Question 1

The United States issues a $10,000 debt forgiveness to Argentina. How is this accounted for in the balance of payments?

Accepted Answer

Debt forgiveness is recorded in the capital account as a transfer payment, reflecting a unilateral transfer from the U.S. to Argentina.

Question 2

Fill in the following table.

Accepted Answer

The answer of Fill in the following table.
 ...

Question 3

Fill in the following table.

Accepted Answer

The answer of Fill in the following table.
 ...

Question 4

Assume in a closed economy:
C = 50 + 0.6 (Y - T)
G = 15
I = 15
T = 2
(a)Calculate Y at equilibrium
(b)Calculate C
(c)Assume the economy is open

Accepted Answer

The answer of Assume in a closed economy:
C = 50...

Question 5

The German government carries out an official foreign exchange intervention in which it uses dollars held in an American bank to buy French currency from its citizens. How is this accounted for in the balance of payments?

Accepted Answer

The German government is buying French currency from its citizens, which is an export of French assets. This is recorded in the financial account as a French asset export.

Question 6

What can one learn from the following figure?

Accepted Answer

The answer of What can one learn from the following...

Question 7

The services British capital provides in Spain are a service export from Britain

Accepted Answer

Service exports are added to the GDP of the exporting country in calculating its GNP. Therefore, in this case, the services provided by British capital in Spain are added to British GDP in calculating British GNP.

Question 8

Assume in a closed economy:
C = 40 + 0.8(Y - T)
G = 10
I = 20
T = 0, where T are taxes.
(a)Calculate Y at equilibrium.
(b)Calculate C, I, and G at equilibrium.
(c)Now assume the economy is open with exports and imports activities,

Accepted Answer

The answer of Assume in a closed economy:
C = 40...

Question 9

The official settlements balance or balance of payments is the sum of

Accepted Answer

The official settlements balance, or balance of payments, includes the current account balance and the capital account balance, but it subtracts the non-reserve portion of the financial account balance. This is because the official settlements balance aims to capture only those transactions that affect a country's official reserves.

Question 10

An American buys a Japanese car, paying by writing a check on an account with a bank in New York. How would this be accounted for in the balance of payments?

Accepted Answer

The transaction involves a current account transaction (import of a Japanese good) and a financial account transaction (export of a US asset).

Question 11

The profits of a Spanish factory with British owners are

Accepted Answer

The profits are counted in Spain's GDP because the factory is located there, and they are part of Britain's GNP because the owners are British.

Question 12

The position of the United States current account balance in 2015 was

Accepted Answer

The statement "borrowed roughly 3 percent of its GNP, leading to a large current account deficit" accurately describes the position of the United States current account balance in 2015. A current account deficit means that the country is spending more on imports than it is earning through exports, resulting in a net outflow of money from the economy.

Question 13

You travel to Paris and pay for a $100 dinner with your credit card. How is this accounted for in the balance of payments?

Accepted Answer

The answer of You travel to Paris and pay for...

Question 14

Which one of the following statements is FALSE?

Accepted Answer

The statement "The U.S. foreign debt was paid off in the 1990s, allowing the U.S. to attain a current account surplus" is false. The U.S. foreign debt continued to grow in the 1990s and has since then, reaching 40 percent of GNP. The deficit did temporarily decrease in the mid to late 1990s, but it has since returned.

Question 15

Government purchases currently take up about

Accepted Answer

Government purchases currently take up about 17 percent of U.S. GNP, and this share has not changed much since the late 1950s.

Question 16

What is the national income identity for a closed economy?

Accepted Answer

The answer of What is the national income identity for...

Question 17

A U.S. citizen buys a newly issued share of stock in England, paying for his order with a check, which the British company deposits in its own U.S. bank account in New York. How is this transaction accounted for in the balance of payments?

Accepted Answer

The transaction is recorded in the financial account as a U.S. asset import because the U.S. citizen is purchasing a foreign financial asset (the stock).

Question 18

Every international transaction automatically enters the balance of payments

Accepted Answer

Every international transaction affects both the current account and the capital account, thus making it a credit in one account and a debit in the other. Therefore, every international transaction is recorded twice, once as a credit and once as a debit. The balance of payments reflects these transactions and their impact on the country's economy.

Question 19

What is the national income identity for an open economy?

Accepted Answer

The answer of What is the national income identity for...

Question 20

Fill in the following table.

Accepted Answer

The answer of Fill in the following table.
 ...

Quiz 13: National Income Accounting and the Balance of Payments

The United States issues a $10,000 debt forgiveness to Argentina. How is this accounted for in the balance of payments?

Fill in the following table.

Fill in the following table.

Assume in a closed economy: C = 50 + 0.6 (Y - T) G = 15 I = 15 T = 2 (a)Calculate Y at equilibrium (b)Calculate C (c)Assume the economy is open

The German government carries out an official foreign exchange intervention in which it uses dollars held in an American bank to buy French currency from its citizens. How is this accounted for in the balance of payments?

What can one learn from the following figure?

The services British capital provides in Spain are a service export from Britain

Assume in a closed economy: C = 40 + 0.8(Y - T) G = 10 I = 20 T = 0, where T are taxes. (a)Calculate Y at equilibrium. (b)Calculate C, I, and G at equilibrium. (c)Now assume the economy is open with exports and imports activities,

The official settlements balance or balance of payments is the sum of

An American buys a Japanese car, paying by writing a check on an account with a bank in New York. How would this be accounted for in the balance of payments?

The profits of a Spanish factory with British owners are

The position of the United States current account balance in 2015 was

You travel to Paris and pay for a $100 dinner with your credit card. How is this accounted for in the balance of payments?

Which one of the following statements is FALSE?

Government purchases currently take up about

What is the national income identity for a closed economy?

A U.S. citizen buys a newly issued share of stock in England, paying for his order with a check, which the British company deposits in its own U.S. bank account in New York. How is this transaction accounted for in the balance of payments?

Every international transaction automatically enters the balance of payments

What is the national income identity for an open economy?

Fill in the following table.