars as a reserve currency.

The U.S.capital account measures the:

U.S.capital account surpluses are NOT related to:

Which of the following would lead to a capital account deficit?

Deviations from purchasing power parity are usually short lived for services.

Expansionary fiscal policy financed by borrowing is more effective in affecting real growth in a closed economy than in an open economy.

An exchange rate appreciation is:

What causes the economy's real growth rate to return to its long-run level after the money supply has been increased?

The director of the IMF is traditionally:

An increase in Americans' demand for vehicles made in Europe:

When a country's inflow of foreign capital is less than its outflow of domestic capital to other countries,then the country runs a:

If the Chinese government purchases $25 million worth of U.S.government bonds,this is recorded as a credit in the U.S.current account.