PS1 354 - METU FEAS Department of Economics Econ 354...

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1 METU / FEAS / Department of Economics Econ 354: Introduction to International Economics II / Spring 2010 Student assistants: Merve Mavu ş ğ lu ([email protected]) Course assistant: Seda Ekmen ([email protected]) Instructor: Emre Özçelik ([email protected]) Problem Set # 1 – Chapter 19 Part A. Multiple choice questions 1. If a country has a current account deficit, which one of the following is true? a. Y – (C + I + G) > 0 b. S + (G – T) – I < 0 c. S < I + (G – T) d. C – Y > 0 2. Provided that there are no errors and omissions and no changes in the official reserve assets of the central bank, if a country has a current account deficit, then the country must necessarily have: a. a merchandise trade deficit. b. a capital-and-financial-account surplus. c. a capital-and-financial-account deficit. d. a merchandise trade surplus. 3. A US firm buys web services from a Japanese company. The US firm pays by transferring money from its bank deposit account to the Japanese company’s bank deposit account in the US. This transaction will be recorded in the U.S. balance-of-payments accounts as: a. a credit in the current account and a debit in the capital-and-financial-account. b. a debit in the current account and a credit in the capital-and-financial-account. c. a debit in the current account and a debit in the capital-and-financial-account. d. a credit in the current account and a credit in the capital-and-financial-account. 4. An English tourist comes to Turkey and spends money from his bank deposit account in Turkey. This transaction will be recorded in Turkey’s balance-of-payments accounts as: a. “exports” (i.e., a credit item in the current account), and “a decrease in foreign short-term private assets in Turkey” (i.e., a debit item in the capital-and-financial-account). b. “factor income received from abroad”
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This note was uploaded on 05/26/2010 for the course ECON 354 taught by Professor Emre during the Spring '10 term at Middle East Technical University.

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PS1 354 - METU FEAS Department of Economics Econ 354...

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