CHAPTER 10—THE BALANCE OF PAYMENTS
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download full file at http://testbankeasy.com 1. On the balance-of-payments statements, merchandise imports are classified in the: a. Current account b. Capital account c. Unilateral transfer account d. Official settlements account ANSWER: a POINTS: 1 DIFFICULTY: Easy NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Knowledge 2. The balance of international indebtedness is a record of a country's international: a. Investment position over a period of time b. Investment position at a fixed point in time c. Trade position over a period of time d. Trade position at a fixed point in time ANSWER: b POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Knowledge 3. Which balance-of-payments item does not directly enter into the calculation of the U.S. gross domestic product? a. Merchandise imports b. Shipping and transportation receipts c. Direct foreign investment d. Service exports ANSWER: c POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 4. Which of the following is considered a capital inflow? a. A sale of U.S. financial assets to a foreign buyer b. A loan from a U.S. bank to a foreign borrower c. A purchase of foreign financial assets by a U.S. buyer d. A U.S. citizen's repayment of a loan from a foreign bank download full file at http://testbankeasy.com download full file at http://testbankeasy.com ANSWER: POINTS: DIFFICULTY: NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: a 1 Moderate United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance Balance-of-Payments Structure BLOOM'S: Comprehension 5. Which of the following would call for inpayments to the United States? a. American imports of German steel b. Gold flowing out of the United States c. American unilateral transfers to less-developed countries d. American firms selling insurance to British shipping companies ANSWER: d POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 6. In a country's balance of payments, which of the following transactions are debits? a. Domestic bank balances owned by foreigners are decreased b. Foreign bank balances owned by domestic residents are decreased c. Assets owned by domestic residents are sold to nonresidents d. Securities are sold by domestic residents to nonresidents ANSWER: a POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 7. Which of the following is classified as a credit in the U.S. balance of payments? a. U.S. exports b. U.S. gifts to other countries c. A flow of gold out of the U.S. d. Foreign loans made by U.S. companies ANSWER: a POINTS: 1 DIFFICULTY: Easy NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance download full file at http://testbankeasy.com download full file at http://testbankeasy.com TOPICS: KEYWORDS: Double-Entry Accounting BLOOM'S: Comprehension Table 10.1 gives hypothetical figures for U.S. International Transactions. Table 10.1. U.S. International Transactions Transaction Merchandise imports Military transactions, net Remittances, pensions, transfers U.S. private assets abroad Merchandise exports Investment income, net U.S. government grants (excluding military) Foreign private assets in the U.S. Compensation of employees Allocation of SDRs Travel and transportation receipts, net Amount (billions of dollars) 110 -5 -20 -50 115 15 -5 25 -5 5 20 8. Referring to Table 10.1, the goods and services balance equals: a. $5 billion b. $15 billion c. $20 billion d. $25 billion ANSWER: c POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 9. Referring to Table 10.1, the current account balance equals: a. $5 billion b. $10 billion c. $15 billion d. $20 billion ANSWER: a POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure download full file at http://testbankeasy.com download full file at http://testbankeasy.com KEYWORDS: BLOOM'S: Comprehension 10. Unlike the balance of payments, the balance of international indebtedness indicates the international: a. Investment position of a country at a given moment in time b. Investment position of a country over a one-year period c. Trade position of a country at a given moment in time d. Trade position of a country over a one-year period ANSWER: a POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance of International Indebtedness KEYWORDS: BLOOM'S: Comprehension 11. Which of the following indicates the international investment position of a country at a given moment in time? a. The balance of payments b. The capital account of the balance of payments c. The current account of the balance of payments d. The balance of international indebtedness ANSWER: d POINTS: 1 DIFFICULTY: Easy NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance of International Indebtedness KEYWORDS: BLOOM'S: Comprehension 12. Concerning the U.S. balance of payments, which account is defined in essentially the same way as the net export of goods and services, which comprises part of the country's gross domestic product? a. Merchandise trade account b. Goods and services account c. Current account d. Capital account ANSWER: b POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Comprehension 13. If an American receives dividends from the shares of stock she or he owns in Toyota, Inc., a Japanese firm, the transaction would be recorded on the U.S. balance of payments as a: download full file at http://testbankeasy.com download full file at http://testbankeasy.com a. Capital account debit b. Capital account credit c. Current account debit d. Current account credit ANSWER: d POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Comprehension 14. If the United States government sells military hardware to Saudi Arabia, the transaction would be recorded on the U.S. balance of payments as a: a. Current account debit b. Current account credit c. Capital account debit d. Capital account