Exam 3

25 cards   |   Total Attempts: 188
  

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Cards In This Set

Front Back
1. The balance-of-payments statements, merchandise imports are classified in the
a. current account. b. capital account. c. unilateral transfer account. d. official settlements account.
2. Which balance-of-payment item does NOT directly enter into the calculation of the U.S. gross domestic product?
a. Merchandise imports b. Shipping and transportation receipts c. Direct foreign investment d. Service exports
3. Which of the following is classified as a credit in the U.S. balance of payments?
a. U.S. exports b. U.S. gifts to other countries c. A flow of gold out of the U.S. d. Foreign loans made by U.S. companies
4. If an American receives dividends from the shares of stock she or he owns in Toyota, Inc., a Japanese firm, the transaction would be recorded on the U.S. balance of payments as a
a. capital account debit. b. capital account credit. c. current account debit. d. current account credit
1. The U.S. faces a balance-of-payments deficit in the current account. This means the U.S. runs a surplus on
a. the official settlements account. b. the capital account c. either the official settlements account or the capital account. d. both the official settlements account and the capital account.
1. Debt (-) items in the balance of payments correspond to anything that
a. involves receipts from foreigners. b. involves payments to foreigners. c. increases the domestic money supply. d. decreases the demand for foreign exchange.
1. When a country realizes a deficit on its current account
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 imports over exports on goods and services. d. it becomes a net supplier of funds to other countries.
1. Reducing a current account deficit requires a country to
a. increase the government’s deficit and increase private investment relative to saving. b. increase the government’s deficit and decrease private investment relative to saving. c. decrease the government’s deficit and increase private investment relative to saving. d. decrease the government’s deficit and decrease private investment relative to saving.
  1. Concerning a country’s business cycle, rapid growth of production and employment is commonly associated with
  1. large or growing trade deficits and current account deficits.
  2. large or growing trade deficits and current account surpluses.
  3. small or shrinking trade deficits and current account deficits.
  4. small or shrinking trade deficits and current account surpluses.
  1. Referring to the balance of payments statement, an international transaction refers to the exchange of good, services, and assets between residents of one country and those abroad.
True
False
  1. If Bank of America receives repayment for a loan it made to a Mexican firm, the U.S. capital account would register an inflow.
True
False
  1. Concerning the covering of exchange market risk—assuming that a depreciation of the domestic currency is anticipated, one can say that there is an incentive for
  1. exporters to rush to cover their future needs.
  2. importers to rush to cover their future needs.
  3. both exporters and importers to rush to cover their future needs.
  4. neither exporters nor importers to rush to cover their future needs.
  1. An appreciation in the value of the U.S. dollar against the British pound would tend to
  1. discourage the British from buying American goods.
  2. discourage Americans from buying British goods.
  3. increase the number of dollars that could be bought with a pound.
  4. discourage U.S. tourists from traveling to Britain.
  1. Suppose researchers discover that Swiss beer causes cancer when given in large amounts to British mice. This finding would likely result in a/an
  1. increase in the demand for Swiss francs.
  2. decrease in the demand for Swiss francs.
  3. increase in the supply of Swiss francs.
  4. decrease in the supply of Swiss francs.
  1. A depreciating dollar refers to
  1. a fall in the dollar price of foreign currency.
  2. an increase in the dollar price of foreign currency.
  3. a loss of foreign exchange reserves for the U.S.
  4. An intervention in the international money market.