Question 1

For the United States, the largest component of its current account transactions consists of

Accepted Answer

A)  payments for imports of goods and services and receipts from exports of goods and services. 
B)  payments for military transactions with other countries. 
C)  travel and transportations payments and receipts with other countries. 
D)  unilateral transfers to other countries and from other countries. 
A)  payments for imports of goods and services and receipts from exports of goods and services. 
B)  payments for military transactions with other countries. 
C)  travel and transportations payments and receipts with other countries. 
D)  unilateral transfers to other countries and from other countries.

Question 2

A current account deficit for the United States necessarily reduces the standard of living for American households.

Accepted Answer

A) True 
 B)False

Question 3

A debit in the U.S.current account would be represented by

Accepted Answer

A)  earnings on U.S. investments abroad flowing into the United States. 
B)  gifts that Americans make to the poor in Africa. 
C)  Chinese investors purchasing the securities of the U.S. government. 
D)  exports of Boeing jetliners to South Korea. 
A)  earnings on U.S. investments abroad flowing into the United States. 
B)  gifts that Americans make to the poor in Africa. 
C)  Chinese investors purchasing the securities of the U.S. government. 
D)  exports of Boeing jetliners to South Korea.

Question 4

In recent years, the two largest holders of U.S.government securities have been

Accepted Answer

A)  China and Japan. 
B)  Mexico and Canada. 
C)  Brazil and Spain. 
D)  Germany and France. 
A)  China and Japan. 
B)  Mexico and Canada. 
C)  Brazil and Spain. 
D)  Germany and France.

Question 5

Most economists contend that any reduction in the current account deficit is better achieved through increased national saving than through reduced domestic investment.

Accepted Answer

A) True 
 B)False

Question 6

The United States realizes several benefits from the dollar serving as the main reserve currency of the world, including

Accepted Answer

A)  Americans can buy goods at a marginally cheaper price than households in other nations who must exchange their currency with each purchase and pay a transaction cost. 
B)  Americans can borrow at lower interest rates for homes and automobiles. 
C)  the U.S. government can finance larger deficits longer and at lower interest rates. 
D)  All of these are correct. 
A)  Americans can buy goods at a marginally cheaper price than households in other nations who must exchange their currency with each purchase and pay a transaction cost. 
B)  Americans can borrow at lower interest rates for homes and automobiles. 
C)  the U.S. government can finance larger deficits longer and at lower interest rates. 
D)  All of these are correct.

Question 7

The current account of the United States includes all of the following EXCEPT

Accepted Answer

A)  trade in goods and services. 
B)  unilateral transfers. 
C)  income receipts and payments. 
D)  gold flows between the United States and foreign central banks. 
A)  trade in goods and services. 
B)  unilateral transfers. 
C)  income receipts and payments. 
D)  gold flows between the United States and foreign central banks.

Question 8

For the United States, a loss in its reserve currency position would likely result in which of the following?

Accepted Answer

A)  imports becoming more expensive 
B)  lower interest rates on private debt. 
C)  more foreign investment in the United States 
D)  lower interest rates on government debt 
A)  imports becoming more expensive 
B)  lower interest rates on private debt. 
C)  more foreign investment in the United States 
D)  lower interest rates on government debt

Question 9

For the U.S.balance-of-payments statement, the sum of debits and credits on all transactions will always be equal-that is, the balance-of-payments always balances.

Accepted Answer

A) True 
 B)False

Question 10

Concerning the balance-of-payments statement, the ______ indicates the receipts from exports of goods and services sold overseas, the payments for imports of goods and services from overseas, unilateral transfers (net), and income receipts and payments (net).

Accepted Answer

A)  capital and financial account 
B)  current account 
C)  official reserve asset account 
D)  monetary gold account 
A)  capital and financial account 
B)  current account 
C)  official reserve asset account 
D)  monetary gold account

Question 11

If a country consistently realizes a current account surplus in its balance-of-payments, it likely will become a net debtor in its balance of international indebtedness.

Accepted Answer

A) True 
 B)False

Question 12

Concerning the balance of international indebtedness, when is a country a net creditor or a net debtor?

Accepted Answer

A country is a net creditor wh

Question 13

Although the United States has realized merchandise trade deficits since the early 1980s, its goods and services balance has always registered surplus.

Accepted Answer

A) True 
 B)False

Question 14

The value of direct investment by Ford Motor Co.in Canada is included in the U.S.

Accepted Answer

A)  capital and financial account. 
B)  current account. 
C)  net export account. 
D)  merchandise trade account. 
A)  capital and financial account. 
B)  current account. 
C)  net export account. 
D)  merchandise trade account.

Question 15

In a country's balance-of-payments, which of the following transactions are debits?

Accepted Answer

A)  Domestic bank balances owned by foreigners are decreased. 
B)  Foreign bank balances owned by domestic residents are decreased. 
C)  Assets owned by domestic residents are sold to nonresidents. 
D)  Securities are sold by domestic residents to nonresidents. 
A)  Domestic bank balances owned by foreigners are decreased. 
B)  Foreign bank balances owned by domestic residents are decreased. 
C)  Assets owned by domestic residents are sold to nonresidents. 
D)  Securities are sold by domestic residents to nonresidents.

Question 16

By the mid-1980s, the United States had evolved from the status of a net creditor nation to a net debtor nation in its balance of international indebtedness.

