Balance Of Payments

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Question 1

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True/False

Over half of all dollar bills in circulation are held outside American's borders.

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True

False

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Question 2

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Multiple Choice

The current account balance,which is the difference between a country's exports and imports,is a component of the country's GNP.Other components of GNP include

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consumption and investment and government expenditure.

consumption and government expenditure and net exports.

consumption and net exports and government expenditure.

consumption less imports.

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Question 3

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Multiple Choice

If the United States imports more than it exports,then this means that

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the supply of dollars is likely to exceed the demand in the foreign exchange market, ceteris paribus.

the demand for dollars is likely to exceed the supply in the foreign exchange market, ceteris paribus.

the U.S.dollar would be under pressure to appreciate against other currencies.

both b) and c) are correct

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Question 4

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Multiple Choice

Balance of payments

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is defined as the statistical record of a country's international transactions over a certain period of time presented in the form of a double-entry bookkeeping.

provides detailed information concerning the demand and supply of a country's currency.

can be used to evaluate the performance of a country in international economic competition.

all of the above

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Question 5

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Multiple Choice

If a country is grappling with a major balance-of-payment difficulty,it may not be able to expand imports from the outside world.Instead,the country may be tempted to

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impose measures to restrict imports.

impose measures to discourage capital outflows.

Both a) and b)

None of the above

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Question 6

Multiple Choice

If the United States imports more than it exports,then

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the supply of dollars is likely to exceed the demand in the foreign exchange market, ceteris paribus.

one can infer that the U.S.dollar would be under pressure to depreciate against other currencies.

a) and b)

None of the above

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Question 7

Multiple Choice

Generally speaking,any transaction that results in a receipt from foreigners

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will be recorded as a debit, with a negative sign, in the U.S.balance of payments.

will be recorded as a debit, with a positive sign, in the U.S.balance of payments.

will be recorded as a credit, with a negative sign, in the U.S.balance of payments.

will be recorded as a credit, with a positive sign, in the U.S.balance of payments.

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Question 8

Multiple Choice

Generally speaking,any transaction that results in a payment to foreigners

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will be recorded as a debit, with a negative sign, in the U.S.balance of payments.

will be recorded as a debit, with a positive sign, in the U.S.balance of payments.

will be recorded as a credit, with a negative sign, in the U.S.balance of payments.

will be recorded as a credit, with a positive sign, in the U.S.balance of payments.

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Question 9

Multiple Choice

If Japan exports more than it imports,then

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the supply of dollars is likely to exceed the demand in the foreign exchange market, ceteris paribus.

one can infer that the yen would be likely to appreciate against other currencies.

a) and b)

None of the above

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Question 10

Multiple Choice

The balance of payments records

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only international trade, (exports and imports).

only cross-border investments (FDI and portfolio investment).

not only international trade, (exports and imports) but also cross-border investments.

none of the above

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Question 11

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Credit entries in the U.S.balance of payments

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result from foreign sales of U.S.goods and services, goodwill, financial claims, and real assets.

result from U.S.purchases of foreign goods and services, goodwill, financial claims, and real assets.

give rise to the demand for dollars.

give rise to the supply of dollars.

both a) and c)

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Question 12

Multiple Choice

A country experiencing a significant balance-of-payments surplus would be likely to

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expand imports, offering marketing opportunities for foreign enterprises.

refrain from imposing foreign exchange restrictions.

expand exports, offering international marketing opportunities for domestic enterprises.

Both a) and b)

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Question 13

Multiple Choice

Suppose the McDonalds Corporation imports Canadian beef,paying for it by transferring the funds to a New York bank account kept by the Canadian Beef producer.

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Payment by McDonalds will be recorded as a debit.

The deposit of the funds by the seller will be recorded as a debit.

Payment by McDonalds will be recorded as a credit.

The deposit of the funds by the buyer will be credit.

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Question 14

Multiple Choice

Since the balance of payments is presented as a system of double-entry bookkeeping,

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every credit in the account is balanced by a matching debit.

every debit in the account is balanced by a matching credit.

answers a) and b) are both true

none of the above

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Question 15

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Suppose the InBev Corporation (a non-U.S.MNC)buys the Anheuser-Busch Corporation,paying the U.S.shareholders cash.

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Payment by InBev will be recorded as a debit.

The deposit of the funds by the sellers will be recorded as a debit.

Payment by InBev will be recorded as a credit.

The deposit of the funds by the buyer will be credit.

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Question 16

Multiple Choice

The current account includes

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the export and import of goods and services.

all purchases and sales of assets such as stocks, bonds, bank accounts, real estate, and businesses.

all purchases and sales of international reserve assets such as dollars, foreign exchanges, gold, and special drawing rights (SDRs).

none of the above

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Question 17

Multiple Choice

A country with a current account surplus

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acquires IOUs from foreigners, thereby increasing its net foreign wealth.

must borrow from foreigners or draw down on its previously accumulated foreign wealth.

will experience a reduction in the country's net foreign wealth.

both b) and c)

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Question 18

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The capital account includes

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the export and import of goods and services.

all purchases and sales of assets such as stocks, bonds, bank accounts, real estate, and businesses.

all purchases and sales of international reserve assets such as dollars, foreign exchanges, gold, and special drawing rights (SDRs).

none of the above

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Question 19

Multiple Choice

The official reserve account includes

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the export and import of goods and services.

all purchases and sales of assets such as stocks, bonds, bank accounts, real estate, and businesses.

all purchases and sales of international reserve assets such as dollars, foreign exchanges, gold, and special drawing rights (SDRs).

none of the above

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Question 20

Multiple Choice

A country's international transactions can be grouped into the following three main types:

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current account, medium term account, and long term capital account.

current account, long term capital account, and official reserve account.

current account, capital account, and official reserve account.

capital account, official reserve account, trade account.

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