Balance of PaymentsTrue False Questions  .doc

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1、Chapter 03 - Balance of Payments3-1 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole

2、or part.Chapter 03 Balance of PaymentsTrue / False Questions 1. Over half of all dollar bills in circulation are held outside Americans borders. True FalseMultiple Choice Questions2. The current account balance, which is the difference between a countrys exports and imports, is a component of the co

3、untrys GNP. Other components of GNP include A. consumption and investment and government expenditure. B. consumption and government expenditure and net exports. C. consumption and net exports and government expenditure. D. consumption less imports.3. If the United States imports more than it exports

4、, then this means that A. the supply of dollars is likely to exceed the demand in the foreign exchange market, ceteris paribus. B. the demand for dollars is likely to exceed the supply in the foreign exchange market, ceteris paribus. C. the U.S. dollar would be under pressure to appreciate against o

5、ther currencies. D. both b) and c) are correct4. Balance of payments A. is defined as the statistical record of a countrys international transactions over a certain period of time presented in the form of a double-entry bookkeeping. B. provides detailed information concerning the demand and supply o

6、f a countrys currency. C. can be used to evaluate the performance of a country in international economic competition. D. all of the aboveChapter 03 - Balance of Payments3-2 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or di

7、stribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.5. 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

8、may be tempted to A. impose measures to restrict imports. B. impose measures to discourage capital outflows. C. Both a) and b) D. None of the above6. If the United States imports more than it exports, then A. the supply of dollars is likely to exceed the demand in the foreign exchange market, ceteri

9、s paribus. B. one can infer that the U.S. dollar would be under pressure to depreciate against other currencies. C. a) and b) D. None of the above7. Generally speaking, any transaction that results in a receipt from foreigners A. will be recorded as a debit, with a negative sign, in the U.S. balance

10、 of payments. B. will be recorded as a debit, with a positive sign, in the U.S. balance of payments. C. will be recorded as a credit, with a negative sign, in the U.S. balance of payments. D. will be recorded as a credit, with a positive sign, in the U.S. balance of payments.8. Generally speaking, a

11、ny transaction that results in a payment to foreigners A. will be recorded as a debit, with a negative sign, in the U.S. balance of payments. B. will be recorded as a debit, with a positive sign, in the U.S. balance of payments. C. will be recorded as a credit, with a negative sign, in the U.S. bala

12、nce of payments. D. will be recorded as a credit, with a positive sign, in the U.S. balance of payments.9. If Japan exports more than it imports, then A. the supply of dollars is likely to exceed the demand in the foreign exchange market, ceteris paribus. B. one can infer that the yen would be likel

13、y to appreciate against other currencies. C. a) and b) D. None of the aboveChapter 03 - Balance of Payments3-3 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, sca

14、nned, duplicated, forwarded, distributed, or posted on a website, in whole or part.10. The balance of payments records A. only international trade, (exports and imports). B. only cross-border investments (FDI and portfolio investment). C. not only international trade, (exports and imports) but also

15、cross-border investments. D. none of the above11. Credit entries in the U.S. balance of payments A. result from foreign sales of U.S. goods and services, goodwill, financial claims, and real assets. B. result from U.S. purchases of foreign goods and services, goodwill, financial claims, and real ass

16、ets. C. give rise to the demand for dollars. D. give rise to the supply of dollars. E. both a) and c)12. A country experiencing a significant balance-of-payments surplus would be likely to A. expand imports, offering marketing opportunities for foreign enterprises. B. refrain from imposing foreign e

17、xchange restrictions. C. expand exports, offering international marketing opportunities for domestic enterprises. D. Both a) and b)13. 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. A. Pa

18、yment by McDonalds will be recorded as a debit. B. The deposit of the funds by the seller will be recorded as a debit. C. Payment by McDonalds will be recorded as a credit. D. The deposit of the funds by the buyer will be credit.14. Since the balance of payments is presented as a system of double-en

19、try bookkeeping, A. every credit in the account is balanced by a matching debit. B. every debit in the account is balanced by a matching credit. C. answers a) and b) are both true D. none of the aboveChapter 03 - Balance of Payments3-4 2012 by McGraw-Hill Education. This is proprietary material sole

20、ly for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.15. Suppose the InBev Corporation (a non-U.S. MNC) buys the Anheuser-Busch Corporation, payi

21、ng the U.S. shareholders cash. A. Payment by InBev will be recorded as a debit. B. The deposit of the funds by the sellers will be recorded as a debit. C. Payment by InBev will be recorded as a credit. D. The deposit of the funds by the buyer will be credit.16. The current account includes A. the ex

22、port and import of goods and services. B. all purchases and sales of assets such as stocks, bonds, bank accounts, real estate, and businesses. C. all purchases and sales of international reserve assets such as dollars, foreign exchanges, gold, and special drawing rights (SDRs). D. none of the above1

23、7. A country with a current account surplus A. acquires IOUs from foreigners, thereby increasing its net foreign wealth. B. must borrow from foreigners or draw down on its previously accumulated foreign wealth. C. will experience a reduction in the countrys net foreign wealth. D. both b) and c)18. T

24、he capital account includes A. the export and import of goods and services. B. all purchases and sales of assets such as stocks, bonds, bank accounts, real estate, and businesses. C. all purchases and sales of international reserve assets such as dollars, foreign exchanges, gold, and special drawing

25、 rights (SDRs). D. none of the aboveChapter 03 - Balance of Payments3-5 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distribute

