Exam 18: Part A: The Balance of Payments and Exchange Rates

The exchange rate system currently used by the industrially advanced nations is:

The following table shows the balance of payments statement of Transylvania for 2013.All the figures are in billions of dollars. Refer to the above data.In 2013, Transylvania was a net recipient of transfers from the rest of the world.

Which one of the following will not directly affect Canada's balance on current account?

Fixed exchange rates are often maintained by using all of the following except:

If the equilibrium exchange rate changes so that fewer dollars are required to buy a pound, then:

The following table shows the balance of payments statement for the hypothetical nation of Zabella for 2014.All the figures are in billions of dollars. Refer to the above data.The sign of the official settlement account indicates that:

International financial transactions mostly fall into two broad categories:

The current exchange-rate system is an "almost" flexible exchange-rate system.

Refer to the above diagram where D and S are Canada's demand for and supply of Swiss francs.At the equilibrium exchange rate, E, Canada's balance of payments is in equilibrium.Given a change in demand from D to D' Canada could maintain the dollar price of francs by:

A deficit on the current account:

Depreciation of the Canadian dollar will tend to:

A nation which imports more goods and services than it exports is necessarily realizing an international balance of payments deficit.

The items in a hypothetical country's balance of payments account were: current account deficit -$100; capital account surplus +$85.The value of official reserves was:

In the balance of payments of Canada, Canadian merchandise imports are recorded as a:

Assume that Switzerland and Britain have flexible exchange rates.Other things unchanged, if the price level is stable in Britain but Switzerland experiences rapid inflation:

A system of fixed exchange rates is more likely to give rise to exchange controls than is a system of flexible exchange rates.

A nation's merchandise balance of trade is equal to its exports less its imports of:

Refer to the diagram below.The initial demand for and supply of pesos are shown by D₁ and S₁.Suppose Canada reduces its imports of Mexican goods, shifting its demand for pesos from D₁ and D₂.If Canada was operating under a system of exchange controls that maintains the exchange rate at E, the Canadian government would:

Using Image 18.2 Global Perspective, In October 2017, one Canadian dollar bought:

Suppose the current account balance of an economy is -$50 billion and the stock of official international reserves is -$11 billion.Given the information, it can be said that the balance in the capital account is: