Hw3_AK - Econ 4401 International Economics Deniz Cicek...

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Econ 4401 International Economics University of Minnesota Deniz Cicek Fall 2009 Assignment 3 – Answer Key (Maximum Points: 100) Multiple-Choice Questions Each question is worth 3 points. Explanation is not required. 1. The most commonly traded currency in the foreign exchange market is the (a) British pound. (b) Japanese yen. (c) Chinese yuan. (d) U.S. dollar. 2. The euro is now the official currency of all of the following countries except (a) France. (b) Slovenia. (c) Great Britain. (d) Spain. 3. A balance of trade deficit occurs when a country (a) exports more goods than it imports. (b) buys more goods from the rest of the world than it sells. (c) buys more stocks and bonds from the rest of the world than it sells. (d) both (b) and (c). 4. Which of the following transactions is a debit in the current account? (a) export of merchandise (b) export of services (c) gift to foreigners (d) foreign bond purchase 5. is necessary to "balance" the BOP statement. (a) Reserve inflow (b) Statistical discrepancy (c) Debit transaction (d) Credit transaction 6. In the BOP, travel and tourism are included in the category of (a) unilateral transfers. (b) financial account. (c) merchandise account. (d) services account. 7. Interest earned on foreign holdings of U.S. federal, state and local government debt are recorded in the (a) services account. (b) merchandise account. (c) transfers account. (d) financial account.
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8. A current account surplus implies that (a) the country is a net lender with the rest of the world. (b) the country is running a net capital account surplus. (c) foreign investment in domestic securities is at very low levels. (d) All of the above.
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This note was uploaded on 03/10/2011 for the course ECN 162 taught by Professor Ina during the Spring '10 term at UC Davis.

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Hw3_AK - Econ 4401 International Economics Deniz Cicek...

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