Question 1

If most major economies are operating under a regime of fixed exchange rates,then a ________ in a country's balance of payments suggests that the country should ________ its currency.

Accepted Answer

A) surplus; revalue 
B) surplus; devalue 
C) deficit; revalue 
D) all of the above

Question 2

Your authors identify five primary mechanisms by which capital may be moved from one country to another.Identify and briefly explain/define three of those methods.

Accepted Answer

The answer of Your authors identify five primary mechanisms by...

Question 3

In a static (accounting)sense,a nation's GDP can be represented by the following equation: where C = consumption spending,I = investment spending,G = government spending,X = exports of goods and services,and M = imports of goods and services.

Accepted Answer

A) GDP = C + I + G + M - X 
B) GDP = C + I + G + X - M 
C) GDP = C + I - G + X - M 
D) GDP = C + I + G + X + M

Question 4

The ________ includes all international economic transactions with income or payment flows occurring within the year.

Accepted Answer

A) capital account 
B) current account 
C) financial account 
D) IMF account

Question 5

The role of official reserves is ________ under a ________ exchange rate regime.

Accepted Answer

A) enhanced; floating 
B) diminished; fixed 
C) enhanced; fixed 
D) None of the above apply.

Question 6

Over the last several years,the United States has run a ________ in the goods trade balance and a ________ in the services trade balance.

Accepted Answer

A) surplus; deficit 
B) surplus; surplus 
C) deficit; deficit 
D) deficit; surplus

Question 7

If your company were to import and export textiles,the transactions would be recorded in the current account subcategory of ________.

Accepted Answer

A) services trade 
B) income trade 
C) goods trade 
D) current transfers

Question 8

The BOP must be in balance but the current account need not be.

Accepted Answer

A) True 
 B)False

Question 9

Assume that a country is experiencing a balance of trade deficit and then suffers a rapid depreciation of its currency.J-curve theory suggests that the trade balance will adjust in three distinct periods in the following order:

Accepted Answer

A) quantity adjustment period; pass-through period; currency contract period 
B) pass-through period; currency contract period; quantity adjustment period 
C) currency contract period; pass-through period; quantity adjustment period 
D) pass-through period; quantity adjustment period; currency contract period

Question 10

The authors identify a tip for understanding BOP accounting.They recommend that you "follow the cash flow."

Accepted Answer

A) True 
 B)False

Question 11

The balance of payments is most like a(an)________.

Accepted Answer

A) cash flow statement 
B) balance sheet 
C) income statement 
D) proxy statement

Question 12

The two major concerns about foreign direct investment are

Accepted Answer

A) national defense and taxes. 
B) who controls the assets and who receives the profits. 
C) who receives the profits and taxes. 
D) who pays the taxes and who receives the taxes.

Question 13

Which of the following is NOT an example of an exchange of financial assets?

Accepted Answer

A) the exchange of travel services 
B) the exchange of stocks 
C) the exchange of bonds 
D) loans

Question 14

Which of the following is the best definition of money laundering?

Accepted Answer

A) legal transfer of funds through the usual international payments mechanisms 
B) the transfer of cash into collectibles that are then transferred across borders 
C) the cross-border purchase of assets that are then managed in a way that hide the movement of money and its ownership 
D) false invoicing of international trade transactions

Question 15

Under an international regime of fixed exchange rates,countries with a BOP ________ should consider ________ their currency while countries with a BOP ________ should consider ________ their currency.

Accepted Answer

A) deficit; revaluing; surplus; revaluing 
B) deficit; devaluing; surplus; devaluing 
C) surplus; devaluing; deficit; revaluing 
D) surplus; revaluing; deficit; devaluing

Question 16

Which of the following would NOT be considered a typical BOP transaction?

Accepted Answer

A) Toyota U.S.A. is a U.S. distributor of automobiles manufactured in Japan by its parent company. 
B) The U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich. 
C) A U.S. tourist purchases gifts at a museum in London. 
D) All are example of BOP transactions.

Question 17

The United States experienced a balance of trade ________ during the 1990s and a balance of trade ________ during the 2000s.

Accepted Answer

A) surplus; surplus 
B) surplus; deficit 
C) deficit; deficit 
D) deficit; surplus

Question 18

Expenditures by U.S.tourists in foreign countries for foreign goods or services are factored into BOP calculations.

Accepted Answer

A) True 
 B)False

Question 19

Identify and explain the three stages of the J-curve adjustment path of the trade balance adjustment process.

Accepted Answer

The answer of Identify and explain the three stages of...

Question 20

In general,a country's exports decrease as foreign income decreases.

Accepted Answer

A) True 
 B)False

Exam 4: The Balance of Payments

If most major economies are operating under a regime of fixed exchange rates,then a in a country's balance of payments suggests that the country should its currency.

Your authors identify five primary mechanisms by which capital may be moved from one country to another.Identify and briefly explain/define three of those methods.

In a static (accounting) sense,a nation's GDP can be represented by the following equation: where C = consumption spending,I = investment spending,G = government spending,X = exports of goods and services,and M = imports of goods and services.

The ________ includes all international economic transactions with income or payment flows occurring within the year.

The role of official reserves is under a exchange rate regime.

Over the last several years,the United States has run a in the goods trade balance and a in the services trade balance.

If your company were to import and export textiles,the transactions would be recorded in the current account subcategory of ________.

The BOP must be in balance but the current account need not be.

Assume that a country is experiencing a balance of trade deficit and then suffers a rapid depreciation of its currency.J-curve theory suggests that the trade balance will adjust in three distinct periods in the following order:

The authors identify a tip for understanding BOP accounting.They recommend that you "follow the cash flow."

The balance of payments is most like a(an) ________.

The two major concerns about foreign direct investment are

Which of the following is NOT an example of an exchange of financial assets?

Which of the following is the best definition of money laundering?

Under an international regime of fixed exchange rates,countries with a BOP should consider their currency while countries with a BOP should consider their currency.

Which of the following would NOT be considered a typical BOP transaction?

The United States experienced a balance of trade during the 1990s and a balance of trade during the 2000s.

Expenditures by U.S.tourists in foreign countries for foreign goods or services are factored into BOP calculations.

Identify and explain the three stages of the J-curve adjustment path of the trade balance adjustment process.

In general,a country's exports decrease as foreign income decreases.