Question : 18.2   Balance of Payments 1) The difference between merchandise exports and : 1373827

18.2   Balance of Payments

1) The difference between merchandise exports and imports is called the ________ balance.

A) current account

B) capital account

C) official reserve transactions

D) trade

2) The account that shows international transactions involving currently produced goods and services is called the

A) trade balance.

B) current account.

C) balance of payments.

D) capital account.

3) The account that shows international transactions involving financial transactions (stocks, bonds, bank loans, etc.) is called the

A) trade balance.

B) current account.

C) balance of payments.

D) capital account.

4) Which of the following does not appear in the current account part of the balance of payments?

A) A loan of $1 million from Bank of America to Brazil.

B) Foreign aid to El Salvador.

C) An Air France ticket bought by an American.

D) Income earned by General Motors from its plants abroad.

5) Of the following, the one that appears in the current account of the balance of payments is

A) an Italian investor’s purchase of IBM stock.

B) income earned by U.S. subsidiaries of Barclay’s Bank of London.

C) a loan by a Swiss bank to an American corporation.

D) a purchase of a British Treasury bond by the Fed.

6) Capital ________ are American purchases of foreign assets, and capital ________ are foreign purchases of American assets.

A) inflows; outflows

B) inflows; inflows

C) outflows; outflows

D) outflows; inflows

7) Which of the following appears in the capital account part of the balance of payments?

A) A gift to an American from his English aunt.

B) A purchase by the Honda corporation of a U.S. Treasury bill.

C) A purchase by the Bank of England of a U.S. Treasury bill.

D) Income earned by the Honda corporation on its automobile plant in Ohio.

8) The net amount of international reserves that move between governments to finance international transactions is called the ________ balance.

A) capital account

B) current account

C) trade

D) official reserve transactions

9) If the current account balance shows a surplus, and the capital account also shows a surplus, then the official reserve transactions balance

A) must be positive.

B) must be negative.

C) must be zero.

D) can either be positive, negative, or zero.

10) A current account surplus indicates that America is ________ its claims on foreign wealth, while a deficit indicates that this country is ________ its claims on foreign wealth.

A) reducing; reducing

B) reducing; increasing

C) increasing; reducing

D) increasing; increasing

11) Because it provides some indication of what is happening to U.S. claims on foreign wealth and the demand for imports and exports, the ________ is closely followed by economists wanting information on the future movement of exchange rates.

A) trade balance

B) capital account

C) current account balance

D) statistical discrepancy

12) Economists closely follow the current account balance because they believe it can provide information on the future movement of

A) interest rates.

B) gold flows.

C) exchange rates.

D) special drawing rights.