EC140 Chapter Notes - Chapter 34: Capital Account, Capital Outflow, The Foreign Exchange
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| 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 1
If a real asset located in Brazil is sold to someone in the US, the transaction would result in a credit in Brazil's balance of payments.
True
False
6.25 points
QUESTION 2
The balance of payments for a given nation records
only imports and exports of good and servies
only foreign direct investment and portfolio investments between nations
both imports and exporst of good and servieces as well as forein direct investment and portolio investments between nations
QUESTION 36.25 points
Transactions between Canada and the rest of the world are shown below. Use the following information to answer the next four questions.
Canadian citizens receive C$5 million worth of dividends from foreign investments.
Imperial Oil (Canadian firm) invests C$60 million in overseas oil discovery.
Foreign tourists spend C$45 million in Canada.
Canadian government sells C$20 million worth of treasury securities to foreign nations.
Alcan (Canadian firm) sells C$8 million worth of aluminum to US companies.
Canadian government buys C$32 million worth of gold.
Canadian firm buys C$12 million worth of computer components from Sony.
Canada sends C$4 million in aid to Mexico.
Ford spends C$30 million in constructing an assembly plant in Canada.
Find Canada's balance of trade. Enter your final answer in terms of millions of dollars. Do not enter a non-numerical value when inputting your answer.
6.25 points
QUESTION 4
Find the capital account balance (in millions of C$).
| -39 | ||
| 19 | ||
| 70 | ||
6.25 points
QUESTION 5
Find Canada's current account balance. Enter your final answer in terms of millions of dollars. Do not enter a non-numerical value when inputting your answer.
6.25 points
QUESTION 6
Canada's capital account balance suggests that it is a net supplier of capital to the rest of the world.
True
False
6.25 points
QUESTION 7
Suppose a nation has a current account surplus. This surplus implies
| ation | ||
| ation | ||
| none of the above |
6.25 points
QUESTION 8
Suppose that the value of the dollar moves from £=$1.5 to £=$1.75. What effect would this have on the UK's balance of trade, all else being equal?
| UK | ||
| UK | ||
| UK | ||
6.25 points
QUESTION 9
There is an inverse relationship between the demand for US exports and the US inflation rate.
True
False
6.25 points
QUESTION 10
Transactions between Great Britian and the rest of the world are shown below. Use the following information to answer the next two questions.
British companies sell 50 million pounds worth of bonds to foreigners.
British government sells 20 million pounds of treasury securities to foreigners.
British citizens receive 2 million pounds in interest from foreign investments.
British companies buy 85 million pounds worth of American produced steel.
GlaxoSmithKline (British firm) sells 40 million pounds of pharmaceutical drugs abroad.
British government buys 15 million pounds of gold in FX market.
British bankers invest 12 million pounds in foreign banks.
Find Great Britian's balance of trade. Enter your answer in terms of millions of pounds. Do not use the pound sign or any other non-numerical value when inputting your answer.
and
Transactions between Great Britian and the rest of the world are shown below. Use the following information to answer the next two questions.
British companies sell 50 million pounds worth of bonds to foreigners.
British government sells 20 million pounds of treasury securities to foreigners.
British citizens receive 2 million pounds in interest from foreign investments.
British companies buy 85 million pounds worth of American produced steel.
GlaxoSmithKline (British firm) sells 40 million pounds of pharmaceutical drugs abroad.
British government buys 15 million pounds of gold in FX market.
British bankers invest 12 million pounds in foreign banks.
Find Great Britian's balance of trade. Enter your answer in terms of millions of pounds. Do not use the pound sign or any other non-numerical value when inputting your answer.
Today, in the Unitedâ States, exports are about
A.
28 percent of GDP.
B.
90 percent of GDP.
C.
14 percent of GDP.
D.
4 percent of GDP.
Which of the following statements isâ FALSE?
A.
Sophisticated financial systems have given U.S. productive efficiency a boost.
B.
When it comes to overall productiveâ efficiency, compared toâ Japan, Germany and the rest of the Europeanâ Union, the United States lags far behind.
C.
Economic restructuring and investments in information technology have added to productive efficiency in the United States.
D.
The Unitedâ States' international competitive position has been helped by its long history of widespread entrepreneurship.
One problem with the infant industry argument is that
A.
it fails to protect domestic industries from foreign competition.
B.
it must be approved by the Federal Reserve Board.
C.
it must be approved by the IMF and the World Bank.
D.
the protection is typically neverâ removed, creating a domestic monopoly.
When a tariff isâ imposed, the supply curve for the imported good
A.
shifts upward and to the left.
B.
shifts downward and to the right.
C.
becomes perfectly inelastic.
D.
does not change.
The WTO replaced the GATT in
A.
1900.
B.
1995.
C.
1960.
D.
1945.
The World Trade Organization
A.
increases world trade by providing interest rate subsidies to foreign borrowers who buy U.S. exports on credit.
B.
was established to settle trade disputes within the European Union.
C.
was established to resolve disputes arising under world trade rules.
D.
is another name for the IMF.
Trade deflection is an act that
A.
has no impact on the amount of international trade in the world.
B.
is illegal among all countries in the world.
C.
decreases the amount of international trade in the world.
D.
increases the amount of international trade in the world.
| The Number of Worker Days to Produce One Cuckoo Clock or Movie Using All Available Resources | ||
| Product | United States â (WorkerminusââDays) | Switzerland â (WorkerminusââDays) |
| Cuckoo Clocks | 8 | 6 |
| Movies | 12 | 4 |
Refer to the above table. Assuming constant opportunityâ costs, which of the of the following statements is correct if the rate of exchange is 1 movie for 1 cuckoo clock.
A.
U.S. residents will gain from exporting movies and Swiss residents will gain from exporting cuckoo clocks at a rate of exchange.
B.
U.S. residents would be willing to export cuckooâ clocks, but Swiss residents would not gain from exporting movies at this rate of exchange.
C.
Swiss residents would be willing to exportâ movies, but U.S. residents would not gain from exporting cuckoo clocks at this rate of exchange.
D.
U.S. residents will gain from exporting cuckoo clocks and Swiss residents will gain from exporting movies at a rate of exchange.
The balance of payments is
A.
a summary record of aâ country's purchases and sales of goods and services in the world market.
B.
a summary record of aâ country's economic transactions with foreign residents and governments.
C.
the value of goods and services bought and sold in the world market.
D.
the value of merchandise goods bought and sold in the world market.
