Exam 2: International Flow of Funds

The International Development Association was established to:

Recently, the U.S. experienced an annual balance of trade representing a ____.

The current account represents the investment in fixed assets in foreign countries that can be used to conduct business operations.

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

Portfolio investment represents transactions involving long-term financial assets (such as stocks and bonds) between countries that do not affect the transfer of control.

The Central American Trade Agreement (CAFTA) is intended to raise tariffs and regulations between the U.S., the Dominican Republic, and Central American countries.

Which is not a concern about the North American Free Trade Agreement (NAFTA)?

Also known as the "central banks' central bank," the ____ attempts to facilitate cooperation among countries with regard to international transactions and provides assistance to countries experiencing a financial crisis.

Changes in country ownership of long-term and short-term assets are measured in the balance of payments with the capital account.

The demand for U.S. exports tends to increase when:

Direct foreign investment by U.S.-based MNCs occurs primarily in the Bahamas and Brazil.

Which of the following is mentioned in the text as a possible means by which the government may attempt to improve its balance of trade position (increase its exports or reduce its imports).

The primary component of the current account is the:

Intracompany trade represents the exporting of products by one country to other countries below cost.

If the home currency begins to appreciate against other currencies, this should ____ the current account balance, other things equal (assume that substitutes are readily available in the countries, and that the prices charged by firms remain the same).

In recent years, the U.S. has had a relatively (compared to other countries) ____ balance of trade ____ with China.

The primary component of the capital account is the balance of trade.

If a country's government imposes a tariff on imported goods, that country's current account balance will likely ____ (assuming no retaliation by other governments).

Intracompany trade makes up approximately ____ percent of all international trade.

____ purchases more U.S. exports than the other countries listed here.