26、d, or posted on a website, in whole or part.19. The official reserve account includes A. the export and import of goods and services. B. all purchases and sales of assets such as stocks, bonds, bank accounts, real estate, and businesses. C. all purchases and sales of international reserve assets suc

27、h as dollars, foreign exchanges, gold, and special drawing rights (SDRs). D. none of the above20. A countrys international transactions can be grouped into the following three main types: A. current account, medium term account, and long term capital account. B. current account, long term capital ac

28、count, and official reserve account. C. current account, capital account, and official reserve account. D. capital account, official reserve account, trade account.21. Invisible trade refers to A. services that avoid tax payments. B. the underground economy. C. legal, consulting, and engineering ser

29、vices. D. tourist expenditures, only.22. A country that gives foreign aid to another country can be viewed as A. importing goodwill from the latter. B. exporting goodwill to the latter.23. In 2007 the United States had a current account deficit. The current account deficit implies that the United St

30、ates A. had a surplus on legal consulting and engineering services. B. produced more output than it consumed. C. consumed more output than it produced. D. none of the aboveChapter 03 - Balance of Payments3-6 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor

31、 use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.24. The current account is divided into four finer categories: A. merchandise trade, services, factor income, and statis

32、tical discrepancy. B. merchandise trade, services, factor income, and unilateral transfers. C. merchandise trade, services, portfolio investment, and unilateral transfers. D. merchandise trade, services, factor income, and direct investment.25. The factors of production are A. land, labor, capital,

33、and entrepreneurial ability. B. interest, wages and dividends. C. payments and receipts of interest, dividends, and other income on foreign investments that were previously made. D. none of the above26. Factor income A. consists largely of interest, dividends, and other income on foreign investments

34、. B. is a theoretical construct of the factors of production, land, labor, capital, and entrepreneurial ability. C. is generally a very minor part of national income accounting, smaller than the statistical discrepancy. D. none of the aboveThe entries in the “current account“ and the “capital accoun

35、t“, combined together, can be outlined (in alphabetic order) as:27. Current account includes A. (i), (ii), and (iii) B. (ii), (iii), and (vii) C. (iv), (v), and (vii) D. (i), (v), and (vi)Chapter 03 - Balance of Payments3-7 2012 by McGraw-Hill Education. This is proprietary material solely for autho

36、rized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.28. Capital account includes A. (i), (ii), and (iii) B. (ii), (iii), and (vii) C. (iv), (v), and (vii) D

37、. (i), (v), and (vi)29. The “J-curve effect“ shows A. the initial deterioration and the eventual improvement of a countrys trade balance following a currency depreciation. B. the initial improvement and the eventual depreciation of a countrys trade balance following a currency depreciation. C. the t

38、rade balances lack of responsiveness to the exchanges rate changes. D. none of the above30. The “J-curve effect“ A. happens most of the time, in the short run. B. actually only occurs in about 40 percent of the cases according to a study by Sebastian Edwards. C. is a long-run phenomenon, not a short

39、-run one. D. none of the above.31. The J-curve effect received wide attention when A. the British trade balance worsened after a strengthening of the pound in 1967. B. the British trade balance worsened after a devaluation of the pound in 1967. C. the British trade balance improved after a devaluati

40、on of the pound in 1967. D. none of the above32. A currency depreciation will begin to improve the trade balance immediately A. if the demand for imports and exports are inelastic. B. if the demand for imports and exports are elastic. C. if imports decrease and exports decrease. D. none of the above

41、Chapter 03 - Balance of Payments3-8 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole

42、or part.33. When a countrys currency depreciates against the currencies of major trading partners, A. the countrys exports tend to rise and imports fall. B. the countrys exports tend to fall and imports rise. C. the countrys exports tend to rise and imports rise. D. the countrys exports tend to fall

43、 and imports fall.34. A depreciation will begin to improve the trade balance immediately if A. imports and exports are responsive to the exchange rate changes. B. imports and exports are inelastic to the exchange rate changes. C. consumers exhibit brand loyalty and price inelasticity. D. b) and c)35

44、. In the short run a currency depreciation can make a trade balance worse if A. there is no domestic producer of an import. B. there is no domestic buyer for an import. C. there is no export market for a countrys output.36. What is the correct label for the vertical axis in the J-curve?A. Time B. Ch

45、ange in the Trade Balance C. Size of Trade Balance D. Size of Merchandise Trade BalanceChapter 03 - Balance of Payments3-9 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be

46、 copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.37. In the long run, both exports and imports tend to be A. unresponsive to changes in exchange rates. B. responsive to changes in exchange rates. C. both a) and b) D. none of the above38. With regard to t

47、he capital account A. the capital account balance measures the difference between U.S. sales of assets to foreigners and U.S. purchases of foreign assets. B. U.S. sales (or exports) of assets are recorded as credits, as they result in capital inflow. C. U.S. purchases (imports) of foreign assets are

48、 recorded as debits, as they lead to capital outflow. D. all of the above39. The difference between Foreign Direct Investment and Portfolio Investment is that A. Portfolio Investment mostly represents the sale and purchase of foreign financial assets such as stocks and bonds that do not involve a tr

49、ansfer of control. B. Foreign Direct Investment mostly represents the sale and purchase of foreign financial assets such as stocks whereas Portfolio Investment mostly involves the sales and purchase of foreign bonds. C. Foreign Direct Investment is about buying land and building factories, whereas portfolio investment is about buying stocks and bonds. D. All of the above40. In the latter half of the 1980s, with a strong yen, Japanese firms A. faced difficulty exporting. B. cou