Deck 13: Balance of Payments

Question 1

The sale of a foreign stock and the deposit of the proceed in a foreign bank is recorded as

A)Incurrence of portfolio investment liability and incurrence other investment liabilities
B)Acquisition of portfolio investment asset and acquisition of other investment assets
C)Acquisition of portfolio investment assets and incurrence other investment liabilities
D)Incurrence of portfolio investment liability and acquisition of other investment assets

Answer 1

A

Question 2

The Statistical discrepancy is needed to ensure that

A)Current account minus capital account equal financial account
B)Current account plus the financial account equal capital account
C)Current account plus capital account equal financial account
D)Current account equal capital account plus financial account

Answer 2

C

Question 3

Capital account transactions include

A)Bank deposits abroad
B)The purchase of a foreign stock
C)Derivatives
D)None of the above

Answer 3

D

Question 4

The official reserve assets of the nation include

A)The gold holdings of the nation's monetary authorities
B)Special Drawing Rights,
C)The nation's reserve position in the IMF
D)All of the above

Question 5

The export of a good or service is recorded in a nation's balance of payments as

A)Net lending in the current account and net lending in the financial account
B)Net borrowing in the current account and net borrowing in the financial account
C)Net lending in the current account and net borrowing in the financial account
D)Net borrowing in the current account and net lending in the financial account

Question 6

In national income accounting

A)The deficit in the current account is equal to the government deficit plus investment minus saving
B)The surplus in the current account is equal to the government surplus minus investment plus saving
C)Both of the above
D)Neither of the above

Question 7

Which is not a debit transaction ?

A)Export of goods and services
B)Primary income receivable
C)Secondary income receivable
D)None of the above

Question 8

What is not part of the current account?

A)Exports and imports of goods and services,
B)Primary investment income received
C)Capital transfer receivable
D)Secondary income receivable

Question 9

The two parts of each transaction cannot both be recorded in the current or financial account

A)True
B)False
C)Can be true or false
D)Depends on whether it is a current account or a financial account transaction

Question 10

The international investment position of a nation

A)The total amount and the distribution of a nation's assets abroad,and foreign assets in the nation at the end of the year
B)Is also called the balance of indebtedness
C)Is usefulness is in projecting the future flow of income from foreign investments and payments on foreign investments in the nation
D)All of the above

Question 11

Primary income receipts include the

A)Net acquisition of portfolio investment assets
B)Net acquisition of direct investment liabilities
C)Income earned on foreign investments
D)Current transfer receipts

Question 12

In national income accounting

A)(M-X)= (G-T)+ (I-S)
B)(X-M)= (T-G)+ (S-I)
C)(X-M)= (T-G)- (I-S)
D)All of the above

Question 13

Which is false with regard to double-entry bookkeeping

A)Each transactions is entered twice with equal values
B)It usually leads to a statistical discrepancy
C)It should lead to the balance of net borrowing and net lending in all the accounts
D)All of the above

Question 14

Which is false about the United States balance of payments in 2013?

A)It was the most indebted nation in the world
B)Its current-account deficit was larger than its trade deficit
C)It had a very large trade deficit
D)It borrowed heavily from abroad