Exchange Rates And The Balance Of Payments
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Question 1
Free
Multiple Choice
A credit entry in Canada's balance-of-payments accounts
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is any transaction that involves a payment to other nations.
is any transaction that involves a receipt from other nations.
typically results in less foreign exchange being held by Canadians.
typically gives rise to the acquisition of foreign exchange on current-account transactions and the loss of foreign exchange on capital-account transactions.
can be recorded only by the central bank in the official financing accounts.
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Question 2
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Multiple Choice
When a Japanese firm buys Canadian lumber,this transaction appears as a
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debit on the Canadian capital account.
credit on the Japanese capital account.
credit on the Canadian current account.
credit on the Japanese current account.
debit on Canada's trade account.
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Question 3
Free
Multiple Choice
Which of the following is true? A credit entry in the Canadian balance-of-payments accounts
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is any transaction that results in a payment to other nations.
typically results in more foreign exchange being held by foreigners.
is a credit in the balance-of-payments accounts for foreign countries.
arises when Canadian assets are sold to foreigners.
arises when Canadians purchase assets from foreigners.
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Question 4
Free
Multiple Choice
Payments made to foreign firms arising from Canadians' purchases of foreign goods and services are shown in Canada's
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capital account.
current account.
official financing account.
capital-service account.
foreign-currency reserves.
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Question 5
Free
Multiple Choice
Canadian firms' receipts from foreign consumers arising from the exports of goods and services are shown in Canada's
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investment account.
capital account.
official financing account.
trade account.
capital-service account.
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Question 6
Multiple Choice
With respect to Canada's balance of payments,
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if the current account is in deficit,the capital account must also be in deficit.
the current account balance must be zero.
the trade account balance must be zero.
total payments must equal total receipts.
if the current account is in surplus,the capital account must also be in surplus.
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Question 7
Multiple Choice
With respect to Canada's balance of payments,
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if the current account is in deficit,the capital account must also be in deficit.
the current account balance must be zero.
the current account balance plus the capital account balance must be zero.
the trade account plus the capital account must equal the official financing account.
the capital account balance must be zero.
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Question 8
Multiple Choice
The capital-service account in Canada's balance-of-payments is the section of the
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capital account which records the net change in Canadian investments abroad and the net change in foreign investments in Canada.
capital account which represents the financial reserves held by the Bank of Canada which they can use in the foreign-exchange market.
current account which records the interest charges and earnings of Canadian importers and exporters.
current account which records income paid to foreign owners of assets in Canada and income received by Canadians for assets located abroad.
current account which records the financial reserves held by the Bank of Canada which they can use in the foreign-exchange market.
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Question 9
Multiple Choice
The purchase of foreign assets by Canadians is,for Canada,considered a capital
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outflow and is recorded as a debit on the current account.
outflow and is recorded as a debit on the capital account.
inflow and is recorded as a credit on the current account.
inflow and is recorded as a credit on the capital account.
inflow and is recorded as a debit on the capital account.
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Question 10
Multiple Choice
The purchase of Canadian assets by foreigners is,for Canada,considered a capital
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outflow and is recorded as a credit on the current account.
outflow and is recorded as a debit on the capital account.
outflow and is recorded as a debit on the current account.
inflow and is recorded as a credit on the capital account.
inflow and is recorded as a credit on the current account.
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Question 11
Multiple Choice
Which of the following would appear as a credit item in the trade account of the Canadian balance of payments?
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dividends payable to Canadians on Canadian-owned assets located in Cuba
sales of Canadian steel to European importers
Canadian purchases of American-made vehicles
purchases by Japanese firms of shares of Canadian firms in the entertainment industry
the opening of an Ottawa branch of a Swiss bank
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Question 12
Multiple Choice
Which of the following would appear as a debit item in the trade account of the Canadian balance of payments?
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dividends payable to Canadians on Canadian-owned assets located in Australia
sales of Canadian steel to European importers
Canadian purchases of Colombian coffee
purchases by a Japanese pension fund of CN Rail shares
purchases by General Motors of Canadian-made auto parts
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Question 13
Multiple Choice
Payments by Canadians of interest and dividends on foreign-owned capital located in Canada
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are a debit in the current account.
are a debit in the capital account.
contribute to a surplus on the trade account.
contribute to increased foreign-exchange holding by the Bank of Canada.
are a credit in the capital account.
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Question 14
Multiple Choice
Which one of the following transactions would appear as a debit in the current account of the Canadian balance of payments?
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The Arabian Capital Investment Corporation makes a loan to a Canadian firm.
A Canadian subsidiary exports raw materials to its Dutch parent company.
Canadians receive dividends on U.S.investment in Latin America.
Canadian tourists in France purchase cases of wine.
The Bank of Canada purchases euros to hold in its official reserves.
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Question 15
Multiple Choice
Which one of the following transactions would appear as a credit in the capital account of the Canadian balance of payments?
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Canadians purchase foreign securities.
A Dutch firm purchases a uranium mine in Canada.
Canadian firms pay dividends to foreigners.
Coffee is imported from Venezuela.
French tourists buy ski tickets in Canada.
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Question 16
Multiple Choice
Consider the following annual transactions in Canada's current account.If Canadian exports of goods and services are $40 billion,imports of goods and services are $35 billion,transfers by Canadians to foreigners are $2 billion and transfers from foreigners to Canadian citizens are $1 billion,then the current account balance is
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+ $6 billion.
+ $4 billion.
- $4 billion.
- $6 billion.
- $7 billion
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Question 17
Multiple Choice
Consider the following annual transactions in Canada's capital account.If Canadian purchases of foreign real estate are $100 million,Canadian purchases of foreign-country bonds are $50 million,foreign purchases of Canadian real estate are $75 million,and foreign purchases of Canadian bonds are $35 million,then the capital account balance is equal to
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+ $90 million.
+ $40 million.
- $10 million.
- $40 million.
- $90 million.
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Question 18
Multiple Choice
Consider Canada's balance of payments.If the Canadian government were to purchase more foreign-exchange reserves,this transaction
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represents the sale of an asset,and thus enters as a credit item in the official financing account.
represents the purchase of an asset from abroad,and thus enters as a debit item in the official financing account.
enters as a credit in the current account.
enters as a credit in the capital account.
represents the purchase of an asset from abroad,and thus enters as a debit item in the capital-service account.
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Question 19
Multiple Choice
Consider Canada's balance of payments.If the Canadian government were to purchase more foreign-exchange reserves,this transaction
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represents the sale of an asset,and thus enters as a credit item in the official financing account.
represents the purchase of an asset from abroad,and thus enters as a debit item in the capital-service account.
enters as a credit in the current account.
enters as a debit in the capital account.
enters as a credit in the capital account.
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Question 20
Multiple Choice
Consider Canada's balance of payments.If the Government of Canada were to sell some of its foreign-exchange reserves to a foreign government,the transaction would
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represent the sale of an asset,and thus enter as a credit item in the official financing account.
represent the purchase of an asset from abroad,and thus enter as a debit item in the official financing account.
enter as a credit in the current account.
enter as a debit in the capital account.
enters as a credit in the capital-service account.
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