credit ANSWER: b POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Comprehension 15. The U.S. balance of trade is determined by: a. Exchange rates b. Growth of economies overseas c. Relative prices in world markets d. All of the above ANSWER: d POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Comprehension 16. U.S. military aid granted to foreign countries is entered in the: a. Merchandise trade account b. Capital account c. Current account d. Official settlements account download full file at http://testbankeasy.com download full file at http://testbankeasy.com ANSWER: POINTS: DIFFICULTY: NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: c 1 Moderate United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance U.S. Balance of Payments BLOOM'S: Comprehension 17. If the U.S. faces a balance-of-payments deficit on the current account, it must run a surplus on: a. The official settlements account b. The capital account c. Either the official settlements account or the capital account d. Both the official settlements account and the capital account ANSWER: c POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Comprehension 18. The current account of the U.S. balance of payments does not include: a. Investment income b. Merchandise exports and imports c. The sale of securities to foreigners d. Unilateral transfers ANSWER: c POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Comprehension 19. The U.S. has a balance of trade deficit when its: a. Merchandise exports exceed its merchandise imports b. Merchandise imports exceed its merchandise exports c. Goods and services exports exceed its goods and services imports d. Goods and services imports exceed its goods and services exports ANSWER: b POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance download full file at http://testbankeasy.com download full file at http://testbankeasy.com TOPICS: KEYWORDS: U.S. Balance of Payments BLOOM'S: Comprehension 20. The value to American residents of income earned from overseas investments shows up in which account in the U.S. balance of payments? a. Current account b. Trade account c. Unilateral transfers account d. Capital account ANSWER: a POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Comprehension Table 10.2. International Investment Position of the United States U.S. assets abroad U.S. government assets U.S. private assets $800 billion $200 billion Foreign assets in the U.S. Foreign official assets Foreign private assets $600 billion $300 billion 21. Consider Table 10.2. The U.S. balance of international indebtedness suggests that the United States is a net: a. Debtor b. Creditor c. Spender d. Exporter ANSWER: b POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance of International Indebtedness KEYWORDS: BLOOM'S: Comprehension 22. For the first time since World War I, in 1985 the United States became a net international: a. Exporter b. Importer c. Debtor d. Creditor ANSWER: c download full file at http://testbankeasy.com download full file at http://testbankeasy.com POINTS: DIFFICULTY: NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: 1 Moderate United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance U.S. Balance of Payments BLOOM'S: Knowledge 23. A country that is a net international debtor initially experiences: a. An augmented savings pool available to finance domestic spending b. A higher interest rate, which leads to lower domestic investment c. A loss of funds to trading partners overseas d. A decrease in its services exports to other countries ANSWER: a POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: What Does a Current Account Deficit (Surplus) Mean? KEYWORDS: BLOOM'S: Comprehension 24. Credit (+) items in the balance of payments correspond to anything that: a. Involves receipts from foreigners b. Involves payments to foreigners c. Decreases the domestic money supply d. Increases the demand for foreign exchange ANSWER: a POINTS: 1 DIFFICULTY: Easy NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Double-Entry Accounting KEYWORDS: BLOOM'S: Knowledge 25. Debt (-) items in the balance of payments correspond to anything that: a. Involves receipts from foreigners b. Involves payments to foreigners c. Increases the domestic money supply d. Decreases the demand for foreign exchange ANSWER: b POINTS: 1 DIFFICULTY: Easy NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Double-Entry Accounting download full file at http://testbankeasy.com download full file at http://testbankeasy.com KEYWORDS: BLOOM'S: Knowledge 26. When all of the debit or credit items in the balance of payments are combined: a. Merchandise imports equal merchandise exports b. Capital imports equal capital exports c. Services exports equal services imports d. The total surplus or deficit equals zero ANSWER: d POINTS: 1 DIFFICULTY: Easy NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 27. In the balance of payments, the statistical discrepancy is used to: a. Ensure that the sum of all debits matches the sum of all credits b. Ensure that trade imports equal the value of trade exports c. Obtain an accurate account of a balance-of-payments deficit d. Obtain an accurate account of a balance-of-payments surplus ANSWER: a POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 28. All of the following are credit items in the balance of payments, except: a. Investment inflows b. Merchandise exports c. Payments for American services to foreigners d. Private gifts to foreign residents ANSWER: d POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Double-Entry Accounting KEYWORDS: BLOOM'S: Comprehension 29. All of the following are debit items in the balance of payments, except: a. Capital outflows b. Merchandise exports download full file at http://testbankeasy.com download full file at http://testbankeasy.com c. Private gifts to