Deck 6: International Finance

Question 1

U.S. imports are considered:

A)a credit or plus item in the U.S. balance of payments.
B)a credit or minus item in the U.S. balance of payments.
C)a debit or plus item in the U.S. balance of payments.
D)a debit or minus item in the U.S. balance of payments.

Answer 1

a debit or minus item in the U.S. balance of payments.

Question 2

Which of the following is true?

A)When real interest rates are higher in country A than country B there will tend to be a capital flow from country B to country A.
B)When real interest rates are higher in country A than country B there will tend to be a capital flow from country A to country B.
C)Capital flows will tend to increase real interest rates in countries with a capital inflow.
D)Both b. and c. are correct.

Answer 2

Both b. and c. are correct.

Question 3

Which of the following is true?

A)When real interest rates are lower in country A than country B there will tend to be a capital flow from country B to country A.
B)Capital flows tend to move real interest rates in different countries toward equality.
C)Capital flows will tend to decrease real interest rates in countries with a capital outflow.
D)Both b. and c. are correct.

Answer 3

Capital flows tend to move real interest rates in different countries toward equality.

Question 4

Which of the following is true?

A)In equilibrium, with only two countries, the excess demand for loanable funds in one country will equal the excess supply of loanable funds in the other.
B)Countries with net capital inflows tend to be few or no capital outflows.
C)Capital flows will tend to decrease real interest rates in countries with a capital inflow.
D)Both a. and c. are correct.

Question 5

Classify each of the following in the U.S. balance of payments.

-Russian tourists travel to United States.

A)credits
B)debits

Question 6

Classify each of the following in the U.S. balance of payments.

-U.S. gives foreign aid to Bosnia.

A)credits
B)debits

Question 7

Classify each of the following in the U.S. balance of payments.

-British investors purchase U.S. government bonds.

A)credits
B)debits

Question 8

Classify each of the following in the U.S. balance of payments.

-American tourists travel to Australia.

A)credits
B)debits

Question 9

Classify each of the following in the U.S. balance of payments.

-Volkswagen earns profits in the United States from its new cars.

A)credits
B)debits

Question 10

Classify each of the following in the U.S. balance of payments.

-Toyota builds a new plant in Ohio.

A)credits
B)debits

Question 11

Classify each of the following in the U.S. balance of payments.

-Capital Records sells rock and roll music in Sweden.

A)credits
B)debits

Question 12

Classify each of the following in the U.S. balance of payments.

-German consumer buy Ronco Vegematics made in United States.

A)credits
B)debits

Question 13

Classify each of the following in the U.S. balance of payments.

-Procter & Gamble earns profits in their Mexican facility.

A)credits
B)debits