1.When the dollar value of the Swiss franc was very high following the financial crisis in
2008:
A) Swiss exports were more expensive in the United States.
B) Swiss exports were less expensive in the United States.
C) the Swiss National Bank sold Swiss francs to increase its value.
D) the Swiss National Bank bought francs to decrease its value.
2.Open-economy macroeconomics deals with:
A) reducing regulations on business.
B) the relationships between economies of different nations.
C) reducing employment discrimination.
D) providing financial information to investors.
3.Economists summarize a country's transactions with other countries with a(n) _____
account.
A) circular flow
B) balance of payments
C) exchange rate
D) purchasing power parity
4.If the United States imports more goods from Japan than it exports to Japan, how will the
difference be financed?
A) U.S. consumers will borrow money from domestic banks.
B) The United States will buy more Japanese assets.
C) The United States will sell assets, generating a liability that obligates Americans to
pay for those imports in the future.
D) The United States will sell assets to the Japanese, which would reduce its liabilities.
5.When the United States gives foreign aid to developing nations in Africa, the _____
account is affected.
A) current
B) financial
C) reserve
D) foreign exchange
6.The difference between a country's exports and imports of goods alone—not including
services—is the:
A) merchandise trade balance.
B) balance of payments on good and services.
C) balance of payments on current account.
D) current account.
Page 1
,Use the following to answer questions 7-10:
Table: International Transactions
7.(Table: International Transactions) Look at the table International Transactions. The
merchandise trade balance is:
A) $51,000.
B) $48,000.
C) $46,000.
D) $2,000.
8.(Table: International Transactions) Look at the table International Transactions. The
balance of payments on goods and services is:
A) $51,000.
B) $48,000.
C) $3,000.
D) –$29,000.
9.(Table: International Transactions) Look at the table International Transactions. The
balance on current account is:
A) $29,000.
B) $22,000.
C) –$8,000.
D) –$29,000.
10.(Table: International Transactions) Look at the table International Transactions. What
additional capital inflows are needed to equilibrate the balance of payments?
A) –$29,000
B) $20,000
C) $29,000
D) $80,000
Page 2
, 11.If the balance of payments on financial account is $25, the balance of payments on goods
and services is –$20, and the statistical discrepancy in the financial account is $2, then
the sum of net international transfer payments and net international factor income is:
A) –$7.
B) –$5.
C) $7.
D) $47.
12.Which of the following would be included in the U.S. current account?
A) a factory in Japan purchased by a firm in the United States
B) stock in a U.S. company sold to someone in Japan
C) a dividend on stock in a U.S. company paid to someone in Japan
D) a bond issued by a firm in Japan sold to someone in the United States
13.When a Japanese investor buys stock in General Motors, the _____ account is affected.
A) current
B) financial
C) reserve
D) foreign exchange
14.If the United States exports $100 billion of goods and services and imports $150 billion
of goods and services and there is no other factor income or transfers, the balance on the
current account is:
A) $250 billion.
B) –$250 billion.
C) $50 billion.
D) –$50 billion.
15.If the United States exports $100 billion of goods and services and imports $150 billion
of goods and services and there is no other factor income or transfers, the balance on the
financial account is:
A) $250 billion.
B) –$250 billion.
C) $50 billion.
D) –$50 billion.
16.Assume that Tom sells a crate of Florida oranges to a retailer in Canada and Susan sells a
U.S. bond to a customer in Britain. Which of the following illustrates the difference
and/or similarity between these two transactions?
A) Only Tom will actually receive U.S. dollars as a result of this transaction.
Page 3
, B) The sale of the bond generates a liability, while the sale of the oranges does not.
C) Both sales generate an asset for the United States.
D) Both sales generate a liability for the United States.
17.If a country has a current account deficit, it must have a:
A) financial account surplus.
B) balance of payment surplus.
C) financial account deficit.
D) balance of payments deficit.
18.Which of the following would be included in the U.S. financial account?
A) a computer made in the United States and exported to Britain
B) a computer made in Britain and imported into the United States
C) interest on a U.S. bond sold to someone living overseas
D) the value of a bond from a U.S. company sold to someone living in Britain
19.Which of the following would NOT be included in the U.S. financial account?
A) a Japanese factory purchased by a U.S. company
B) U.S. stock sold to someone in Japan
C) a Japanese bond sold to someone in the United States
D) a Chinese video game imported into the United States
20.Which of the following would be included in the U.S. current account?
A) public purchases and sales of financial assets
B) trade balance
C) financial account balance
D) private purchases and sales of financial assets
21.If a country has a positive balance of payments on the current account, then it must:
A) be exporting too much.