foreigners d. Foreign aid granted to other nations ANSWER: b POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Double-Entry Accounting KEYWORDS: BLOOM'S: Comprehension 30. The role of ____ is to direct one nation's savings into another nation's investments: a. Merchandise trade flows b. Services flows c. Current account flows d. Capital flows ANSWER: d POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 31. When a country realizes a deficit on its current account: a. Its net foreign investment position becomes positive b. It becomes a net demander of funds from other countries c. It realizes an excess of imports over exports on goods and services d. It becomes a net supplier of funds to other countries ANSWER: b POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: What Does a Current Account Deficit (Surplus) Mean? KEYWORDS: BLOOM'S: Comprehension 32. Reducing a current account deficit requires a country to: a. Increase private saving relative to investment b. Increase private consumption relative to saving c. Increase private investment relative to consumption d. Increase private investment relative to saving ANSWER: a POINTS: 1 DIFFICULTY: Moderate download full file at http://testbankeasy.com download full file at http://testbankeasy.com NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance What Does a Current Account Deficit (Surplus) Mean? BLOOM'S: Comprehension 33. Reducing a current account deficit requires a country to: a. Increase the government's deficit and increase private investment relative to saving b. Increase the government's deficit and decrease private investment relative to saving c. Decrease the government's deficit increase private investment relative to saving d. Decrease the government's deficit and decrease private investment relative to saving ANSWER: d POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: What Does a Current Account Deficit (Surplus) Mean? KEYWORDS: BLOOM'S: Comprehension 34. Reducing a current account surplus requires a country to: a. Increase the government's deficit and increase private investment relative to saving b. Increase the government's deficit and decrease private investment relative to saving c. Decrease the government's deficit and increase private investment relative to saving d. Decrease the government's deficit and decrease private investment relative to saving ANSWER: a POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: What Does a Current Account Deficit (Surplus) Mean? KEYWORDS: BLOOM'S: Comprehension 35. Concerning a country's business cycle, rapid growth of production and employment is commonly associated with: a. Large or growing trade deficits and current account deficits b. Large or growing trade deficits and current account surpluses c. Small or shrinking trade deficits and current account deficits d. Small or shrinking trade deficits and current account surpluses ANSWER: a POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: What Does a Current Account Deficit (Surplus) Mean? KEYWORDS: BLOOM’S: Comprehension download full file at http://testbankeasy.com download full file at http://testbankeasy.com 36. The burden of a current account deficit would be the least if a nation uses what it borrows to finance: a. Unemployment compensation benefits b. Social Security benefits c. Expenditures on food and recreation d. Investment on plant and equipment ANSWER: d POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: What Does a Current Account Deficit (Surplus) Mean? KEYWORDS: BLOOM'S: Comprehension 37. Concerning a country's business cycle, ____ is commonly associated with large or growing current account deficits: a. Rapid growth rates of production and employment b. Slow growth rates of production and employment c. Falling interest rates on government securities d. Falling interest rates on corporate securities ANSWER: a POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: What Does a Current Account Deficit (Surplus) Mean? KEYWORDS: BLOOM'S: Comprehension 38. According to researchers at the Federal Reserve, the loss of jobs associated with a deficit in the current account tends to be: a. Offset by the increase of jobs associated with a surplus in the capital account b. Reinforced by the decrease of jobs associated with a surplus in the capital account c. A threat to the level of employment for the economy as a whole d. Of no long-run economic consequence for workers who lose their jobs ANSWER: a POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: What Does a Current Account Deficit (Surplus) Mean? KEYWORDS: BLOOM'S: Comprehension Table 10.3 shows hypothetical transactions, in billions of U.S. dollars, that took place during a year. Table 10.3. International Transactions of the United States Amount download full file at http://testbankeasy.com download full file at http://testbankeasy.com Transaction (billions of dollars) Allocation of SDRs Changes in U.S. assets abroad Statistical discrepancy Merchandise imports Payments on foreign assets in U.S. Remittances, pensions, transfers Travel and transportation receipts, net Military transactions, net Investment income, net Merchandise exports U.S. government grants (excluding military) Changes in foreign assets in the U.S. Other services, net Receipts on U.S. investments abroad Compensation of employees 10 100 -15 -400 -20 -60 30 -10 100 350 -20 190 80 30 -10 39. Refer to Table 10.3. The merchandise-trade balance registered a deficit of $50 billion. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 40. Refer to Table 10.3. The services balance registered a surplus of $100 billion. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 41. Refer to Table 10.3. The goods-and-services balance registered a surplus of $50 billion. