Question 1

Which is not a concern about the North American Free Trade Agreement (NAFTA) ?

Accepted Answer

A)   its impact on U.S. inflation.
B)   its impact on U.S. unemployment.
C)   lower environmental standards in Mexico.
D)   different health laws for workers in Mexico.E) B) and C)
F) All of the above

Question 2

U.S. government officials would likely prefer that China devalue the yuan against the dollar.

Accepted Answer

A) True 
 B)False

Question 3

A balance of trade surplus indicates an excess of merchandise imports over merchandise exports.

Accepted Answer

A) True 
 B)False

Question 4

The balance of payments is a measurement of all transactions between domestic and foreign residents over a specified period of time.

Accepted Answer

A) True 
 B)False

Question 5

An American tourist visiting Germany and spending money there (for lodging, food, etc.) will reduce the U.S. current account deficit and reduce Germany's current account balance.

Accepted Answer

A) True 
 B)False

Question 6

Direct foreign investment into the U.S. represents a ____.

Accepted Answer

A)   capital inflow
B)   trade inflow
C)   capital outflow
D)   trade outflowE) B) and D)
F) B) and C)

Question 7

Which of the following factors probably does not directly affect a country's capital account and its components?

Accepted Answer

A)   Inflation
B)   Interest rates
C)   Withholding taxes on foreign income
D)   Exchange rate movements
E)   All of the above will directly affect a country's capital account.F) C) and D)
G) B) and D)

Question 8

A weakening of the U.S. dollar with respect to the British pound would likely reduce the U.S. exports to Britain and increase U.S. imports from Britain over time.

Accepted Answer

A) True 
 B)False

Question 9

The World Bank frequently enters into cofinancing agreements. Under these agreements, financing is provided by the World Bank and/or official aid agencies, export credit agencies, or commercial banks.

Accepted Answer

A) True 
 B)False

Question 10

Regarding the U.S. balance of payments, capital account items are relatively minor compared to the financial account items.

Accepted Answer

A) True 
 B)False

Question 11

The ____ is the difference between exports and imports.

Accepted Answer

A)   balance of trade
B)   balance on goods and services
C)   balance of payments
D)   current account
E)   capital accountF) C) and D)
G) A) and E)

Question 12

Also known as the "central banks' central bank," the ____ attempts to facilitate cooperation among countries with regard to international transactions and provides assistance to countries experiencing a financial crisis.

Accepted Answer

A)   World Bank
B)   International Financial Corporation (IF
C)  
C)   World Trade Organization
D)   International Development Association (ID
A)  
E)   Bank for International Settlements (BIS) F) C) and D)
G) B) and E)

Question 13

A weak home currency may not be a perfect solution to correct a balance of trade deficit because:

Accepted Answer

A)   it reduces the prices of imports paid by local companies.
B)   it increases the prices of exports by local companies.
C)   it prevents international trade transactions from being prearranged.
D)   foreign companies may reduce the prices of their products to stay competitive.E) None of the above
F) A) and D)

Question 14

The ____, an accord among 117 nations, called for lower tariffs around the world.

Accepted Answer

A)   General Agreement on Tariffs and Trade (GATT) 
B)   North American Free Trade Agreement (NAFT
A)  
C)   Single European Act of 1987
D)   European Union Accord
E)   None of the aboveF) A) and D)
G) A) and E)

Question 15

____ purchases more U.S. exports than the other countries listed here.

Accepted Answer

A)   Italy
B)   Spain
C)   Mexico
D)   CanadaE) A) and C)
F) C) and D)

Question 16

According to the text, international trade (exports plus imports combined)  as a percentage of GDP is:

Accepted Answer

A)   higher in the U.S. than in European countries.
B)   lower in the U.S. than in European countries.
C)   higher in the U.S. than in about half the European countries, and lower in the U.S. than the others.
D)   about the same in the U.S. as in European countries.E) B) and C)
F) A) and D)

Question 17

____ is (are)  income received by investors on foreign investments in financial assets (securities) .

Accepted Answer

A)   Portfolio income
B)   Direct foreign income
C)   Unilateral transfers
D)   Factor incomeE) B) and D)
F) A) and B)

Question 18

Changes in country ownership of long-term and short-term assets are measured in the balance of payments with the capital account.

Accepted Answer

A) True 
 B)False

Question 19

The U.S. typically has a balance of trade surplus in its trade with ____.

Accepted Answer

A)   China
B)   Japan
C)   A and B
D)   none of the aboveE) None of the above
F) C) and D)

Question 20

A tariff is a maximum limit on imports.

Accepted Answer

A) True 
 B)False

Exam 2: International Flow of Funds

The World Bank frequently enters into cofinancing agreements. Under these agreements, financing is provided by the World Bank and/or official aid agencies, export credit agencies, or commercial banks.

Correct AnswerverifiedShow Answer

Regarding the U.S. balance of payments, capital account items are relatively minor compared to the financial account items.

Correct AnswerverifiedShow Answer

Which of the following factors probably does not directly affect a country's capital account and its components?

Correct AnswerverifiedShow Answer

A weak home currency may not be a perfect solution to correct a balance of trade deficit because:

Correct AnswerverifiedShow Answer

The balance of payments is a measurement of all transactions between domestic and foreign residents over a specified period of time.

Correct AnswerverifiedShow Answer

Also known as the "central banks' central bank," the ____ attempts to facilitate cooperation among countries with regard to international transactions and provides assistance to countries experiencing a financial crisis.

Correct AnswerverifiedShow Answer

____ purchases more U.S. exports than the other countries listed here.

Correct AnswerverifiedShow Answer

A balance of trade surplus indicates an excess of merchandise imports over merchandise exports.

Correct AnswerverifiedShow Answer

____ is (are) income received by investors on foreign investments in financial assets (securities) .

Correct AnswerverifiedShow Answer

The U.S. typically has a balance of trade surplus in its trade with ____.

Correct AnswerverifiedShow Answer

Which is not a concern about the North American Free Trade Agreement (NAFTA) ?

Correct AnswerverifiedShow Answer

The ____, an accord among 117 nations, called for lower tariffs around the world.

Correct AnswerverifiedShow Answer

The ____ is the difference between exports and imports.

Correct AnswerverifiedShow Answer

According to the text, international trade (exports plus imports combined) as a percentage of GDP is:

Correct AnswerverifiedShow Answer

Direct foreign investment into the U.S. represents a ____.

Correct AnswerverifiedShow Answer

Changes in country ownership of long-term and short-term assets are measured in the balance of payments with the capital account.

Correct AnswerverifiedShow Answer

A tariff is a maximum limit on imports.

Correct AnswerverifiedShow Answer

A weakening of the U.S. dollar with respect to the British pound would likely reduce the U.S. exports to Britain and increase U.S. imports from Britain over time.

Correct AnswerverifiedShow Answer

U.S. government officials would likely prefer that China devalue the yuan against the dollar.

Correct AnswerverifiedShow Answer

An American tourist visiting Germany and spending money there (for lodging, food, etc.) will reduce the U.S. current account deficit and reduce Germany's current account balance.

Correct AnswerverifiedShow Answer

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