Chap012 - Chapter 12 - International Linkages Chapter 12...

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Chapter 12 - International Linkages Chapter 12 International Linkages Multiple Choice Questions 1. The record of international trade in goods and services and international transfer payments is called a. The balance of payments b. The capital account C . The current account d. The foreign account e. The exchange rate account Difficulty: Easy 2. If a French citizen buys 100 shares of IBM stock on the New York Stock Exchange, the transaction will be recorded as A . A surplus item in the capital account b. A deficit item in the capital account c. A surplus item in the current account d. A deficit item in the current account e. A decrease in France's GDP Difficulty: Easy 3. Which of the following is FALSE? a. A rise in foreign income always improves a country's trade balance and leads to an increase in aggregate demand B . A rise in domestic interest rates improves a country's trade balance since it decreases imports c. An exchange rate depreciation improves a country's trade balance and thus increases aggregate demand d. An increase in domestic income worsens a country's trade balance since it increases spending on imports e. A decrease in exports leads to lower interest rates and a currency depreciation Difficulty: Medium 12-1
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Chapter 12 - International Linkages 4. Which of the following items are deficit items in the balance of payments for the United States? a. A German citizen buys a U.S. Treasury bill b. A U.S. citizen buys a vacation home in Mexico c. A U.S. citizen makes a deposit in a Swiss bank d. All of the above E . Only B and C Difficulty: Easy 5. In 2005, imports of goods and services to the U.S. was approximately what percentage of total U.S. GDP? a. 4.4% b. 8.6% c. 10.5% D . 12.0% e. 16.2% Difficulty: Easy 6. If a country has a balance-of-payments surplus, we know for sure that a. The current account shows a surplus b. The capital account shows a surplus C . The sum of the current and capital accounts shows a surplus d. Net exports are positive e. All of the above have to be true Difficulty: Medium 12-2
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Chapter 12 - International Linkages 7. A country's balance-of-payments surplus is equal to a. The decrease in the country's official exchange reserves b. Net capital outflow minus the current account deficit C . The current account surplus plus private net capital inflow d. Exports minus imports e. Imports minus exports Difficulty: Easy 12-3
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Chapter 12 - International Linkages 8. A country's balance of payments can be affected by changes in a. Domestic income b. Foreign income c. The real exchange rate d. The differential between domestic and foreign interest rates E . All of the above Difficulty: Easy 9. If the price level of U.S. goods is 200, the price level of foreign goods is 125, and the dollar price of foreign currency is 1.20, what is the real exchange rate? a. 1.92
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This note was uploaded on 12/05/2011 for the course ECON 201 taught by Professor Dr.matin during the Spring '09 term at Charleston.

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Chap012 - Chapter 12 - International Linkages Chapter 12...

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