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis download full file at http://testbankeasy.com download full file at http://testbankeasy.com STATE STANDARDS: TOPICS: KEYWORDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance Balance-of-Payments Structure BLOOM'S: Comprehension 42. Refer to Table 10.3. The unilateral-transfers balance registered a deficit of $40 billion. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 43. Refer to Table 10.3. The current-account balance registered a surplus of $30 billion. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 44. Refer to Table 10.3. The "net exports" component of the U.S. gross domestic product registered $-110 billion. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 45. Refer to Table 10.3. The payments data suggest that the United States was a "net demander" of $30 billion from the rest of the world. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Challenging download full file at http://testbankeasy.com download full file at http://testbankeasy.com NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance Balance-of-Payments Structure BLOOM'S: Comprehension 46. The balance of payments refers to the stock of trade and investment transactions that exists at a particular point in time. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 47. Referring to the balance-of-payments statement, an international transaction refers to the exchange of goods, services, and assets between residents of one country and those abroad. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 48. The balance of payments includes international transactions of households and businesses, but not government. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 49. Because the balance of payments utilizes double-entry accounting, merchandise exports will always be in balance with merchandise imports. a. True b. False download full file at http://testbankeasy.com download full file at http://testbankeasy.com ANSWER: POINTS: DIFFICULTY: NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: False 1 Moderate United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance Double-Entry Accounting BLOOM'S: Knowledge 50. On the U.S. balance-of-payments statement, the following transactions are credits, leading to the receipt of dollars from foreigners: merchandise exports, transportation receipts, income received from investments abroad, and investments in the United States by foreign residents. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 51. On the U.S. balance of payments, the following transactions are debits, leading to payments to foreigners: merchandise imports, travel expenditures, gifts to foreign residents, and overseas investments by U.S. residents. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 52. The "goods and services" account of the balance of payments shows the monetary value of international flows associated with transactions in goods, services, and unilateral transfers. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension download full file at http://testbankeasy.com download full file at http://testbankeasy.com 53. An increase in import restrictions by the U.S. government tends to promote a merchandise-trade surplus. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 54. Services transactions on Canada's balance-of-payments statement would include Canadian ships transporting lumber to Japan, foreign tourists spending money in Canada, and Canadian engineers designing bridges in China. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 55. On the balance-of-payments statement, dividend and interest income are classified as capital-account transactions. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 56. A surplus on Germany's goods-and-services balance indicates that Germany has sold more goods and services to foreigners than it has bought from them over a one-year period. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure download full file at http://testbankeasy.com download full file at http://testbankeasy.com KEYWORDS: BLOOM'S: Comprehension 57. The merchandise-trade account on the balance-of-payments statement is defined the same way as "net exports" which constitutes part of the nation's gross domestic product. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 58. A positive balance on the goods-and-services account of the balance of payments indicates an excess of exports over imports which must be added to the nation's gross domestic product. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 59. For the United States, merchandise trade has generally constituted the largest portion of its goods-and-services account. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Comprehension 60. Unilateral transfers refer to two-sided transactions, reflecting the movement of goods and services in one direction with corresponding payments in the other direction. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate download full file at http://testbankeasy.com download full file at http://testbankeasy.com NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance Balance-of-Payments Structure BLOOM'S: Comprehension 61. Unilateral transfers consist of private-sector transfers, such as church contributions to alleviate starvation in Africa, as well as governmental transfers, such as foreign aid. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 62. Current-account transactions include direct foreign investment, purchases of foreign government securities, and commercial bank loans made abroad. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 63. On the U.S. balance-of-payments statement, a capital inflow would occur if a Swiss resident purchases the securities of the U.S. government. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 64. If Toyota Inc. of Japan builds an automobile assembly plant in the United States, the Japanese capital account would register an outflow. a. True b. False download full file at http://testbankeasy.com download full file at http://testbankeasy.com ANSWER: POINTS: DIFFICULTY: NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: True 1 Moderate United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance Balance-of-Payments Structure BLOOM'S: Comprehension 65. If Bank of America receives repayment for a loan it made to a Mexican firm, the U.S. capital account would register an inflow. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 66. On the balance-of-payments statement, a capital inflow can be likened to the import of goods and services. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 67. The capital account of the balance of payments includes private-sector transactions as well as official-settlements transactions of the home country's central bank. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 68. If the current account of the balance of payments registers a deficit, the capital account registers a surplus, and vice download full file at http://testbankeasy.com download full file at http://testbankeasy.com versa. a. True b. False ANSWER: POINTS: DIFFICULTY: NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: True 1 Moderate United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance Balance-of-Payments Structure BLOOM'S: Comprehension 69. Concerning the balance of payments, a current-account surplus means an excess of exports over imports of goods, services, investment income, and unilateral transfers. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 70. If a country realizes a current-account deficit in its balance of payments, it becomes a net supplier of funds to the rest of the world. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 71. Concerning the balance of payments, a current-account deficit results in a worsening of a country's net foreign investment position. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure download full file at http://testbankeasy.com download full file at http://testbankeasy.com KEYWORDS: BLOOM'S: Comprehension 72. In the balance-of-payments statement, statistical discrepancy is treated as part of the merchandise trade account because merchandise transactions are generally the most frequent source of error. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 73. Because a large number of international transactions fail to get recorded, statisticians insert a residual, known as statistical discrepancy, to ensure that total debits equal total credits. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 74. Concerning the balance of payments, the goods-and-services balance is commonly referred to as the "trade balance" by the news media. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 75. Since the 1970s, the merchandise trade account of the U.S. balance of payments has registered deficit. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate download full file at http://testbankeasy.com download full file at http://testbankeasy.com NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance U.S. Balance of Payments BLOOM'S: Knowledge 76. Although the United States has realized merchandise trade deficits since the early 1970s, its goods-and-services balance has always registered surplus. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Knowledge 77. In the past two decades, the U.S. services balance has generally registered surplus. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Easy NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Knowledge 78. The U.S. unilateral-transfers balance has consistently registered surplus in the past two decades. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Easy NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Knowledge 79. Because the balance of payments is a record of the economic transactions of a country over a period of time, it is a "flow" concept. a. True b. False ANSWER: True download full file at http://testbankeasy.com download full file at http://testbankeasy.com POINTS: DIFFICULTY: NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: 1 Moderate United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance Balance-of-Payments Structure BLOOM'S: Comprehension 80. The United States would be a "net creditor" if the value of U.S. assets abroad exceeded the value of foreign assets in the United States. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance of International Indebtedness KEYWORDS: BLOOM'S: Comprehension 81. If a country consistently realizes a current-account surplus in its balance of payments, it likely will become a "net debtor" in its balance of international indebtedness. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance of International Indebtedness KEYWORDS: BLOOM'S: Comprehension 82. By the mid-1980s, the United States had evolved from the status of a net-creditor nation to a net-debtor nation in its balance of international indebtedness. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance of International Indebtedness KEYWORDS: BLOOM'S: Knowledge 83. The net-debtor status, that the United States achieved in its balance of international indebtedness by the mid-1980s, reflected the continuous current-account surplus that the United States attained in its balance of payments during the download full file at http://testbankeasy.com download full file at http://testbankeasy.com 1970s. a. True b. False ANSWER: POINTS: DIFFICULTY: NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: False 1 Moderate United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance Balance of International Indebtedness BLOOM'S: Knowledge 84. Although a net-debtor country may initially benefit from an inflow of savings from abroad, over the long run continued borrowing results in growing dividend payments to foreigners and a drain on the debtor-country's economic resources. