Question : 21) A U.S. citizen buys a Japanese bond. transaction will : 1381570

 

21) A U.S. citizen buys a Japanese bond. This transaction will be entered as a

A) credit in the U.S. current account.

B) credit in the U.S. capital account.

C) debit in the U.S. current account.

D) debit in the U.S. capital account.

 

22) A German individual buys shares in a U.S. company. This transaction will be entered as a

A) credit in the U.S. current account.

B) debit in the U.S. current account.

C) credit in the U.S. capital account.

D) debit in the U.S. capital account.

 

23) A Dutch firm builds a factory in the United States. This will be entered as a

A) debit in the U.S. capital account.

B) debit in the U.S. current account.

C) credit in the U.S. capital account.

D) credit in the U.S. current account.

 

24) When an American sells an asset abroad, the transaction

A) is registered as a credit in the capital account, and it decreases private U.S. assets abroad.

B) is registered as a debit in the current account, and it decreases private U.S. assets abroad.

C) is registered as a credit in the capital account, and it increases private U.S. assets abroad.

D) is registered as a debit in the capital account, and it increases private U.S. assets abroad.

25) If a Japanese investor buys shares of General Motors company, the transaction

A) is registered as a credit in the capital account, and it increases foreign private assets in the United States.

B) is registered as a debit in the current account, and it decreases private U.S. assets abroad.

C) is registered as a credit in the capital account, and it decreases foreign private assets in the United States.

D) is registered as a debit in the capital account, and it increases private U.S. assets abroad.

 

26) Which of the following statements is FALSE?

A) A country runs a net export deficit if it imports more than it exports.

B) If the current account is in surplus, the capital account must be in deficit.

C) The overall sum of all the entries in the balance of payments must be zero.

D) A country runs a current account surplus if it sells more of its assets abroad than it buys abroad.

 

27) Which of the following statements is true?

A) A decreases in imports causes a balance of payments surplus.

B) A decrease in exports causes a balance of payments deficit.

C) An increase in exports causes a balance of payments surplus.

D) none of the above

 

28) When domestic assets in the United States decrease

A) the U.S. residents are reducing their debt to the rest of the world.

B) the U.S. residents are increasing their stock of assets.

C) the U.S. residents are increasing their debt to the rest of the world.

D) there is no change in the U.S. debt to the rest of the world.

29) When foreign assets in the United States increase, the United States residents are ________ their debt to the ________.

A) increasing; U.S. government

B) increasing; the rest of the world

C) decreasing; the U.S. government

D) decreasing; the rest of the world

 

30) When U.S. residents sell assets abroad, they are in essence

A) borrowing money, and foreign debts to the United States decrease.

B) borrowing money, and foreign debts to the United States increase.

C) lending money, and foreign debts to the United States decrease.

D) lending money, and foreign debts to the United States increase.

 

31) Until the mid-1970s the United States consistently ran current account ________ and capital account ________.

A) deficits; surpluses.

B) surpluses; deficits

C) deficits; deficits

D) surpluses; surpluses

 

32) In the United States, which of the following is directly determined by U.S. income?

A) consumption

B) income tax revenue

C) imports

D) all of the above

33) Related to the Economics in Practice on p. 691: Trade gaps occur when a country’s ________ of goods and services outweigh its ________.

A) imports; exports

B) exports; imports

C) production; sales

D) sales; production