the balance of payments Mcqs
1. The role of _______ is to direct one nations savings into investments of another nation?
comments icon0

A. merchandise trade flows

B. current account flows

C. capital flows

D. services flows

2. Purchases of government securities in the United States by foreigners is ?
comments icon0
A. a credit item in the capital account

B. a debit item in the current account

C. a credit item in the current account

D. a debit item in the capital account

3. All of the following are debit items in the balance of payments except ?
comments icon0

A. private gifts to foreigners

B. merchandise exports

C. capital outflows

D. foreign aid granted to other nations

4. For the first time since World War I, in the mid-1980s the United States became a net international ?
comments icon0

A. creditor

B. exporter

C. importer

D. debtor
5. The balance of trade is a record of ?
comments icon0

A. the current account plus capital account

B. exports and imports of financial assets

C. the value of merchandise exports minus imports

D. the net export of goods and services

6. Which of the following statements is correct ?
comments icon0

A. If the current accounts is in surplus then the capital account must also be in surplus

B. If the current account is in deficit then the capital account must also be in deficit

C. The overall sum of all entries in the balance of payments must be zero

D. The overall sum of all the entries in the balance of payments must be positive

7. In balance of payments accounting tourism and travel are classified in the ?
comments icon0

A. unilateral transfers account

B. capital account

C. merchandise trade account

D. services account
8. _______ is needed to balancell the balance of payments statements?
comments icon0

A. debit transactions

B. statistical discrepancy

C. credit transactions

D. unilateral transfers

9. The argument that U.S current account deficits cause net job losses for Americans ?
comments icon0

A. is true by definition in all possible circumstances

B. fails to recognize that a current account deficit is matched by an equal inflow of foreign funds which finances employment increasing investment spending

C. is supported by recent U.S history

D. focuses only on the overall economy and is thus always true

10. In the balance of payments travels and tourism are included in the category of ?
comments icon0

A. unilateral transfers

B. merchandise account

C. services account

D. capital account

11. A current account surplus implies that ?
comments icon0
A. the country is a net lender to the rest of the world

B. the country is running a net capital account surplus

C. All of the above

D. foreign investment in domestic securities is at very low levels

12. A capital account surplus might be expected to cause a current account deficit because the associated ?
comments icon0
A. capital inflow would cause the nations currency to appreciate contributing to a trade deficit

B. capital outflow would cause the nations currency to appreciate contributing to a trade deficit

C. capital outflow would cause the nations currency to depreciate contributing to a trade deficit

D. capital inflow would cause the nations currency to depreciate contributing to a trade deficit

13. In the calculation of gross domestic product net exports are ?
comments icon0

A. short-term capital plus the basic balance

B. the sum of merchandise trade and services

C. the value of merchandise exports minus imports

D. the current account plus long-term capital

14. In the balance of payments the statistical discrepancy is used to ?
comments icon0
A. insure that the sum of all debits matches the sum of all credits

B. obtain an accurate account of a balance of payments deficit

C. insure that trade imports equals the value of trade exports

D. obtain an accurate account of a balance of payments surplus

15. When a country has a trade deficit it ?
comments icon0

A. sells more stocks and bonds to the rest of the world than it purchases

B. sells more goods to the rest of the world than it purchases

C. purchases more stocks and bonds from the rest of the world than it sells

D. purchases more goods from the rest of the world than it sells
16. A nation will a current account deficit will be ?
comments icon0

A. reducing its indebtedness to other nations

B. experiencing a surplus in exports of goods an services

C. going further into debt with other nations

D. lending more money to other nations

17. A country that is a net international debtor initially experiences a (an) ?
comments icon0
A. larger savings pool available to finance domestic spending

B. higher interest rate which leads to lower domestic investment

C. loss of funds to trading partners overseas

D. decrease in its services exports to other countries

18. The balance of payments is divided into two major accounts the ?
comments icon0

A. current account the trade account

B. trade account the capital account

C. current account the reserve account

D. current account the capital account
19. Referring to the above table, the U.S balance of international indebtedness suggests that the U.S is a net ?
comments icon0
A. creditor

B. debtor

C. exporter

D. spender

20. The difference between a countrys balance of payments and its balance of international indebtedness?
comments icon0

A. is equal to official reserve transactions

B. reflects statistical discrepancies

C. occurs because of foreign exchange fluctuations

D. reflects the difference between flow and stock concepts
21. Which of the following statements is True ?
comments icon0

A. A country runs a current account surplus if it sells more of its assets abroad than it buys abroad

B. A country runs a capital account deficit if it imports more than it exports

C. The overall sum of all the entries in the balance of payments must be positive

D. If the current account is in surplus the capital account must be in deficit
22. The difference between the balance on current account and the balance on capital account is the ?
comments icon0

A. balance of payments

B. balance of trade

C. statistical discrepancy

D. trade deficit

23. The current account includes ?
comments icon0

A. services

B. the value of trade in merchandise

C. unilateral transfers

D. All of the above
24. Credit (-) items in the balance of payments correspond to anything that ?
comments icon0

A. involves receipts from foreigners

B. increases the domestic money supply

C. involves payments to foreigners

D. decreases the demand for foreign exchange

25. The differences between a countrys merchandise exports and its merchandise imports is the ?
comments icon0

A. current account

B. balance of payments

C. capital account

D. balance of trade
26. Debit entries on the balance of payments are the entries that would ?
comments icon0
A. mean a loss of foreign exchange

B. exist at the bottom line after all accounts are totaled

C. indicate a surplus exist

D. bring foreign exchange into the country

27. Current account deficit are offset by______________?
comments icon0

A. merchandise trade surpluses

B. merchandise trade deficits

C. capital/financial account surpluses

D. capital/financial account deficits

28. Historically countries at early stages of rapid economic development have tender to experience ?
comments icon0

A. trade deficits and an excess of domestic savings over investment

B. trade surplus and an excess of investment over domestic saving

C. trade deficit and an excess of investment over domestic saving

D. trade surpluses and an excess of domestic saving over investment

29. When all of the debit or credit items in the balance of payments are combined ?
comments icon0

A. capital imports equal capital exports

B. merchandise imports equal merchandise exports

C. the total surplus or deficit equals zero

D. services exports equal services imports

30. The record of a countrys transactions in goods, services and assets with the rest of the world is its ?
comments icon0

A. current account

B. capital account

C. balance of payments

D. balance of trade

31. The U.S balance of payments is constructed by ?
comments icon0
A. the U.S Department of commerce

B. the U.S Department of labor

C. the U.S Department of Agriculture

D. the council of Economic Advisers to the President

32. A nation wishing to reduce its current account deficit would be advised to ?
comments icon0

A. reduce government taxes

B. engage in more government spending

C. decrease domestic consumption

D. increases private investment spending

33. A countrys transactions with the rest of the world are recorded in the ?
comments icon0

A. balance of international indebtedness

B. income statements

C. balance of payments

D. balance of financial transactions

34. Credit (+) items in the balance of payments correspond to anything that ?
comments icon0

A. decreases the demand for foreign exchange

B. involves payments to foreigners

C. increases the domestic money supply

D. involves receipts from foreigners
35. Direct investment and security purchases are classified as ?
comments icon0

A. merchandise trade transactions

B. current account transactions

C. capital account transactions

D. unilateral transfer transactions

36. All of the following are credit items in the balance of payments except ?
comments icon0

A. payments for American services to foreigners

B. investment inflows

C. merchandise exports

D. private gives to foreign residents