Questions:
Question 1
A credit item in the balance of payments is:
An item for which the country must be paid.
An item for which the country must pay.
Any imported item.
An item that creates a monetary claim owed to a foreigner.
Question 2
Which of the following constitutes the largest component of the world's international reserve assets?
Gold.
Special Drawing Rights.
IMF Reserve Positions.
Foreign Currencies.
Question 3
A summary of all economic transactions between the residents of one country and those of all other countries during a given time period is called:
the balance of payments
the current account
a net unilateral transfer
the capital account
Question 4
Which of the following would not be included in the current account?
net unilateral transfers
purchases of foreign currencies
exports
imports
Question 5
Which of the following would not be included in the capital account?
purchases of U.S. securities by foreigners
establishment of foreign subsidiaries by U.S. companies
purchases of foreign securities
net unilateral transfers
Question 6
Which nation owes more to foreign creditors than any other nation in the world?
The United States
Mexico
Russia
Australia
Question 7
The number of units of one currency exchangeable for one unit of another currency is called:
currency revaluation.
a quota.
an exchange rate.
a balance of payment.
Question 8
If a country that maintains fixed exchange rates decides to let their exchange rate fall, the currency has:
devalued
revalued
appreciated
depreciated
Question 9
Under a flexible exchange rate system, if a country's exchange rate increases, then the currency has:
devalued.
revalued.
depreciated.
appreciated.
Question 10
When is the balance of payments out of balance?
Whenever imports exceed exports.
Whenever exports exceed imports.
If the balance in the capital account exceeds the balance in the current account.
Never.
Question 11
In the United States, much of the deficit balance in the current account has been financed by:
selling U.S. Treasury securities.
foreign investment in the United States.
selling U.S. savings bonds.
increasing the size of the federal deficit.
Question 12
An exchange rate is:
the price consumers pay for goods in the market place.
the rate at which consumers are willing to exchange one good for another.
the rate at which producers can transform inputs into outputs.
the rate at which the units of one currency can be exchanged for units of another.
Question 13
Under a system of flexible exchange rates, rates are determined by:
the forces of demand and supply.
the central bank in the economy.
an international monetary board.
the federal government.
Question 14
If a country has a positive balance in its current account we know that:
the balance in its capital account must be negative.
the balance in its capital account must be positive.
the balance in its capital account must be zero.
the balance in its capital account cannot be determined without further information.
Question 15
Which of the following capital transactions are entered as debits in the U.S. balance of payments?
A U.S. resident transfers $100 from his account at Credit Suisse in Basel (Switzerland) to his account at a San Francisco branch of Wells Fargo Bank.
A French resident transfers $100 from his account at Wells Fargo Bank in San Francisco to his Credit Suisse account in Basel.
A U.S. resident sells his IBM stock to a French resident.
A U.S. resident sells his Credit Suisse stock to a French resident.
Question 16
__________ are money-like assets that are held by governments and that are recognized by governments as fully acceptable for payments between them.
Official international reserve assets
Unofficial international reserve assets
Official domestic reserve assets
Unofficial domestic reserve assets
Question 17
The net value of flows of goods, services, income, and unilateral transfers is called the:
Capital account.
Current account.
Trade balance.
Official reserve balance.
Question 18
The net value of flows of financial assets and similar claims (excluding official international reserve asset flows) is called the:
Financial account.
Current account.
Trade balance.
Official reserve balance.
Question 19
A U.S. resident increasing her holdings of a foreign financial asset causes a:
Credit in the U.S. current account.
Debit in the U.S. current account.
Credit in the U.S. capital account.
Credit in the U.S. capital account.
Question 20
In September, 2005, exports of goods from the U.S. decreased $3.3 billion to $73.4 billion, and imports of goods increased $3.8 billion to $144.5 billion. This increased the deficit in:
The balance of payments.
The financial account.
The current account.
Unilateral transfers.
Question 21
In the balance of payments, the statistical discrepancy or error term is used to:
Ensure that the sum of all debits matches the sum of all credits.
Ensure that imports equal the value of exports.
Obtain an accurate account of a balance-of-payments deficit.
Obtain an accurate account of a balance-of-payments surplus.
Question 22
Which of the following is not directly related to the Bretton Woods system?
1944
the fixed exchange rate system
the bank of England
the International Monetary Fund
the World Bank
Question 23
The objectives of the International Monetary Fund (IMF) are .
to promote international monetary cooperation
to promote exchange stability
to create standby reserves
all of the above
none of the above
Question 24
Which of the following currencies is directly linked to the value of gold?
US dollar
Japanese yen
euro
British pound
none of the above
Question 25
A fixed exchange rate ___.
is an exchange rate which does not fluctuate or which changes within a predetermined band
will have a par value
requires central banks to absorb currency surpluses and eliminate currency deficiencies
B and C
all of the above