Accepted Answer

A) True 
 B)False

Question 17

The U.S.balance of trade position is in part determined by

Accepted Answer

A)  exchange rates. 
B)  growth of foreign consumers' incomes. 
C)  relative prices in world markets. 
D)  All of these are correct. 
A)  exchange rates. 
B)  growth of foreign consumers' incomes. 
C)  relative prices in world markets. 
D)  All of these are correct.

Question 18

When a country realizes a deficit on its current account

Accepted Answer

A)  its net foreign investment position becomes positive. 
B)  it becomes a net demander of funds from other countries. 
C)  it realizes an excess of exports over imports on goods and services. 
D)  it becomes a net supplier of funds to other countries. 
A)  its net foreign investment position becomes positive. 
B)  it becomes a net demander of funds from other countries. 
C)  it realizes an excess of exports over imports on goods and services. 
D)  it becomes a net supplier of funds to other countries.

Question 19

If the U.S.current account balance is negative

Accepted Answer

A)  the United States lends to other countries who purchase goods and services from the United States. 
B)  the United States borrows from other countries to pay for the goods and services that the United States buys from them. 
C)  the U.S. balance of international indebtedness shows that the United States is a net creditor nation. 
D)  the U.S. balance of international indebtedness shows that the United States is a net exporting nation. 
A)  the United States lends to other countries who purchase goods and services from the United States. 
B)  the United States borrows from other countries to pay for the goods and services that the United States buys from them. 
C)  the U.S. balance of international indebtedness shows that the United States is a net creditor nation. 
D)  the U.S. balance of international indebtedness shows that the United States is a net exporting nation.

Question 20

Reducing a current account deficit requires a country to

Accepted Answer

A)  increase private saving relative to investment. 
B)  increase private consumption relative to saving. 
C)  increase private investment relative to consumption. 
D)  increase private investment relative to saving. 
A)  increase private saving relative to investment. 
B)  increase private consumption relative to saving. 
C)  increase private investment relative to consumption. 
D)  increase private investment relative to saving.

For the United States, the largest component of its current account transactions consists of

A current account deficit for the United States necessarily reduces the standard of living for American households.

A debit in the U.S.current account would be represented by

In recent years, the two largest holders of U.S.government securities have been

Most economists contend that any reduction in the current account deficit is better achieved through increased national saving than through reduced domestic investment.

The United States realizes several benefits from the dollar serving as the main reserve currency of the world, including

The current account of the United States includes all of the following EXCEPT

For the United States, a loss in its reserve currency position would likely result in which of the following?

For the U.S.balance-of-payments statement, the sum of debits and credits on all transactions will always be equal-that is, the balance-of-payments always balances.

Concerning the balance-of-payments statement, the ______ indicates the receipts from exports of goods and services sold overseas, the payments for imports of goods and services from overseas, unilateral transfers (net), and income receipts and payments (net).

If a country consistently realizes a current account surplus in its balance-of-payments, it likely will become a net debtor in its balance of international indebtedness.

Concerning the balance of international indebtedness, when is a country a net creditor or a net debtor?

Although the United States has realized merchandise trade deficits since the early 1980s, its goods and services balance has always registered surplus.

The value of direct investment by Ford Motor Co.in Canada is included in the U.S.

In a country's balance-of-payments, which of the following transactions are debits?

By the mid-1980s, the United States had evolved from the status of a net creditor nation to a net debtor nation in its balance of international indebtedness.

The U.S.balance of trade position is in part determined by

When a country realizes a deficit on its current account

If the U.S.current account balance is negative

Reducing a current account deficit requires a country to

The International Economy and Globalization

Foundations of Modern Trade Theory Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance of Payments

Exchange Rate Systems and Currency Crises

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Exam 10: The Balance of Payments

For the United States, the largest component of its current account transactions consists of

A current account deficit for the United States necessarily reduces the standard of living for American households.

A debit in the U.S.current account would be represented by

In recent years, the two largest holders of U.S.government securities have been

Most economists contend that any reduction in the current account deficit is better achieved through increased national saving than through reduced domestic investment.

The United States realizes several benefits from the dollar serving as the main reserve currency of the world, including

The current account of the United States includes all of the following EXCEPT

For the United States, a loss in its reserve currency position would likely result in which of the following?

For the U.S.balance-of-payments statement, the sum of debits and credits on all transactions will always be equal-that is, the balance-of-payments always balances.

Concerning the balance-of-payments statement, the ______ indicates the receipts from exports of goods and services sold overseas, the payments for imports of goods and services from overseas, unilateral transfers (net), and income receipts and payments (net).

If a country consistently realizes a current account surplus in its balance-of-payments, it likely will become a net debtor in its balance of international indebtedness.

Concerning the balance of international indebtedness, when is a country a net creditor or a net debtor?

Although the United States has realized merchandise trade deficits since the early 1980s, its goods and services balance has always registered surplus.

The value of direct investment by Ford Motor Co.in Canada is included in the U.S.

In a country's balance-of-payments, which of the following transactions are debits?

By the mid-1980s, the United States had evolved from the status of a net creditor nation to a net debtor nation in its balance of international indebtedness.

The U.S.balance of trade position is in part determined by

When a country realizes a deficit on its current account

If the U.S.current account balance is negative

Reducing a current account deficit requires a country to

The International Economy and Globalization

Foundations of Modern Trade Theory Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance of Payments

Exchange Rate Systems and Currency Crises

Filters