Final 5 22 April 2020, questions PDF

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Download Final 5 22 April 2020, questions PDF

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Multiple Choice Questions on Balance of Payments The balance of payments equals: A. The difference between household spending and income B. The difference between government spending and income C. A measure of the value of economic transactions between residents of a country and the rest of the world D. The difference between inflation and unemployment The balance of payments of a country records flows of money from: A. Imports and exports and investment flows. B. Imports and exports and domestic demand. C. Imports and exports. D. Imports and exports and investments flows and speculative flows. Which of the following is not an export? A. Sales of cars abroad B. Purchase of foreign components C. Students from abroad studying in your country D. Sales of financial services overseas Which of the following should not be included in the balance of payments account? A. Imports of automobile parts B. Bonus shares to equity shareholders C. Interest payment on loan to the IMF D. Dividend payment to home-country investors from a foreign subsidiary Aid provided by a country to another country will come in which of the following accounts of the second country? A. Official reserves account B. Errors and omissions C. Capital account D. Current account External commercial borrowing comes under the category of — A. Exports B. Capital account C. Official reserves account D. Current account The balance of payments account must always balance because — A. It is a record of flow of foreign exchange between countries B. It is based on the double-entry principle C. It records international transactions D. It is a cash flow statement

The balance of trade is given by A. income receipts minus income payments on investments B. merchandise exports plus service exports minus the sum of merchandise and service imports C. merchandise exports minus merchandise imports D. the balance on current account The balance on current account includes all of the following items except A. Merchandise exports minus merchandise imports B. Exports of services minus imports of services C. Income receipts minus income payments on investments D. Changes in U.S. assets owned abroad and foreign assets owned in the U.S. E. Unilateral transfers of currency by individuals Given an unfavorable balance of trade, the current account can still be in surplus if A. There is a larger value for merchandise imports B. Exports of services are less than imports of services C. Unilateral transfers of dollars out of the United States exceed unilateral transfers of dollars into the United States D. Sales of U.S. assets to foreigners increase E. Exports of services are greater than imports of services by enough to offset the unfavorable trade balance In an economy's balance of payments account, A. The capital and current accounts must add to one B. The current account is always greater than the capital account C. Both the balance on current account and the balance on capital account are zero D. The capital plus current account balances must equal zero E. Capital outflows must equal capital inflows If the current account for a country is in deficit, then there must be A. A surplus in the government budget B. Low interest rates C. High productivity D. A capital account surplus E. The presence of attractive investment opportunities Which of the following approaches believes that BOP disequilibrium is a monetary and not structural phenomenon? A. The monetary approach B. The absorption approach C. The Keynesian approach D. The elasticity approach Capital flows that take place to help bring equilibrium in the balance of payments are called — A. Accommodating flows

B. Autonomous flows C. FDI D. Official reserves Which of the following approaches of BOP explains the relationship between domestic output and trade balance? A. The classical approach B. The absorption approach C. The monetary approach D. The elasticity approach "In the absorption approach, what does (X - M) in the formula Y = C + I + G + (X - M) represent?" A. Government expenditure B. Consumption C. Imports D. Net exports What does Ex in the formula Em + Ex > 1 in the elasticity approach represent? A. Price elasticity of exports B. Price elasticity of imports C. Price elasticity of domestic production D. Total exports of the country...