Exam 2: International Flow of Funds

The J curve effect is the initial worsening of the UK trade balance due to a weakening dollar because of established trade relationships that are not easily changed; as the dollar weakens, the dollar value of imports initially rises before the UK trade balance is improved.

The current account represents the investment in fixed assets in foreign countries that can be used to conduct business operations.

The World Bank was established to:

The recent BRICS alliance is a representative group of the Canada, Brazil, India, Russia and South Africa.

If a country's government imposes a tariff on imported goods, that country's current account balance will likely ____ (assuming no retaliation by other governments).

A weak home currency may not be a perfect solution to correct a balance of trade deficit because:

The World Bank's Multilateral Investment Guarantee Agency (MIGA):

If the home currency begins to appreciate against other currencies, this should ____ the current account balance, other things equal (assume that substitutes are readily available in the countries, and that the prices charged by firms remain the same).

Like the International Monetary Fund (IMF), the ____ is composed of a collection of nations as members. However, unlike the IMF, it uses the private rather than the government sector to achieve its objectives.

The imperfect markets theory states that factors of production are somewhat immobile, allowing firms to capitalize on a foreign country's resources.

Changes in country ownership of long-term and short-term assets are measured in the balance of payments with the capital account.

Which of the following theories identifies the non-transferability of resources as a reason for international business?

Over time, international trade (exports plus imports) as a percentage of GDP has:

Which of the following theories identifies specialization as a reason for international business?

The World Bank extends loans only to developed nations, while the International Development Association (IDA) extends loans only to developing nations.

An increase in the current account deficit will place ____ pressure on the home currency value, other things equal.

Exporting of products by one country to other countries at prices below cost is called elasticity.

An increase in the use of quotas is expected to:

'Dumping' is used in the text to represent the:

The primary component of the current account is the: