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Page 21
50. On the U.S. balance-of-payments statement, the following transactions are credits, leading to the receipt of dollars
from foreigners: merchandise exports, transportation receipts, income received from investments abroad, and investments
in the United States by foreign residents.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
51. On the U.S. balance of payments, the following transactions are debits, leading to payments to foreigners:
merchandise imports, travel expenditures, gifts to foreign residents, and overseas investments by U.S. residents.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
52. The “goods and services” account of the balance of payments shows the monetary value of international flows
associated with transactions in goods, services, and unilateral transfers.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
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Page 22
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
53. An increase in import restrictions by the U.S. government tends to promote a merchandise-trade surplus.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
54. Services transactions on Canada’s balance-of-payments statement would include Canadian ships transporting lumber
to Japan, foreign tourists spending money in Canada, and Canadian engineers designing bridges in China.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
55. On the balance-of-payments statement, dividend and interest income are classified as capital-account transactions.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
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Page 23
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
56. A surplus on Germany’s goods-and-services balance indicates that Germany has sold more goods and services to
foreigners than it has bought from them over a one-year period.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
57. The merchandise-trade account on the balance-of-payments statement is defined the same way as “net exports” which
constitutes part of the nation’s gross domestic product.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
58. A positive balance on the goods-and-services account of the balance of payments indicates an excess of exports over
imports which must be added to the nation’s gross domestic product.
a.
True
b.
False
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Page 24
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
59. For the United States, merchandise trade has generally constituted the largest portion of its goods-and-services
account.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
U.S. Balance of Payments
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
60. Unilateral transfers refer to two-sided transactions, reflecting the movement of goods and services in one direction
with corresponding payments in the other direction.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
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Page 25
61. Unilateral transfers consist of private-sector transfers, such as church contributions to alleviate starvation in Africa, as
well as governmental transfers, such as foreign aid.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
62. Current-account transactions include direct foreign investment, purchases of foreign government securities, and
commercial bank loans made abroad.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
63. On the U.S. balance-of-payments statement, a capital inflow would occur if a Swiss resident purchases the securities
of the U.S. government.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
Copyright Cengage Learning. Powered by Cognero.
Page 26
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
64. If Toyota Inc. of Japan builds an automobile assembly plant in the United States, the Japanese capital account would
register an outflow.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
65. If Bank of America receives repayment for a loan it made to a Mexican firm, the U.S. capital account would register
an inflow.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
66. On the balance-of-payments statement, a capital inflow can be likened to the import of goods and services.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
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Page 27
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
67. The capital account of the balance of payments includes private-sector transactions as well as official-settlements
transactions of the home country’s central bank.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
68. If the current account of the balance of payments registers a deficit, the capital account registers a surplus, and vice
versa.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
69. Concerning the balance of payments, a current-account surplus means an excess of exports over imports of goods,
services, investment income, and unilateral transfers.
a.
True
b.
False
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Page 28
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
70. If a country realizes a current-account deficit in its balance of payments, it becomes a net supplier of funds to the rest
of the world.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
71. Concerning the balance of payments, a current-account deficit results in a worsening of a country’s net foreign
investment position.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
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Page 29
72. In the balance-of-payments statement, statistical discrepancy is treated as part of the merchandise trade account
because merchandise transactions are generally the most frequent source of error.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
73. Because a large number of international transactions fail to get recorded, statisticians insert a residual, known as
statistical discrepancy, to ensure that total debits equal total credits.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
74. Concerning the balance of payments, the goods-and-services balance is commonly referred to as the “trade balance”
by the news media.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
Copyright Cengage Learning. Powered by Cognero.
Page 30
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
75. Since the 1970s, the merchandise trade account of the U.S. balance of payments has registered deficit.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
U.S. Balance of Payments
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
76. Although the United States has realized merchandise trade deficits since the early 1970s, its goods-and-services
balance has always registered surplus.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
U.S. Balance of Payments
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
77. In the past two decades, the U.S. services balance has generally registered surplus.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
Copyright Cengage Learning. Powered by Cognero.
Page 31
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
U.S. Balance of Payments
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
78. The U.S. unilateral-transfers balance has consistently registered surplus in the past two decades.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
U.S. Balance of Payments
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
79. Because the balance of payments is a record of the economic transactions of a country over a period of time, it is a
“flow” concept.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
80. The United States would be a “net creditor” if the value of U.S. assets abroad exceeded the value of foreign assets in
the United States.
a.
True
b.
False
ANSWER:
True
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Page 32
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance of International Indebtedness
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
81. If a country consistently realizes a current-account surplus in its balance of payments, it likely will become a “net
debtor” in its balance of international indebtedness.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance of International Indebtedness
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
82. By the mid-1980s, the United States had evolved from the status of a net-creditor nation to a net-debtor nation in its
balance of international indebtedness.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance of International Indebtedness
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
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Page 33
83. The net-debtor status, that the United States achieved in its balance of international indebtedness by the mid-1980s,
reflected the continuous current-account surplus that the United States attained in its balance of payments during the
1970s.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance of International Indebtedness
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
84. Although a net-debtor country may initially benefit from an inflow of savings from abroad, over the long run
continued borrowing results in growing dividend payments to foreigners and a drain on the debtor-country’s economic
resources.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance of International Indebtedness
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
85. The official reserve assets of the United States consist of holdings of gold and foreign corporate securities.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
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Page 34
TOPICS:
U.S. Balance of Payments
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
86. That U.S. importers purchase bananas from Brazil constitutes a debit transaction on the U.S. balance of payments.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Double-Entry Accounting
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
87. That German investors collect interest income on their holdings of U.S. Treasury bills constitutes a credit transaction
on the U.S. balance of payments.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Double-Entry Accounting
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
88. That U.S. charities donate funds to combat starvation in Africa constitutes a debit transaction on the U.S. balance of
payments.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
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Page 35
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Double-Entry Accounting
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
89. To reduce a current account deficit, a country should either decrease the budget deficit of its government or reduce
investment spending relative to saving.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
90. Most economists belief that in the 1980s, a massive outflow of capital caused a current account deficit for the United
States.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
U.S. Balance of Payments
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
91. A current account deficit for the United States necessarily reduces the standard of living for American households.
a.
True
b.
False
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Page 36
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
U.S. Balance of Payments
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
92. Rapid growth of production and employment is commonly associated with large or growing trade surpluses and
current account surpluses.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
93. Often, countries realizing rapid economic growth rates possess long-run current account deficits.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
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Page 37
94. For the United States, a consequence of its current account deficit is a growing foreign ownership of the capital stock
of the United States and a rising fraction of U.S. income that must be diverted abroad in the form of interest and dividends
to foreigners.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
U.S. Balance of Payments
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
95. Most economists contend that any reduction in the current account deficit is better achieved through increased national
saving than through reduced domestic investment.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
True / False
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
96. What are the components of the current account of the balance of payments?
ANSWER:
The current account includes transactions in goods and services, income flows, and unilateral
transfers.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
97. Concerning the balance of international indebtedness, when is a country a net creditor or a net debtor?
ANSWER:
A country is a net creditor when its claims on foreign nations exceed foreign claims on it. The
nation is a net debtor when foreign nations’ claims on it exceed its claims on foreign nations.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Subjective Short Answer
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance of International Indebtedness
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:23 PM
DATE MODIFIED:
6/22/2016 3:23 PM
98. How do we measure the international investment position of the United States at any point in time? How did the U.S.
become a net debtor nation so rapidly?
ANSWER:
The international investment position of the United States is measured by the monetary value
of U.S. assets abroad versus foreign assets in the United States. Unlike the balance of
payments, which is a flow concept, the balance of international indebtedness is a stock
concept. The reason for the U.S. becoming a net debtor nation is that foreign investors have
placed more funds in the United States than the U.S. residents have invested abroad. The
United States has been considered attractive to foreign investors.
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Essay
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Balance of International Indebtedness
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:23 PM
DATE MODIFIED:
6/22/2016 3:23 PM
99. What does a current account deficit mean?
ANSWER:
When a country realizes a deficit in its current account, it has an excess of imports over
exports of goods, services, income, and unilateral transfers. This leads to an increase in net
foreign claims upon the home country. The home country becomes a net demander of funds
from abroad, the demand being met through borrowing from other countries or liquidating
foreign assets. The result is a worsening of the home country’s net foreign investment
position.
POINTS:
1
DIFFICULTY:
Moderate
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Page 39
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Analytic Reflective Thi – BUSPROG: Reflective Thinking
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
What Does a Current Account Deficit (Surplus) Mean?
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:23 PM
DATE MODIFIED:
6/22/2016 3:23 PM
100. If an American purchases a ticket from Scandinavian Airlines, paying by a personal check, which entries result in the
balance-of-payments accounts of Norway or the United States?
a.
b.
c.
d.
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Double Entry Accounting
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 5:05 AM
DATE MODIFIED:
7/5/2016 5:06 AM
101. If a resident of Japan purchases a ticket from American Airlines, paying by a personal check, which entries result in
the balance-of-payments accounts of Japan or the United States?
a.
a debit in the U.S. service account
b.
a credit in the U.S. service account
c.
a credit in Japan’s unilateral transfers account
d.
a debit in Japan’s unilateral transfers account
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance
TOPICS:
Double Entry Accounting
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
7/5/2016 5:06 AM
DATE MODIFIED:
7/5/2016 5:08 AM
102. A credit transaction would appear on the balance of payments as a result of
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Page 40
a.
the import of goods and services
b.
domestic residents touring overseas
c.
transfer payments made to foreign relatives
d.
an inflow of investment capital
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: The role of money
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/5/2016 5:09 AM
DATE MODIFIED:
7/5/2016 5:11 AM
103. A debit transaction would appear on the balance of payments as a result of
a.
the export of goods abroad
b.
the export of services abroad
c.
transfer payments received by domestic residents
d.
outflows of investment capital
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: The role of money
TOPICS:
Balance-of-Payments Structure
KEYWORDS:
BLOOM’S: Remember
DATE CREATED:
7/5/2016 5:11 AM
DATE MODIFIED:
7/5/2016 5:13 AM
104. The current account of the United States includes all of the following except
a.
trade in goods and services
b.
unilateral transfers
c.
income receipts and payments
d.
gold flows between the United States and foreign central banks
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
NATIONAL STANDARDS:
United States – BUSPROG: Promotion – BUSPROG: Analytic
STATE STANDARDS:
United States – PA – DISC: International trade and fi – DISC: International trade and finance