Identify the 5 Correct Statements

Essay

Identify the 5 correct statements
1. A balance of payments surplus means that a country has an export surplus.
2. The current account records all in- and outflow of foreign exchange.
3. A very high current account surplus often goes together with a capital (sometimes also called: financial) account deficit.
4. For running a current account surplus, a country must spend less than it produces.
5. High government budget deficits are always behind a current account deficit.
6. A high capital inflow can lead to excess spending.
7. A depreciation of the domestic currency can - everything else equal - make our economy less price competitive.
8. The real exchange rate provides better information on a country's price competitiveness than the nominal exchange rate.
9. For calculating the real exchange rate, the Consumer Price Index (CPI) is the best choice.
10. The Real Effective Exchange Rate (REER) is a trade-weighted average of bilateral real exchange rates.