Exam 19: The Balance-Of-Payments Accounts

The country/group of countries with which the United States has had the largest merchandise trade deficits in the last several years is __________.

Suppose that, during 2012, country A had exports of goods of $50, imports of goods of $60, exports of services plus factor income receipts from abroad of $36, and imports Of services plus factor income payments abroad of $30. In addition, during 2007, country A made $15 of unilateral transfers abroad and received no unilateral transfers from Abroad. Given this information, country A's "balance on current account" in 2007 was

If a U.K. citizen removes funds from a London bank and places them in his/her bank account in the United States, this deposit into the United States is recorded as a __________ item in the U.S. balance-of-payments accounts. If, in a different transaction, a U.K. firm sells a good to a U.S. citizen, this U.K. export (U.S. import) of the good is __________ item in the U.S. balance-of-payments accounts.

Suppose that you had to explain to a person in the street (who is not an economist) why a current account deficit must be accompanied by a financial or capital account surplus. What would you say?

In its international investment position in the 1980s, the United States moved from a position of a __________ at the beginning of the decade to that of a __________ at the End of the decade.

When might a current account deficit be a reflection of the fact that "good things" are happening in the economy?

Suppose that a developing country receives foreign aid in the form of a shipment of wheat. Balance-of-payments accountants in that country would record the "debit" item in their accounts as __________ and the credit item as __________.

How is a country's net international investment position related to that country's balance- of-payments accounts? When might the net international investment position not change from the end of one year to the end of the next year? Explain.

"Since the statistical discrepancy in the U.S. balance-of-payments accounts is so large, we cannot rely on the U.S. BOP statement to give information on the size of various 'balances' with any precision. Perhaps the U.S. BOP statement is essentially useless." Discuss this statement.