Exam 2: International Flow of Funds

Assume that some U.S. firms will purchase supplies from either China or from U.S. firms. If the Chinese yuan appreciates against the dollar, it should reduce the U.S. balance of trade deficit with China.

A country's net outflow of funds ____ affect its interest rates, and ____ affect its economic conditions.

Like the International Monetary Fund (IMF), the ____ is composed of a collection of nations as members. However, unlike the IMF, it uses the private rather than the government sector to achieve its objectives.

The J curve effect is the initial worsening of the U.S. trade balance due to a weakening dollar because of established trade relationships that are not easily changed; as the dollar weakens, the dollar value of imports initially rises before the U.S. trade balance is improved.

The World Bank was established to:

Regarding the U.S. balance of payments, capital account items are relatively minor compared to the financial account items.

The World Bank extends loans only to developed nations, while the International Development Association (IDA) extends loans only to developing nations.

Which of the following is not likely to represent a strategy by the government of Country X to reduce its balance of trade deficit with Country Y?

Which of the following countries purchases the largest amount of exports by U.S. firms?

Which of the following statements is not true?

Which of the following factors probably does not directly affect a country's capital account and its components?

The "J curve" effect describes:

The International Financial Corporation was established to:

Exporting of products by one country to other countries at prices below cost is called elasticity.

The North American Free Trade Agreement (NAFTA) increased restrictions on:

An increase in the current account deficit will place ____ pressure on the home currency value, other things equal.

A high home inflation rate relative to other countries would ____ the home country's current account balance, other things equal. A high growth in the home income level relative to other countries would ____ the home country's current account balance, other things equal.

A balance of trade surplus indicates an excess of imports over exports.

A weakening of the U.S. dollar with respect to the British pound would likely reduce the U.S. exports to Britain and increase U.S. imports from Britain over time.

The direct foreign investment positions by U.S. firms have generally ____ over time. Restrictions by governments on direct foreign investment have generally ___ over time.