Question 1

In September 2005, exports of goods from the U.S. decreased $3.3 billion to $73.4 billion, and imports of goods increased $3.8 billion to $144.5 billion. This increased the deficit in:

Accepted Answer

A)  the balance of payments.
B)  the financial account.
C)  the current account.
D)  unilateral transfers.E) A) and B)
F) None of the above

Question 2

During the 20th century and into the 21st, the U.S. net international investment position has:

Accepted Answer

A)  been consistently positive.
B)  been consistently negative.
C)  gone from negative to positive and back to negative.
D)  gone from positive to negative and back to positive.E) A) and C)
F) None of the above

Question 3

The net value of the flow of goods, services, income, and gifts is the current account balance.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following transactions could contribute to a British current account surplus? Discuss.
a.A French firm sells defense equipment to the British government for 250 million pounds in bank deposits
b.Great Britain makes a gift of $500 million to the Iraqi government in the form of equipment to aid in reconstruction.

Accepted Answer

A.The transaction will lead to a debit e...

Question 5

Explain the three different viewpoints (meanings) of the current account balance. Discuss the macroeconomic interpretations of a current account deficit.

Accepted Answer

The current account includes all debit a...

Question 6

Capital inflows are debits and capital outflows are credits.

Accepted Answer

A) True 
 B)False

Question 7

A statement of the stocks of a country's foreign assets and foreign liabilities at a point in time represents the country's:

Accepted Answer

A)  government budget surplus or deficit
B)  balance of payments
C)  financial account balance
D)  international investment position.E) None of the above
F) C) and D)

Question 8

Which of the following constitutes the largest component of the world's international reserve assets?

Accepted Answer

A)  Gold
B)  Special drawing rights
C)  IMF reserve positions
D)  Foreign currenciesE) A) and D)
F) B) and C)

Question 9

A credit item in the balance of payments is:

Accepted Answer

A)  an item for which the country must be paid.
B)  any loan given out by the country.
C)  any imported item.
D)  an item that creates a monetary claim owed to a foreigner.E) B) and D)
F) B) and C)

Question 10

If the balance of payments accounts of a country shows a current account deficit, it means that:

Accepted Answer

A)  it is acting as a net lender to the rest of the world.
B)  its foreign assets are growing slower than its foreign liabilities.
C)  its foreign assets are growing faster than its foreign liabilities.
D)  its exports are higher than its imports.E) A) and D)
F) A) and C)

Question 11

Every international exchange of value is entered into the balance-of-payments accounts _____ time(s) .

Accepted Answer

A)  one
B)  two
C)  three
D)  fourE) A) and B)
F) C) and D)

Question 12

The international investment position of a country shows:

Accepted Answer

A)  its stocks of international assets during a time period.
B)  its stocks of international liabilities during a time period.
C)  its stocks of international assets and liabilities at a point in time.
D)  whether its current account is in deficit or surplus at a point in time.E) B) and C)
F) None of the above

Question 13

The _____ measures the sum of the current account balance plus the nonofficial financial account balance.

Accepted Answer

A)  official fiscal balance
B)  nonofficial capital balance
C)  official settlements balance
D)  unofficial settlements balanceE) C) and D)
F) A) and B)

Question 14

We often hear that trade deficits are bad for a country. Do you agree or disagree with this viewpoint? Explain carefully.

Accepted Answer

Having a deficit on the goods and servic...

Question 15

A nation is considered to be a(n)  _____ in the international market, if its current account is in deficit.

Accepted Answer

A)  importer
B)  exporter
C)  borrower
D)  lenderE) A) and C)
F) A) and D)

Question 16

In the balance of payments, the statistical discrepancy is used to:

Accepted Answer

A)  ensure that the sum of all debits matches the sum of all credits.
B)  ensure that the value of imports equals the value of exports.
C)  show how a balance-of-payments deficit is funded.
D)  obtain an accurate account of a balance-of-payments surplus.E) A) and B)
F) B) and C)

Question 17

In 2013, U.S. households, businesses, and government were buying more goods and services than they were producing.

Accepted Answer

A) True 
 B)False

Question 18

An increase in a nation's financial liabilities to foreign residents is a:

Accepted Answer

A)  reserve inflow.
B)  reserve outflow.
C)  capital imports.
D)  capital exports.E) A) and D)
F) C) and D)

Question 19

In a nation's balance of payments, which one of the following items is always recorded as a positive entry?

Accepted Answer

A)  Changes in foreign currency reserves
B)  Imports of goods and services
C)  Military foreign aid supplied to allied nations
D)  Purchases by foreign travelers visiting the countryE) A) and D)
F) All of the above

Question 20

At present, the majority of a nation's official reserve transactions are done by using foreign exchange assets instead of gold.

