Question 1

Which of the following is an example of a surplus in the balance of payments?

Accepted Answer

A)  The excess of debits over credits in the current and financial accounts
B)  The excess of credits over debits in the current account
C)  The excess of credits over debits in the capital account
D)  Both B & CE) C) and D)
F) None of the above

Question 2

If a US resident were to visit Japan and spend $500 on food and shelter,what entries would be made into the US balance of payments?

Accepted Answer

A)  Travel services - credit of $500; Capital inflow - debit of $500
B)  Accounts Payable - debit of $500; Goods imports - credit of $500
C)  Travel services - debit of $500; Capital inflow - credit of $500
D)  Accounts Payable - credit of $500; Inventory - debit of $500E) B) and D)
F) A) and D)

Question 3

US military aid granted to foreign countries is entered in the:

Accepted Answer

A)  Merchandise trade account
B)  Capital account
C)  Current account
D)  Official settlements accountE) A) and D)
F) A) and C)

Question 4

The sharp deterioration of the US trade balance on goods after the 1970s was due in large part to which of the following?

Accepted Answer

A)  The sharp rise in the price of imported petroleum products during the 1970s
B)  The high international value of the dollar in the 1980s
C)  The more rapid growth of the United States than Europe and Japan during the 1990s
D)  All of the aboveE) None of the above
F) All of the above

Question 5

Financial reserve assets are excluded from the capital account because changes in reserves reflect government policy rather than market forces.

Accepted Answer

A) True 
 B)False

Question 6

Credit transactions involve the receipt of payments from foreigners.

Accepted Answer

A) True 
 B)False

Question 7

The official reserve account is relatively simple to account for since it only measures the change in the US official reserve assets.

Accepted Answer

A) True 
 B)False

Question 8

A nation's balance of payments reflects

Accepted Answer

A)  the summary of all trade related transactions that took place within a given period.
B)  all the money that was exchanged between the country and all its trading partners within a given period.
C)  the value of all the assets that was purchased by foreigners within a given period.
D)  the summary of all the transactions that took place between the residents of a country and the rest of the world within a given period.E) B) and D)
F) B) and C)

Question 9

Which of the following is an example of a capital outflow for the US?

Accepted Answer

A)  A domestic increase of assets held by foreign investors
B)  A reduction in US foreign asset holdings
C)  Unilateral transfers from foreigners
D)  A domestic decrease of assets held by foreign investorsE) A) and B)
F) A) and C)

Question 10

Which of the following does the international investment position consider?

Accepted Answer

A)  The total amount of a nation's assets abroad at the end of the year
B)  The distribution of a nation's assets abroad at the end of the year
C)  The foreign assets in the nation at the end of the year
D)  All of the aboveE) B) and C)
F) All of the above

Question 11

Which of the following must be considered when examining a nation's balance of payments?

Accepted Answer

A)  Too much attention is placed on the balance of goods and on short-term data
B)  International transactions are independent so that an attempt to reduce the US trade deficit with one nation doesn't affect the surplus the US has with another.
C)  Measuring the deficit in the balance of payments is strictly correct under a flexible exchange rate system and not under a fixed exchange rate system.
D)  If we have a deficit in the balance of payments,under the flexible exchange rate that will not bring any pressure on the currency value.E) A) and B)
F) A) and C)

Question 12

_____________ are transactions in official reserve assets that are required to balance international transactions.

Accepted Answer

A)  Automated transactions
B)  Autonomous transactions
C)  Accommodating transactions
D)  Discrepancy AdjustmentE) B) and D)
F) C) and D)

Question 13

A nation's international investment position is also called its:

Accepted Answer

A)  Balance of international capital flow
B)  Balance of international indebtedness
C)  International capital accumulation standing
D)  Current account balanceE) A) and B)
F) A) and C)

Question 14

In the balance of payments,the statistical discrepancy is used to:

Accepted Answer

A)  Ensure that the sum of all debits matches the sum of all credits
B)  Ensure that trade imports equal trade exports
C)  Obtain an accurate account of the trade deficit
D)  Obtain an accurate account of the balance of payments deficitE) All of the above
F) B) and D)

Question 15

The earnings received from abroad for the services of US assets abroad are recorded in the capital account.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is an example of a capital inflow for the US?

Accepted Answer

A)  A domestic increase of assets held by foreign investors
B)  A domestic decrease of assets held by foreign investors
C)  An increase in US foreign asset holdings
D)  Importing of goods and servicesE) None of the above
F) A) and D)

Question 17

Debit transactions involve the receipt of payments from foreigners.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is not included in the current account?

Accepted Answer

A)  Currently produced goods and services
B)  Income on foreign investments
C)  Unilateral transfers
D)  Direct Foreign InvestmentE) A) and C)
F) C) and D)

Question 19

____________ are balance of payments transactions involving the receipt of payments from foreigners.

Accepted Answer

A)  Debit transactions
B)  Credit transactions
C)  Accommodating transactions
D)  Autonomous transactionsE) B) and C)
F) A) and C)

Question 20

During the fiscal year 2009,how much did the US export in dollars?

Accepted Answer

A)  $1 - $2.5 trillion
B)  $100 - $500 million
C)  $500 million - $1 billion
D)  $5 - $10 billionE) B) and C)
F) A) and B)

Exam 10: Balance of Payments

A nation's international investment position is also called its:

Correct AnswerverifiedShow Answer

US military aid granted to foreign countries is entered in the:

Correct AnswerverifiedShow Answer

Debit transactions involve the receipt of payments from foreigners.

Correct AnswerverifiedShow Answer

Which of the following must be considered when examining a nation's balance of payments?

Correct AnswerverifiedShow Answer

Which of the following is an example of a surplus in the balance of payments?

Correct AnswerverifiedShow Answer

During the fiscal year 2009,how much did the US export in dollars?

Correct AnswerverifiedShow Answer

____________ are balance of payments transactions involving the receipt of payments from foreigners.

Correct AnswerverifiedShow Answer

Which of the following is an example of a capital inflow for the US?

Correct AnswerverifiedShow Answer

Which of the following is not included in the current account?

Correct AnswerverifiedShow Answer

Which of the following is an example of a capital outflow for the US?

Correct AnswerverifiedShow Answer

The sharp deterioration of the US trade balance on goods after the 1970s was due in large part to which of the following?

Correct AnswerverifiedShow Answer

In the balance of payments,the statistical discrepancy is used to:

Correct AnswerverifiedShow Answer

The official reserve account is relatively simple to account for since it only measures the change in the US official reserve assets.

Correct AnswerverifiedShow Answer

Financial reserve assets are excluded from the capital account because changes in reserves reflect government policy rather than market forces.

Correct AnswerverifiedShow Answer

The earnings received from abroad for the services of US assets abroad are recorded in the capital account.

Correct AnswerverifiedShow Answer

If a US resident were to visit Japan and spend $500 on food and shelter,what entries would be made into the US balance of payments?

Correct AnswerverifiedShow Answer

Credit transactions involve the receipt of payments from foreigners.

Correct AnswerverifiedShow Answer

A nation's balance of payments reflects

Correct AnswerverifiedShow Answer

Which of the following does the international investment position consider?

Correct AnswerverifiedShow Answer

_____________ are transactions in official reserve assets that are required to balance international transactions.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified