31) The oicial settlements account records the
A) change in oicial U.S. reserves.
B) revenue collected from taxing imports.
C) income used to settle international lawsuits.
D) change in the oicial U.S. exchange rate.
E) revenue collected from taxing exports.
Skill: Level 1: Deinition
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
32) The oicial settlements account is the record of
A) a nation’s international trading, borrowing and lending.
B) payments for imports, receipts for exports, net interest, and net transfers.
C) foreign investment in the nation minus the nation’s investment abroad.
D) changes in the government’s holdings for foreign currency.
E) exports of capital goods minus imports of capital goods.
Skill: Level 1: Deinition
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
33) When the government increases the level of oicial reserves by $50 million, the change
is recorded in the
A) oicial settlements account.
B) capital and inancial account.
C) foreign currency account.
D) oicial reserves account.
E) current account.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
11
34) The oicial settlements account contains data on
A) oicials’ expenses.
B) oicial reserves.
C) trade complaints that are oicially settled.
D) oicial governmental complaints between countries.
E) capital imports and exports.
Skill: Level 1: Deinition
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
35) The government’s holdings of foreign currency is recorded in the
A) money account.
B) oicial settlements account.
C) capital and inancial account.
D) current account.
E) currency account.
Skill: Level 1: Deinition
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
36) Suppose that the U.S. government acquires more foreign currency. This change is
entered into which of the balance of payments accounts?
A) current account
B) capital and inancial account
C) oicial settlements account
D) trade account
E) reserves account
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
12
37) When U.S. oicial reserves ________, the oicial settlements account balance becomes
negative and when U.S. oicial reserves ________, the oicial settlements account balance
becomes positive.
A) decrease; decrease
B) decrease; increase
C) increase; decrease
D) increase; increase
E) More information is needed about the balances on the current account and the capital
account in order to answer this question.
Skill: Level 1: Deinition
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
38) Suppose that the U.S. government acquires more foreign currency. How does this
change afect the balance of payments accounts?
A) The oicial settlements account balance is positive.
B) The oicial settlements account balance is negative.
C) The capital and inancial account is positive.
D) The capital and inancial account is negative.
E) The balance of payments account sum to a positive number equal to the value of the
additional foreign currency the government has obtained.
Skill: Level 1: Deinition
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
39) If U.S. oicial reserves increase, the
A) current account increases.
B) balance of payments increases.
C) oicial settlements account balance is negative.
D) current account is positive.
E) oicial settlements account balance is positive.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
13
40) If oicial reserves increase, then we know that the
A) oicial settlements account balance is negative.
B) capital and inancial account is negative.
C) oicial settlements account balance is positive.
D) capital and inancial account and the current account must sum to zero.
E) capital and inancial account is positive.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
41) In 2008, the current account balance was -$706 billion and the capital and inancial
account balance was +$711 billion. Therefore, the oicial settlements account balance was
________ and the balance of all payments accounts summed was ________.
A) -$5 billion; zero
B) +$5 billion; zero
C) not enough information to determine; negative
D) negative; negative
E) positive; positive
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
42) In 2008, the current account balance was -706 billion and the capital and inancial
account balance was +711 billion. Therefore, the oicial settlements account balance was
________ and the balance of all payments accounts was ________.
A) -5; zero
B) +5; zero
C) not enough information to determine; most likely negative
D) negative; negative
E) positive; positive
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
43) The table above gives data for the nation of Syldavia. The current account has a
A) $40 billion deicit.
B) $30 billion deicit.
14
C) $40 billion surplus.
D) $50 billion deicit.
E) balance of $320 billion.
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
44) The table above gives data for the nation of Syldavia. The capital and inancial account
has a
A) $40 billion deicit.
B) $30 billion deicit.
C) $40 billion surplus.
D) $50 billion deicit.
E) balance of $380 billion.
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
45) The table above gives data for the nation of Syldavia. The oicial settlements account
has a
A) $40 billion deicit.
B) $30 billion deicit.
C) $40 billion surplus.
D) zero balance.
E) balance of $380 billion.