Accepted Answer

A) True 
 B)False

Exam 16: Payments Among Nations

Explain the three different viewpoints (meanings) of the current account balance. Discuss the macroeconomic interpretations of a current account deficit.

Correct Answer
verified
The current account includes all debit a...
View Answer

Capital inflows are debits and capital outflows are credits.

Correct Answer
verified

In the balance of payments, the statistical discrepancy is used to:

Correct Answer
verified

An increase in a nation's financial liabilities to foreign residents is a:

Correct Answer
verified

We often hear that trade deficits are bad for a country. Do you agree or disagree with this viewpoint? Explain carefully.

Correct Answer
verified
Having a deficit on the goods and servic...
View Answer

A nation is considered to be a(n) _____ in the international market, if its current account is in deficit.

Correct Answer
verified

Which of the following constitutes the largest component of the world's international reserve assets?

Correct Answer
verified

The _____ measures the sum of the current account balance plus the nonofficial financial account balance.

Correct Answer
verified

In 2013, U.S. households, businesses, and government were buying more goods and services than they were producing.

Correct Answer
verified

If the balance of payments accounts of a country shows a current account deficit, it means that:

Correct Answer
verified

Correct Answer
verified
A.The transaction will lead to a debit e...
View Answer

A statement of the stocks of a country's foreign assets and foreign liabilities at a point in time represents the country's:

Correct Answer
verified

In a nation's balance of payments, which one of the following items is always recorded as a positive entry?

Correct Answer
verified

The international investment position of a country shows:

Correct Answer
verified

During the 20^th century and into the 21^st, the U.S. net international investment position has:

Correct Answer
verified

The net value of the flow of goods, services, income, and gifts is the current account balance.

Correct Answer
verified

Every international exchange of value is entered into the balance-of-payments accounts _____ time(s) .

Correct Answer
verified

A credit item in the balance of payments is:

Correct Answer
verified

At present, the majority of a nation's official reserve transactions are done by using foreign exchange assets instead of gold.

Correct Answer
verified

In September 2005, exports of goods from the U.S. decreased $3.3 billion to $73.4 billion, and imports of goods increased $3.8 billion to $144.5 billion. This increased the deficit in:

Correct Answer
verified

Exam 16: Payments Among Nations

Explain the three different viewpoints (meanings) of the current account balance. Discuss the macroeconomic interpretations of a current account deficit.

Correct AnswerverifiedThe current account includes all debit a...View AnswerShow Answer

Capital inflows are debits and capital outflows are credits.

Correct AnswerverifiedShow Answer

In the balance of payments, the statistical discrepancy is used to:

Correct AnswerverifiedShow Answer

An increase in a nation's financial liabilities to foreign residents is a:

Correct AnswerverifiedShow Answer

We often hear that trade deficits are bad for a country. Do you agree or disagree with this viewpoint? Explain carefully.

Correct AnswerverifiedHaving a deficit on the goods and servic...View AnswerShow Answer

A nation is considered to be a(n) _____ in the international market, if its current account is in deficit.

Correct AnswerverifiedShow Answer

Which of the following constitutes the largest component of the world's international reserve assets?

Correct AnswerverifiedShow Answer

The _____ measures the sum of the current account balance plus the nonofficial financial account balance.

Correct AnswerverifiedShow Answer

In 2013, U.S. households, businesses, and government were buying more goods and services than they were producing.

Correct AnswerverifiedShow Answer

If the balance of payments accounts of a country shows a current account deficit, it means that:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedA.The transaction will lead to a debit e...View AnswerShow Answer

A statement of the stocks of a country's foreign assets and foreign liabilities at a point in time represents the country's:

Correct AnswerverifiedShow Answer

In a nation's balance of payments, which one of the following items is always recorded as a positive entry?

Correct AnswerverifiedShow Answer

The international investment position of a country shows:

Correct AnswerverifiedShow Answer

During the 20th century and into the 21st, the U.S. net international investment position has:

Correct AnswerverifiedShow Answer

The net value of the flow of goods, services, income, and gifts is the current account balance.

Correct AnswerverifiedShow Answer

Every international exchange of value is entered into the balance-of-payments accounts _____ time(s) .

Correct AnswerverifiedShow Answer

A credit item in the balance of payments is:

Correct AnswerverifiedShow Answer

At present, the majority of a nation's official reserve transactions are done by using foreign exchange assets instead of gold.

Correct AnswerverifiedShow Answer

In September 2005, exports of goods from the U.S. decreased $3.3 billion to $73.4 billion, and imports of goods increased $3.8 billion to $144.5 billion. This increased the deficit in:

Correct AnswerverifiedShow Answer

Correct Answer
verified
The current account includes all debit a...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Having a deficit on the goods and servic...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A.The transaction will lead to a debit e...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

During the 20^th century and into the 21^st, the U.S. net international investment position has:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified