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1. On the balance-of-payments statements, merchandise imports are classified in the:
a.
Current account
b.
Capital account
c.
Unilateral transfer account
d.
Official settlements account
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
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: Remember
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
2. The balance of international indebtedness is a record of a country’s international:
a.
Investment position over a period of time
b.
Investment position at a fixed point in time
c.
Trade position over a period of time
d.
Trade position at a fixed point in time
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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: Remember
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
3. Which balance-of-payments item does not directly enter into the calculation of the U.S. gross domestic product?
a.
Merchandise imports
b.
Shipping and transportation receipts
c.
Direct foreign investment
d.
Service exports
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
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Page 2
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
4. Which of the following is considered a capital inflow?
a.
A sale of U.S. financial assets to a foreign buyer
b.
A loan from a U.S. bank to a foreign borrower
c.
A purchase of foreign financial assets by a U.S. buyer
d.
A U.S. citizen’s repayment of a loan from a foreign bank
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
5. Which of the following would call for inpayments to the United States?
a.
American imports of German steel
b.
Gold flowing out of the United States
c.
American unilateral transfers to less-developed countries
d.
American firms selling insurance to British shipping companies
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
6. In a country’s balance of payments, which of the following transactions are debits?
a.
Domestic bank balances owned by foreigners are decreased
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b.
Foreign bank balances owned by domestic residents are decreased
c.
Assets owned by domestic residents are sold to nonresidents
d.
Securities are sold by domestic residents to nonresidents
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
7. Which of the following is classified as a credit in the U.S. balance of payments?
a.
U.S. exports
b.
U.S. gifts to other countries
c.
A flow of gold out of the U.S.
d.
Foreign loans made by U.S. companies
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
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
Table 10.1 gives hypothetical figures for U.S. International Transactions.
Table 10.1. U.S. International Transactions
Amount
Transaction
(billions of dollars)
Merchandise imports
110
Military transactions, net
-5
Remittances, pensions, transfers
-20
U.S. private assets abroad
-50
Merchandise exports
115
Investment income, net
15
U.S. government grants
-5
(excluding military)
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Foreign private assets in the U.S.
25
Compensation of employees
-5
Allocation of SDRs
5
Travel and transportation receipts, net
20
8. Referring to Table 10.1, the goods and services balance equals:
a.
$5 billion
b.
$15 billion
c.
$20 billion
d.
$25 billion
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 10.1
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
9. Referring to Table 10.1, the current account balance equals:
a.
$5 billion
b.
$10 billion
c.
$15 billion
d.
$20 billion
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 10.1
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
10. Unlike the balance of payments, the balance of international indebtedness indicates the international:
a.
Investment position of a country at a given moment in time
b.
Investment position of a country over a one-year period
c.
Trade position of a country at a given moment in time
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d.
Trade position of a country over a one-year period
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
11. Which of the following indicates the international investment position of a country at a given moment in time?
a.
The balance of payments
b.
The capital account of the balance of payments
c.
The current account of the balance of payments
d.
The balance of international indebtedness
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
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
12. Concerning the U.S. balance of payments, which account is defined in essentially the same way as the net export of
goods and services, which comprises part of the country’s gross domestic product?
a.
Merchandise trade account
b.
Goods and services account
c.
Current account
d.
Capital account
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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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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
13. If an American receives dividends from the shares of stock she or he owns in Toyota, Inc., a Japanese firm, the
transaction would be recorded on the U.S. balance of payments as a:
a.
Capital account debit
b.
Capital account credit
c.
Current account debit
d.
Current account credit
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
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
14. If the United States government sells military hardware to Saudi Arabia, the transaction would be recorded on the U.S.
balance of payments as a:
a.
Current account debit
b.
Current account credit
c.
Capital account debit
d.
Capital account credit
ANSWER:
b
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
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
15. The U.S. balance of trade is determined by:
a.
Exchange rates
b.
Growth of economies overseas
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c.
Relative prices in world markets
d.
All of the above
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
16. U.S. military aid granted to foreign countries is entered in the:
a.
Merchandise trade account
b.
Capital account
c.
Current account
d.
Official settlements account
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
17. If the U.S. faces a balance-of-payments deficit on the current account, it must run a surplus on:
a.
The official settlements account
b.
The capital account
c.
Either the official settlements account or the capital account
d.
Both the official settlements account and the capital account
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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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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
18. The current account of the U.S. balance of payments does not include:
a.
Investment income
b.
Merchandise exports and imports
c.
The sale of securities to foreigners
d.
Unilateral transfers
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
19. The U.S. has a balance of trade deficit when its:
a.
Merchandise exports exceed its merchandise imports
b.
Merchandise imports exceed its merchandise exports
c.
Goods and services exports exceed its goods and services imports
d.
Goods and services imports exceed its goods and services exports
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
20. The value to American residents of income earned from overseas investments shows up in which account in the U.S.
balance of payments?
a.
Current account
b.
Trade account
c.
Unilateral transfers account
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d.
Capital account
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
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
Table 10.2. International Investment Position of the United States
U.S. assets abroad
U.S. government assets
$800 billion
U.S. private assets
$200 billion
Foreign assets in the U.S.
Foreign official assets
$600 billion
Foreign private assets
$300 billion
21. Consider Table 10.2. The U.S. balance of international indebtedness suggests that the United States is a net:
a.
Debtor
b.
Creditor
c.
Spender
d.
Exporter
ANSWER:
b
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
PREFACE NAME:
Table 10.2
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
22. For the first time since World War I, in 1985 the United States became a net international:
a.
Exporter
b.
Importer
c.
Debtor
d.
Creditor
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Page 10
ANSWER:
c
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
23. A country that is a net international debtor initially experiences:
a.
An augmented savings pool available to finance domestic spending
b.
A higher interest rate, which leads to lower domestic investment
c.
A loss of funds to trading partners overseas
d.
A decrease in its services exports to other countries
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
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 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
24. Credit (+) items in the balance of payments correspond to anything that:
a.
Involves receipts from foreigners
b.
Involves payments to foreigners
c.
Decreases the domestic money supply
d.
Increases the demand for foreign exchange
ANSWER:
a
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
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: Remember
Copyright Cengage Learning. Powered by Cognero.
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DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
25. Debt (-) items in the balance of payments correspond to anything that:
a.
Involves receipts from foreigners
b.
Involves payments to foreigners
c.
Increases the domestic money supply
d.
Decreases the demand for foreign exchange
ANSWER:
b
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
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: Remember
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
26. When all of the debit or credit items in the balance of payments are combined:
a.
Merchandise imports equal merchandise exports
b.
Capital imports equal capital exports
c.
Services exports equal services imports
d.
The total surplus or deficit equals zero
ANSWER:
d
POINTS:
1
DIFFICULTY:
Easy
QUESTION TYPE:
Multiple Choice
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
27. In the balance of payments, the statistical discrepancy is used to:
a.
Ensure that the sum of all debits matches the sum of all credits
b.
Ensure that trade imports equal the value of trade exports
c.
Obtain an accurate account of a balance-of-payments deficit
d.
Obtain an accurate account of a balance-of-payments surplus
ANSWER:
a
POINTS:
1
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Page 12
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
28. All of the following are credit items in the balance of payments, except:
a.
Investment inflows
b.
Merchandise exports
c.
Payments for American services to foreigners
d.
Private gifts to foreign residents
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
29. All of the following are debit items in the balance of payments, except:
a.
Capital outflows
b.
Merchandise exports
c.
Private gifts to foreigners
d.
Foreign aid granted to other nations
ANSWER:
b
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
Copyright Cengage Learning. Powered by Cognero.
Page 13
30. The role of ____ is to direct one nation’s savings into another nation’s investments:
a.
Merchandise trade flows
b.
Services flows
c.
Current account flows
d.
Capital flows
ANSWER:
d
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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
31. When a country realizes a deficit on its current account:
a.
Its net foreign investment position becomes positive
b.
It becomes a net demander of funds from other countries
c.
It realizes an excess of imports over exports on goods and services
d.
It becomes a net supplier of funds to other countries
ANSWER:
b
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
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 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
32. Reducing a current account deficit requires a country to:
a.
Increase private saving relative to investment
b.
Increase private consumption relative to saving
c.
Increase private investment relative to consumption
d.
Increase private investment relative to saving
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
Copyright Cengage Learning. Powered by Cognero.
Page 14
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 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
33. Reducing a current account deficit requires a country to:
a.
Increase the government’s deficit and increase private investment relative to saving
b.
Increase the government’s deficit and decrease private investment relative to saving
c.
Decrease the government’s deficit increase private investment relative to saving
d.
Decrease the government’s deficit and decrease private investment relative to saving
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
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 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
34. Reducing a current account surplus requires a country to:
a.
Increase the government’s deficit and increase private investment relative to saving
b.
Increase the government’s deficit and decrease private investment relative to saving
c.
Decrease the government’s deficit and increase private investment relative to saving
d.
Decrease the government’s deficit and decrease private investment relative to saving
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
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 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
35. Concerning a country’s business cycle, rapid growth of production and employment is commonly associated with:
Copyright Cengage Learning. Powered by Cognero.
Page 15
a.
Large or growing trade deficits and current account deficits
b.
Large or growing trade deficits and current account surpluses
c.
Small or shrinking trade deficits and current account deficits
d.
Small or shrinking trade deficits and current account surpluses
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
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 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
36. The burden of a current account deficit would be the least if a nation uses what it borrows to finance:
a.
Unemployment compensation benefits
b.
Social Security benefits
c.
Expenditures on food and recreation
d.
Investment on plant and equipment
ANSWER:
d
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
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 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
37. Concerning a country’s business cycle, ____ is commonly associated with large or growing current account deficits:
a.
Rapid growth rates of production and employment
b.
Slow growth rates of production and employment
c.
Falling interest rates on government securities
d.
Falling interest rates on corporate securities
ANSWER:
a
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
Multiple Choice
HAS VARIABLES:
False
Copyright Cengage Learning. Powered by Cognero.
Page 16
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 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
38. According to researchers at the Federal Reserve, the loss of jobs associated with a deficit in the current account tends
to be:
a.
Offset by the increase of jobs associated with a surplus in the capital account
b.
Reinforced by the decrease of jobs associated with a surplus in the capital account
c.
A threat to the level of employment for the economy as a whole
d.
Of no long-run economic consequence for workers who lose their jobs
ANSWER:
a
POINTS:
1
DIFFICULTY:
Moderate
QUESTION TYPE:
Multiple Choice
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 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
Table 10.3 shows hypothetical transactions, in billions of U.S. dollars, that took place during a year.
Table 10.3. International Transactions of the United States
Amount
(billions of dollars)
Transaction
Allocation of SDRs
10
Changes in U.S. assets abroad
100
Statistical discrepancy
-15
Merchandise imports
-400
Payments on foreign assets in U.S.
-20
Remittances, pensions, transfers
-60
Travel and transportation receipts, net
30
Military transactions, net
-10
Investment income, net
100
Merchandise exports
350
U.S. government grants (excluding military)
-20
Changes in foreign assets in the U.S.
190
Other services, net
80
Receipts on U.S. investments abroad
30
Compensation of employees
-10
39. Refer to Table 10.3. The merchandise-trade balance registered a deficit of $50 billion.
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Page 17
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Table 10.3
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
40. Refer to Table 10.3. The services balance registered a surplus of $100 billion.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Table 10.3
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
41. Refer to Table 10.3. The goods-and-services balance registered a surplus of $50 billion.
a.
True
b.
False
ANSWER:
True
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Table 10.3
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
Copyright Cengage Learning. Powered by Cognero.
Page 18
KEYWORDS:
BLOOM’S: Understand
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM
42. Refer to Table 10.3. The unilateral-transfers balance registered a deficit of $40 billion.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Table 10.3
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
43. Refer to Table 10.3. The current-account balance registered a surplus of $30 billion.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Table 10.3
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
44. Refer to Table 10.3. The “net exports” component of the U.S. gross domestic product registered $-110 billion.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
Copyright Cengage Learning. Powered by Cognero.
Page 19
PREFACE NAME:
Table 10.3
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
45. Refer to Table 10.3. The payments data suggest that the United States was a “net demander” of $30 billion from the
rest of the world.
a.
True
b.
False
ANSWER:
False
POINTS:
1
DIFFICULTY:
Challenging
QUESTION TYPE:
True / False
HAS VARIABLES:
False
PREFACE NAME:
Table 10.3
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
46. The balance of payments refers to the stock of trade and investment transactions that exists at a particular point in
time.
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
47. Referring to the balance-of-payments statement, an international transaction refers to the exchange of goods, services,
and assets between residents of one country and those abroad.
a.
True
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Page 20
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
48. The balance of payments includes international transactions of households and businesses, but not government.
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
49. Because the balance of payments utilizes double-entry accounting, merchandise exports will always be in balance with
merchandise imports.
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: Remember
DATE CREATED:
6/22/2016 3:22 PM
DATE MODIFIED:
6/22/2016 3:22 PM