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
46) The table above gives data for the nation of Syldavia. The sum of the current account
balance, capital and inancial account balance, and the oicial settlements account
balances of Syldavia is equal to
A) $30 billion.
B) -$10 billion.
C) $10 billion.
D) zero.
E) $40 billion.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
15
The table has some of the U.S. balance of payments account.
47) Refer to the table above. The current account balance is equal to
A) +$200 billion.
B) -$200 billion.
C) +$220 billion.
D) -$220 billion.
E) +$20 billion.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
16
48) Refer to the table above. If there is no statistical discrepancy, the capital and inancial
account balance equals
A) -$220 billion.
B) +$220 billion.
C) +$200 billion.
D) -$200 billion.
E) +$20 billion.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
49) Refer to the table above. If there is no statistical discrepancy, the oicial settlement
account balance equals
A) +$20 billion.
B) -$20 billion.
C) +$200 billion.
D) +$220 billion.
E) zero
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
50) Refer to the table above. If there is no statistical discrepancy, the sum of all three
balance of payments accounts equals
A) zero
B) -$20 billion.
C) +$200 billion.
D) +$220 billion.
E) +$20 billion.
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
17
51) The sum of the balances of the three accounts of the balance of payments (the current
account, the capital and inancial account, and the oicial settlements account) is
A) negative if there is a balance of trade deicit.
B) equal to zero.
C) positive if there is a balance of trade surplus.
D) negative if there is a balance of trade surplus or positive if there is a balance of trade
deicit.
E) positive if there is a balance of trade surplus or negative if there is a balance of trade
deicit.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
52) There are three balance of payments accounts. The sum of the balances on these three
accounts will equal
A) the total amount of the nation‘s foreign borrowing.
B) the total amount of the nation’s foreign lending.
C) zero.
D) the total amount of the nation‘s exports.
E) the total amount of the nation’s imports.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
53) In 2014, in the United States the sum of the balance of all three of the balance of
payments accounts was
A) zero.
B) slightly negative.
C) greatly negative.
D) slightly positive.
E) greatly positive.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
18
54) The ________ always equals zero.
A) sum of current account plus capital and inancial account
B) sum of current account plus oicial settlements account
C) sum of capital and inancial account plus oicial settlements account
D) sum of current account plus capital and inancial account plus oicial settlements
account
E) oicial settlements account
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
55) When the U.S. current account has a deicit, international payments from the United
States ________ U.S. international receipts. To cover the current account deicit, there must
be a ________ in the combined capital and inancial account and oicial settlements account.
A) are less than; surplus
B) exceed; surplus
C) are less than; deicit
D) equal; surplus
E) exceed; deicit
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
56) We know that among the current account, the capital and inancial account, and the
oicial settlements account that the
A) current account is always larger than the capital and inancial and oicial settlements
accounts combined.
B) current and capital and inancial accounts sum to zero while the oicial settlements
account must be greater than zero.
C) current account plus the capital and inancial account plus the oicial settlements
account must sum to zero.
D) current account plus the capital and inancial account plus the oicial settlements
account must sum to 100.
E) current account plus the capital and inancial account equals zero.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
19
57) The sum of the current account plus the capital and inancial account plus the oicial
settlements account equals
A) 100 percent.
B) U.S. oicial reserves.
C) zero.
D) government expenditures.
E) U.S. exports.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
58) If the current account balance has a $70 million deicit and there was no change in
oicial reserves during that year, then we know that
A) the balance of payments must register a $70 million surplus.
B) the capital and inancial account balance must have a $70 million surplus.
C) the oicial settlements account balance must have a $70 million surplus.
D) net transfers were -$70 million.
E) the capital account balance must have a $70 million deicit.
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
59) If the U.S. capital and inancial account balance has a $30 million surplus and there
was no change in oicial reserves during that year, we know that
A) U.S. net foreign lending must equal $30 million.
B) the United States has a $30 million current account deicit.
C) the United States is a net lender.
D) U.S. oicial reserves have increased by $30 million.
E) the United States has a $30 million current account surplus.
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
20