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

Accepted Answer

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

Accepted Answer

Statistical discrepancy is used to balance the accounts in the balance of payments, ensuring that the sum of the current account and the capital account equals the financial account, due to the principle of double-entry bookkeeping in accounting.

Question 3

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

Accepted Answer

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

Accepted Answer

The official reserve assets of a nation include all of the above mentioned assets: the gold holdings of the nation's monetary authorities, Special Drawing Rights, and the nation's reserve position in the International Monetary Fund (IMF). These assets are used to support the stability of the nation's currency and to meet its international obligations.

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

Accepted Answer

The answer of The export of a good or service...

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

Accepted Answer

The surplus in the current account is equal to the government surplus minus investment plus saving. The deficit in the current account is equal to the government deficit plus investment minus saving.

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

Accepted Answer

In the context of balance of payments, all the options listed (A, B, C) are considered credit transactions, not debit transactions. Debit transactions involve imports or expenditures going out of a country, whereas credit transactions involve exports or incomes coming into a country. Therefore, none of the options listed is a debit transaction.

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

Accepted Answer

Capital transfer receivable is not a part of the current account. The current account includes exports and imports of goods and services, primary investment income received, and secondary income receivable. Capital transfer is a separate component of a country's balance of payments and is recorded in the capital account.

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

Accepted Answer

Transactions in the balance of payments are recorded in either the current account or the financial account, but not both simultaneously. The current account reflects the country's net income, including transactions for goods, services, and income, while the financial account records transactions that involve financial assets and liabilities between a country and the rest of the world. Each part of a transaction is recorded in the appropriate account based on its nature, not in both accounts.

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

Accepted Answer

The international investment position of a nation encompasses all of these aspects: it details the total amount and distribution of a nation's foreign assets and liabilities (A), is referred to as the balance of indebtedness (B), and is useful for projecting future income flows from foreign investments (C).

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

Accepted Answer

Primary income receipts refer to income earned on foreign investments, such as dividends from stock ownership, interest on loans or bonds, and income earned from direct investment activities. Therefore, option C, income earned on foreign investments, is the correct choice for primary income receipts. Options A and B refer to the acquisition of investment assets and liabilities and are not considered income receipts. Option D refers to current transfers, which are not included in primary income 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

Accepted Answer

(X-M)= (T-G)- (I-S) is the correct answer because it represents the equilibrium condition in the national income accounting system.

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

Accepted Answer

The answer of Which is false with regard to double-entry...

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

Accepted Answer

In 2013, the United States' current-account deficit included the trade deficit but also included other factors like net income from abroad and net current transfers. The trade deficit is a component of the current-account deficit, not larger than it.

Quiz 13: Balance of Payments

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

The Statistical discrepancy is needed to ensure that

Capital account transactions include

The official reserve assets of the nation include

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

In national income accounting

Which is not a debit transaction ?

What is not part of the current account?

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

The international investment position of a nation

Primary income receipts include the

In national income accounting

Which is false with regard to double-entry bookkeeping

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