60) If the current account balance is -$100 billion, the capital and inancial account balance
is $80 billion, then the oicial settlements account balance is
A) 0.
B) $180 billion.
C) $20 billion.
D) -$20 billion.
E) -$180 billion.
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
61) If the current account balance is -$450 billion, the capital and inancial account balance
is $440 billion, then the oicial settlements balance is
A) $10 billion.
B) -$10 billion.
C) $890 billion.
D) -$890 billion.
E) $0 because it is always zero.
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
62) Between 1981 and 2012, the United States
A) had a current account deicit almost every year.
B) had a current account surplus almost every year.
C) some years had a deicit and some years had a surplus that netted out to $0.
D) some years had a deicit and some years had a surplus that totaled a surplus of $2.5
trillion.
E) had a current account surplus or deicit that almost equal to $0 every year.
Skill: Level 1: Deinition
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
21
63) For most of the years since 1981, the United States has had
A) a current account deicit.
B) a capital and inancial account deicit.
C) balanced trade.
D) a large oicial settlements balance.
E) an oicial settlements account deicit.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
64) From the early 1990s through 2012, the U.S.
A) balance of payments exceeded the capital account.
B) current account was negative.
C) capital and inancial account was negative.
D) actual balance of payments deicit exceeded what the United States measured as the
balance of payments deicit.
E) current account and U.S. capital and inancial account were both positive.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
65) Which of the following has NOT changed much as a percent of GDP over the last twenty
years for the United States?
i. the oicial settlements account
ii. the capital and inancial account
iii. the current account
A) i only
B) ii only
C) iii only
D) ii and iii
E) None of the above answers is correct because all three have had large swings over the
last 20 years.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
22
66) Looking at the U.S. balance of payments from 1980 to 2012, we see that the
A) current account was positive until 1992 then turned negative.
B) current account has been negative for most years and was small in the late 1980s and
early 1990s.
C) capital and inancial account has been negative for most years and was small in the late
1980s and early 1990s.
D) oicial settlements account was large in the 1980s relative to the current account.
E) current account was negative until 1992 then turned positive.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
67) From the 1990s to the present, the U.S. current account balance has had a ________,
and the U.S. capital and inancial account balance has had ________.
A) deicit; a deicit
B) deicit; a surplus
C) surplus; a deicit
D) surplus; a surplus
E) deicit; neither a deicit nor a surplus
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
68) Which of the following is true?
A) Most countries are net lenders.
B) Most countries are net borrowers.
C) A net borrower must be a debtor country.
D) A net lender must be a debtor nation.
E) A net lender must be a creditor nation.
Skill: Level 1: Deinition
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
23
69) The United States switched from being a ________ to being a ________ in the early 1980s,
when it started to run large current account ________.
A) net lender; net borrower; surpluses
B) net borrower; net lender; surpluses
C) net lender; net borrower; deicits
D) net borrower; net lender; deicits
E) debtor nation; creditor nation; deicits
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
70) During the last year, foreign investment in a country was $500 billion and the country’s
investment abroad was $600 billion. Which of the following statements is true?
A) The country has net borrowing of $100 billion.
B) The country has a current account deicit of $100 billion.
C) The country has a current account deicit of $1,100 billion.
D) The country has net lending of $100 billion.
E) The country has a capital and inancial account deicit of $1,100 billion.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
71) The United States currently is
A) a net borrower and has been since the end of World War II in 1945.
B) a net lender and has been since the 1980s.
C) a net borrower and has been since the 1980s.
D) a net lender and has been since the end of World War II in 1945.
E) neither a net lender nor a net borrower.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
24
72) A country with an oicial settlements balance of zero and a negative current account
balance is a
A) net borrower.
B) net lender.
C) net saver.
D) net creditor.
E) None of the above answers is correct because it is not possible to have an oicial
settlements balance of zero and a negative current account balance.
Skill: Level 4: Applying models
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
73) A country reports exports minus imports of $300 billion, net interest income of $30
billion, net transfers of $50 billion, and no change in oicial reserves. The country is a
A) net borrower.
B) net lender.
