A) is the nature and cause of the disequilibrium.
B) is whether it is a trade surplus or deficit.
C) is whether the local government is mercantilist or not.
D) Nothing is more important than the absolute size of a country's balance-of-payments disequilibrium.
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A) If (S - I) < 0, it implies that a country's domestic savings is insufficient to finance domestic investment.
B) If (T - G) < 0, it implies that a country's tax revenue is insufficient to finance government spending.
C) When BCA is negative, it implies that government budget deficits an/or part of domestic investment are being finance with foreign-controlled capital.
D) All of the above are true.
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A) Time
B) Change in the Trade Balance
C) Size of Trade Balance
D) Size of Merchandise Trade Balance
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A) there is no domestic producer of an import.
B) there is no domestic buyer for an import.
C) there is no export market for a country's output.
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A) it was engaged in foreign direct investment.
B) it was engaged in portfolio investment.
C) it was engaged in a cross-border acquisition.
D) none of the above.
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A) equal in magnitude to the country's national debt.
B) zero.
C) equal in magnitude to the Trade Deficit or Surplus.
D) none of the above
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A) capital inflows into the U.S.will increase.
B) capital inflows into the U.S.may not materialize.
C) capital will flow out of the U.S.
D) none of the above
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A) the export and import of goods and services.
B) all purchases and sales of assets such as stocks, bonds, bank accounts, real estate, and businesses.
C) all purchases and sales of international reserve assets such as dollars, foreign exchanges, gold, and special drawing rights (SDRs) .
D) none of the above
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A) happens most of the time, in the short run.
B) actually only occurs in about 40 percent of the cases according to a study by Sebastian Edwards.
C) is a long-run phenomenon, not a short-run one.
D) none of the above.
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A) acquisitions of controlling interests in foreign businesses.
B) investments in foreign stocks and bonds that do not involve acquisitions of control.
C) bank deposits, currency investment, trade credit, and the like.
D) all of the above
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A) acquires IOUs from foreigners, thereby increasing its net foreign wealth.
B) must borrow from foreigners or draw down on its previously accumulated foreign wealth.
C) will experience a reduction in the country's net foreign wealth.
D) both b and c
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A) Special Drawing Rights (SDRs) at the IMF.
B) reserve positions in the International Monetary Fund (IMF) .
C) foreign currency held by a country's central bank.
D) none of the above
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A) cannot be calculated directly.
B) is calculated by taking into account the balance-of-payments identity.
C) probably has some elements that are honest mistakes, it can't all be money laundering and drugs.
D) all of the above
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A) -$44 billion
B) $44 billion
C) $216 billion
D) none of the above
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A) Portfolio Investment mostly represents the sale and purchase of foreign financial assets such as stocks and bonds that do not involve a transfer of control.
B) Foreign Direct Investment mostly represents the sale and purchase of foreign financial assets such as stocks whereas Portfolio Investment mostly involves the sales and purchase of foreign bonds.
C) Foreign Direct Investment is about buying land and building factories, whereas portfolio investment is about buying stocks and bonds.
D) All of the above
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A) the combined balance on the current and capital accounts will be equal in size, but opposite in sign, to the change in the official reserves.
B) the balance on the current and capital accounts will be equal in size, but opposite in sign.
C) a current account surplus or deficit must be matched by an official reserves deficit or surplus.
D) a capital account surplus or deficit must be matched by an official reserves deficit or surplus.
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A) the capital account balance measures the difference between U.S.sales of assets to foreigners and U.S.purchases of foreign assets.
B) U.S.sales (or exports) of assets are recorded as credits, as they result in capital inflow.
C) U.S.purchases (imports) of foreign assets are recorded as debits, as they lead to capital outflow.
D) all of the above
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A) consists largely of interest, dividends, and other income on foreign investments.
B) is a theoretical construct of the factors of production, land, labor, capital, and entrepreneurial ability.
C) is generally a very minor part of national income accounting, smaller than the statistical discrepancy.
D) none of the above
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A) the export and import of goods and services.
B) all purchases and sales of assets such as stocks, bonds, bank accounts, real estate, and businesses.
C) all purchases and sales of international reserve assets such as dollars, foreign exchanges, gold, and special drawing rights (SDRs) .
D) none of the above
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A) this would have the result of a strengthening of the value of the dollar.
B) this would have the result of a weakening in the value of the dollar.
C) this would not have much impact, as the information would be lost in the day-to-day volatility of exchange rates.
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