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance of International Indebtedness KEYWORDS: BLOOM'S: Comprehension 85. The official reserve assets of the United States consist of holdings of gold and foreign corporate securities. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Comprehension 86. That U.S. importers purchase bananas from Brazil constitutes a debit transaction on the U.S. balance of payments. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Double-Entry Accounting download full file at http://testbankeasy.com download full file at http://testbankeasy.com KEYWORDS: BLOOM’S: Comprehension 87. That German investors collect interest income on their holdings of U.S. Treasury bills constitutes a credit transaction on the U.S. balance of payments. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Double-Entry Accounting KEYWORDS: BLOOM'S: Comprehension 88. That U.S. charities donate funds to combat starvation in Africa constitutes a debit transaction on the U.S. balance of payments. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Double-Entry Accounting KEYWORDS: BLOOM'S: Comprehension 89. To reduce a current account deficit, a country should either decrease the budget deficit of its government or reduce investment spending relative to saving. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 90. Most economists belief that in the 1980s, a massive outflow of capital caused a current account deficit for the United States. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate download full file at http://testbankeasy.com download full file at http://testbankeasy.com NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance U.S. Balance of Payments BLOOM'S: Comprehension 91. A current account deficit for the United States necessarily reduces the standard of living for American households. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: U.S. Balance of Payments KEYWORDS: BLOOM'S: Comprehension 92. Rapid growth of production and employment is commonly associated with large or growing trade surpluses and current account surpluses. a. True b. False ANSWER: False POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 93. Often, countries realizing rapid economic growth rates possess long-run current account deficits. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 94. For the United States, a consequence of its current account deficit is a growing foreign ownership of the capital stock of the United States and a rising fraction of U.S. income that must be diverted abroad in the form of interest and dividends to foreigners. a. True b. False download full file at http://testbankeasy.com download full file at http://testbankeasy.com ANSWER: POINTS: DIFFICULTY: NATIONAL STANDARDS: STATE STANDARDS: TOPICS: KEYWORDS: True 1 Moderate United States - BPROG: Reflective Thinking - BPROG: Analysis United States - PA - DISC: International trade and fi - DISC: International trade and finance U.S. Balance of Payments BLOOM'S: Comprehension 95. Most economists contend that any reduction in the current account deficit is better achieved through increased national saving than through reduced domestic investment. a. True b. False ANSWER: True POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 96. What are the components of the current account of the balance of payments? ANSWER: The current account includes transactions in goods and services, income flows, and unilateral transfers. POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance-of-Payments Structure KEYWORDS: BLOOM'S: Comprehension 97. Concerning the balance of international indebtedness, when is a country a net creditor or a net debtor? ANSWER: A country is a net creditor when its claims on foreign nations exceed foreign claims on it. The nation is a net debtor when foreign nations' claims on it exceed its claims on foreign nations. POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance of International Indebtedness KEYWORDS: BLOOM'S: Comprehension 98. How do we measure the international investment position of the United States at any point in time? How did the U.S. become a net debtor nation so rapidly? ANSWER: The international investment position of the United States is measured by the monetary value of U.S. assets abroad versus foreign assets in the United States. Unlike the balance of payments, which is a flow concept, the balance of international indebtedness is a stock download full file at http://testbankeasy.com download full file at http://testbankeasy.com concept. The reason for the U.S. becoming a net debtor nation is that foreign investors have placed more funds in the United States than the U.S. residents have invested abroad. The United States has been considered attractive to foreign investors. POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: Balance of International Indebtedness KEYWORDS: BLOOM'S: Comprehension 99. What does a current account deficit mean? ANSWER: When a country realizes a deficit in its current account, it has an excess of imports over exports of goods, services, income, and unilateral transfers. This leads to an increase in net foreign claims upon the home country. The home country becomes a net demander of funds from abroad, the demand being met through borrowing from other countries or liquidating foreign assets. The result is a worsening of the home country's net foreign investment position. POINTS: 1 DIFFICULTY: Moderate NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis STATE STANDARDS: United States - PA - DISC: International trade and fi - DISC: International trade and finance TOPICS: What Does a Current Account Deficit (Surplus) Mean? KEYWORDS: BLOOM'S: Comprehension download full file at http://testbankeasy.com
