ECON 110 Chapter Notes - Chapter 35: Mercantilism, Comparative Advantage, Monetary Policy

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Chapter 35: meaning, measurement, and morality in international development. 35. 1 the balance of payments: the balance of payments accounts is a summary record of a country"s transactions with the rest of the world, includes the buying and selling of goods, services, and assets. The demand for foreign exchange: the demand for foreign exchange arises from all international transactions that represent a payment for. Fixed exchange rates: if the central bank chooses to fix the exchange rate at a particular value, its official financing transactions must offset any excess demand or supply of foreign exchange. Structural changes: anything that leads to a change in the pattern of trade, such as changes in costs or demand, will lead to changes in exchange rates. The volatility of exchange rates: exchange rates are constantly changing, exchange rates are one of the most volatile of all macroeconomic variables. 35. 4 three policy issues: 3 policy issues as questions, 1.

Related Questions

Q46. An appreciation of the U. S. dollar would
a. encourage foreigners to invest in the United States
b. discourage foreigners from buying U. S. goods
c. discourage the travel abroad of U. S. citizens
d. encourage foreign travel in the United States

Q47. The financial account of the balance of payments includes the purchase and sale of physical assets but not of financial assets.
a. true
b. false

Q48. Special Drawing Rights are issued by the
a. International Monetary Fund
b. Bretton Woods Organization
c. General Agreement on Tariffs and Trade
d. World Bank

Q49. The balance of payments includes
a. only exports, imports, and service transactions
b. the balance on current account, plus all capital transactions and all official transactions and the statistical discrepancy
c. only the official transactions
d. all goods and services produced in a nation's economy during a given year

Q50. A debit item on the U. S. balance of payments is any transaction that
a. results in a loss by U. S. sellers
b. results in a loss by U. S. buyers
c. makes foreigners use up their holdings of U. S. dollars
d. makes U. S. dollars available to foreigners

QUESTION 10

Below is a table for the Balance of Payments of Goegania, a prosperous island nation.

Current Account			Financial Account
Exports of Goods	$1,940		Capital Inflow	$661
Imports of Goods	???		Capital Outflow	$347
Trade Balance		???	Financial Account		???
Exports of Services	$569		Capital Account		$0
Imports of Services	???		Statistical Discrepancy		$0
Services Balance		$16	Balance of Payments		???
Income Received on Investments	$704
Income Paid on Investments	$505
Net Income on Investments		???
Net Transfers		$-168
The balance on the Current Account		???

Given this information, what is the value for the imports of goods?

Sometimes this question generates some weird numbers. Remember that you would always add the values in a category to get the total. So the total for the Financial Account is always Capital Inflow + Capital Outflow and the Trade Balance is always Exports + Imports for this table. It's just that sometimes those values being added are negative. If you get a negative answer, you should enter in the negative.

lavendertermite76

Exports of goods & services	$1000
Imports of goods & services	$800
The net change in assets owned abroad	$590
The net change in foreign-owned assets at home	$400
Unilateral transfers received	$100
Unilateral transfers paid	$200
Investment income paid to foreigners	$300
Investment income received from foreigners	$400
The balance on the capital account	$0

1. The balance on the current account is A) $100. B) $200. C) 0. D) - $100

2. The balance on the financial account is A) -$90. B) -$190. C) $100. D) $200

3. The statistical discrepancy is A) -$5. B) $5. C) $10. D) -$10

4. From the domestic economy's perspective,

A) there is a net international capital inflow equal to $190.

B) there is a net international capital outflow equal to $190.

C) the net international capital flow is zero.

D) its domestic absorption exceeds its GNP by $200.

orangewildebeest926

ECON 110 Chapter Notes - Chapter 35: Mercantilism, Comparative Advantage, Monetary Policy

ECON 110 Full Course Notes

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