C) debtor nation.
D) net liability.
E) net asset.
Skill: Level 4: Applying models
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
74) If U.S. exports exceed U.S. imports and oicial reserves do not change, the United
States
A) borrows from the rest of the world.
B) makes loans to the rest of the world.
C) borrows from the U.S. government.
D) makes loans to the U.S. government.
E) cannot sell any capital to foreigners.
Skill: Level 4: Applying models
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
25
75) A nation that currently has a surplus in its current account is called a
A) debtor nation.
B) creditor nation.
C) net borrower.
D) net lender.
E) capital account surplus nation.
Skill: Level 4: Applying models
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
76) A nation that currently has a surplus in its capital account is called a
A) debtor nation.
B) creditor nation.
C) net borrower.
D) net lender.
E) current account surplus nation.
Skill: Level 4: Applying models
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
77) A nation that is a net borrower each year over time will become a ________ nation. A
nation that is a net lender each year over time will become a ________ nation. Since the
early 1980s, the United States has been a ________ due to the current account ________.
A) debtor; creditor; net lender; surpluses
B) creditor; debtor; net lender; surpluses
C) creditor; debtor; net borrower; deicits
D) debtor; creditor; net borrower; deicits
E) creditor; debtor; net lender; deicits
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
26
78) A nation that has invested more in the rest of the world than other countries have
invested in it is called a
A) debtor nation.
B) creditor nation.
C) net borrower.
D) net lender.
E) saver nation.
Skill: Level 1: Deinition
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
79) The United States currently is
A) a creditor nation and has been since the end of World War II in 1945.
B) a debtor nation and has been since 1989.
C) a creditor nation and has been one since 1989.
D) a debtor nation and has been since the end of World War II in 1945.
E) neither a debtor nation nor a creditor nation.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
80) Because of the large current account deicits accumulated by the United States since
1981, the United States has become a
A) creditor nation.
B) broke nation.
C) balanced nation.
D) debtor nation.
E) nation with no oicial reserves.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
27
The table above gives data on the U.S. balance of payments in 2019.
81) Refer to the table above. The current account balance is
A) -$100 billion.
B) $100 billion.
C) -$200 billion.
D) $200 billion.
E) $1,900 billion.
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
82) Refer to the table above. The capital and inancial account balance is
A) -$200 billion.
B) $200 billion.
C) -$190 billion.
D) $190 billion.
E) $1,900 billion.
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
83) Refer to the table above. The oicial settlements account balance is
A) -$1,100 billion.
B) $1,100 billion.
C) $10 billion.
D) -$10 billion.
E) $0.
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
84) Refer to the table above. Is the United States a debtor or a creditor nation in 2019?
A) a debtor nation
B) a creditor nation
C) neither a creditor nor debtor nation
D) both a creditor nation and a debtor nation
E) More information is needed to determine if the United States is a debtor or creditor
28
nation.
Skill: Level 3: Using models
Section: Checkpoint 19.1
Status: Old
AACSB: Analytical thinking
85) The current account balance is equal to net exports ________ net interest ________ net
transfers.
A) plus; plus
B) plus; minus
C) minus; plus
D) minus; minus
E) multiplied by; multiplied by
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
86) The current account balance equals
A) net exports + net transfers + net interest.
B) net exports – net transfers + net interest.
C) net exports + net transfers – net interest.
D) net exports – net transfers – net interest.
E) net exports + net transfers.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
29
87) Fluctuations in the current account balance are mainly the result of luctuations in
A) net exports.
B) net interest.
C) net transfers.
D) foreign reserves.
E) imports of capital.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
88) In the United States, the main source of luctuations in the current account balance is
A) net transfers.
B) international debt.
C) net exports.
D) net interest.
E) exports of capital.
Skill: Level 2: Using deinitions
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
89) The private sector balance equals
A) saving plus investment.
B) saving minus investment.
C) net taxes minus government expenditures.
D) net taxes plus government expenditures.
E) investment minus saving.
Skill: Level 1: Deinition
Section: Checkpoint 19.1
Status: Old
AACSB: Relective thinking
30