Question 1

The current account reflects

Accepted Answer

A)  trade in tangible products
B)  trade in goods as well as services
C)  trade in services only
D)  the purchase of securities from foreigners
E)  the sale of securities to foreignersF) A) and C)
G) A) and B)

Question 2

The exchange rate is the

Accepted Answer

A)  ratio of exports to imports
B)  interest rate the U.S.government charges on international transactions
C)  pricing policy of goods scheduled for export
D)  price of one nation's currency in terms of another nation's currency
E)  price that central banks charge each other for currency exchangesF) None of the above
G) B) and E)

Question 3

In the balance of payments accounts, a net importer of capital is a nationthat

Accepted Answer

A)  sells more goods in foreign countries than it imports
B)  buys more goods from foreign countries than it exports
C)  sells more assets to individuals in other countries than the assets it buys from them
D)  buys more assets from individuals in other countries than the assets it sells to them
E)  imports less machinery than it exportsF) A) and B)
G) A) and C)

Question 4

The statistical discrepancy

Accepted Answer

A)  is always positive
B)  is always negative
C)  must be reduced to zero and eliminated from the balance of payments before the records become official
D)  is a residual factor that indicates the net error in the balance of payments data
E)  is a record of all transactions between residents of two countries over a specified periodF) A) and B)
G) A) and C)

Question 5

If you are planning to visit wildlife preserves in Kenya, you hope the U.S.dollar appreciates against Kenya's currency.

Accepted Answer

A) True 
 B)False

Question 6

The balance of payments can be thought of as the balance of economictransactions.

Accepted Answer

A) True 
 B)False

Question 7

The merchandise trade balance

Accepted Answer

A)  reflects trade in intangibles like insurance and tourism
B)  includes personal gifts to friends abroad
C)  records the flow of financial assets like stocks and bonds
D)  equals the value of imports minus the value of exports
E)  equals the value of tangible products exported minus the value of tangible products importedF) A) and E)
G) A) and B)

Question 8

If the current account is in deficit, imports of goods and services exceedexports of goods and services (plus net unilateral transfers).

Accepted Answer

A) True 
 B)False

Question 9

If the exchange rate changes from 1 euro per U.S.dollar to 1.2 euros perU.S.dollar, the Euro has

Accepted Answer

A)  appreciated, since its value has increased
B)  appreciated, since the price of U.S.dollars has increased
C)  appreciated, making U.S.goods cheaper in Euros
D)  depreciated, since its value has declined
E)  depreciated, since its value has increasedF) All of the above
G) D) and E)

Question 10

Which of the following is a credit item (+)  in the U.S.balance of payments?

Accepted Answer

A)  U.S.companies sell merchandise abroad.
B)  Foreign companies sell merchandise to U.S. consumers.
C)  U.S.consumers send money to foreign companies.
D)  Immigrants to the United States send presents of money back to their families in their native countries.
E)  Immigrants to the United States send presents of goods back to their families in their native countries.F) B) and E)
G) D) and E)

Question 11

The world's largest net debtor nation is

Accepted Answer

A)  Russia
B)  China
C)  Brazil
D)  Mexico
E)  the United StatesF) A) and D)
G) C) and D)

Question 12

The value of a country's exports is listed in its balance of payments accountas a(n)

Accepted Answer

A)  credit
B)  debit
C)  payment
D)  investment
E)  unilateral transferF) C) and D)
G) A) and B)

Question 13

Which one of the following is not true?

Accepted Answer

A)  An exchange rate is the price of one currency in terms of another.
B)  An exchange rate is the means by which the price of a good in one country is translated into the price to theBuyer in another country.
C)  The cost of a foreign good in dollars will depend on the current exchange rate.
D)  The exchange rate will affect the willingness of foreign buyers and sellers to trade with each other.
E)  The exchange rate is the price of a currency in terms of another currency for exchanges of goods andServices but not for financial transactions.F) A) and E)
G) B) and E)

Question 14

The trade balance is

Accepted Answer

A)  the services balance plus the current account balance plus the capital account balance
B)  merchandise exports minus merchandise imports
C)  the current account balance plus the capital account balance
D)  foreign purchases of domestic assets minus domestic purchases of foreign assets
E)  the services balance plus the capital account balanceF) B) and C)
G) D) and E)

Question 15

When an American buys a Swedish financial asset,

Accepted Answer

A)  both c and d
B)  the U.S.balance of goods and services worsens
C)  the U.S.capital account balance declines
D)  the U.S.balance of payments worsens
E)  the U.S.trade balance worsensF) A) and B)
G) A) and C)

Question 16

Which of the following is not considered a unilateral transfer?

Accepted Answer

A)  foreign aid from one government to another
B)  income earned from foreign investments
C)  personal gifts to friends in foreign countries
D)  donations to foreign countries from non­government domestic charities
E)  government transfers to foreign residentsF) C) and E)
G) B) and D)

Question 17

If the exchange rate changes from 75 cents per euro to $1 per euro, the euro

Accepted Answer

A)  appreciated, since its value has increased
B)  appreciated, since the price of U.S.dollars has increased
C)  appreciated, making U.S.goods more expensive in Euros
D)  depreciated, since its value has declined
E)  depreciated, since its value has increasedF) A) and B)
G) A) and D)

Question 18

The merchandise trade balance does not include

Accepted Answer

A)  exports of refrigerators
B)  imports of automobiles
C)  exports of agricultural products
D)  shipping and insurance costs
E)  imports of food items with heavy tariffsF) A) and D)
G) C) and D)

Question 19

Which of the following would be represented as a debit in the U.S.balanceof payments?

Accepted Answer

A)  U.S.purchase of cars from Italy
B)  U.S.sale of beef to Israel
C)  U.S.government receives transfers from foreign governments to support U.S.expenses incurred inEurope
D)  U.S.residents receive gifts of money from friends abroad
E)  income received by U.S.resident from overseas investmentF) None of the above
G) A) and D)

Question 20

International reserves include all except one of the following.Which is theexception?

Accepted Answer

A)  gold
B)  dollars
C)  yen
D)  Special Drawing Rights
E)  oilF) B) and E)
G) D) and E)

Exam 20: International Finance

The exchange rate is the

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The current account reflects

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If the current account is in deficit, imports of goods and services exceedexports of goods and services (plus net unilateral transfers).

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If the exchange rate changes from 1 euro per U.S.dollar to 1.2 euros perU.S.dollar, the Euro has

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The balance of payments can be thought of as the balance of economictransactions.

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In the balance of payments accounts, a net importer of capital is a nationthat

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The trade balance is

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The merchandise trade balance does not include

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The value of a country's exports is listed in its balance of payments accountas a(n)

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When an American buys a Swedish financial asset,

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Which of the following is a credit item (+) in the U.S.balance of payments?

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International reserves include all except one of the following.Which is theexception?

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The merchandise trade balance

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If you are planning to visit wildlife preserves in Kenya, you hope the U.S.dollar appreciates against Kenya's currency.

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The statistical discrepancy

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If the exchange rate changes from 75 cents per euro to $1 per euro, the euro

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The world's largest net debtor nation is

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Which of the following would be represented as a debit in the U.S.balanceof payments?

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Which one of the following is not true?

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Which of the following is not considered a unilateral transfer?

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