B) be importing too much.
C) have a surplus on the financial account.
D) have a deficit on the financial account.
22.Money flows into the United States from other countries as a result of:
A) U.S. purchases of foreign goods and services.
B) payments to foreign owners of U.S. assets.
C) domestic purchases of U.S. goods and services.
D) transfer payments from foreign sources to U.S. residents.
Page 4
2008:
A) Swiss exports were more expensive in the United States.
B) Swiss exports were less expensive in the United States.
C) the Swiss National Bank sold Swiss francs to increase its value.
D) the Swiss National Bank bought francs to decrease its value.
2.Open-economy macroeconomics deals with:
A) reducing regulations on business.
B) the relationships between economies of different nations.
C) reducing employment discrimination.
D) providing financial information to investors.
3.Economists summarize a country's transactions with other countries with a(n) _____
account.
A) circular flow
B) balance of payments
C) exchange rate
D) purchasing power parity
4.If the United States imports more goods from Japan than it exports to Japan, how will the
difference be financed?
A) U.S. consumers will borrow money from domestic banks.
B) The United States will buy more Japanese assets.
C) The United States will sell assets, generating a liability that obligates Americans to
pay for those imports in the future.
D) The United States will sell assets to the Japanese, which would reduce its liabilities.
5.When the United States gives foreign aid to developing nations in Africa, the _____
account is affected.
A) current
B) financial
C) reserve
D) foreign exchange
6.The difference between a country's exports and imports of goods alone—not including
services—is the:
A) merchandise trade balance.
B) balance of payments on good and services.
C) balance of payments on current account.
D) current account.
Page 1
,Use the following to answer questions 7-10:
Table: International Transactions
7.(Table: International Transactions) Look at the table International Transactions. The
merchandise trade balance is:
A) $51,000.
B) $48,000.
C) $46,000.
D) $2,000.
8.(Table: International Transactions) Look at the table International Transactions. The
balance of payments on goods and services is:
A) $51,000.
B) $48,000.
C) $3,000.
D) –$29,000.
9.(Table: International Transactions) Look at the table International Transactions. The
balance on current account is:
A) $29,000.
B) $22,000.
C) –$8,000.
D) –$29,000.
10.(Table: International Transactions) Look at the table International Transactions. What
additional capital inflows are needed to equilibrate the balance of payments?
A) –$29,000
B) $20,000
C) $29,000
D) $80,000
Page 2
, 11.If the balance of payments on financial account is $25, the balance of payments on goods
and services is –$20, and the statistical discrepancy in the financial account is $2, then
the sum of net international transfer payments and net international factor income is:
A) –$7.
B) –$5.
C) $7.
D) $47.
12.Which of the following would be included in the U.S. current account?
A) a factory in Japan purchased by a firm in the United States
B) stock in a U.S. company sold to someone in Japan
C) a dividend on stock in a U.S. company paid to someone in Japan
D) a bond issued by a firm in Japan sold to someone in the United States
13.When a Japanese investor buys stock in General Motors, the _____ account is affected.
A) current
B) financial
C) reserve
D) foreign exchange
14.If the United States exports $100 billion of goods and services and imports $150 billion
of goods and services and there is no other factor income or transfers, the balance on the
current account is:
A) $250 billion.
B) –$250 billion.
C) $50 billion.
D) –$50 billion.
15.If the United States exports $100 billion of goods and services and imports $150 billion
of goods and services and there is no other factor income or transfers, the balance on the
financial account is:
A) $250 billion.
B) –$250 billion.
C) $50 billion.
D) –$50 billion.
16.Assume that Tom sells a crate of Florida oranges to a retailer in Canada and Susan sells a
U.S. bond to a customer in Britain. Which of the following illustrates the difference
and/or similarity between these two transactions?
A) Only Tom will actually receive U.S. dollars as a result of this transaction.
Page 3
, B) The sale of the bond generates a liability, while the sale of the oranges does not.
C) Both sales generate an asset for the United States.
D) Both sales generate a liability for the United States.
17.If a country has a current account deficit, it must have a:
A) financial account surplus.
B) balance of payment surplus.
C) financial account deficit.
D) balance of payments deficit.
18.Which of the following would be included in the U.S. financial account?
A) a computer made in the United States and exported to Britain
B) a computer made in Britain and imported into the United States
C) interest on a U.S. bond sold to someone living overseas
D) the value of a bond from a U.S. company sold to someone living in Britain
19.Which of the following would NOT be included in the U.S. financial account?
A) a Japanese factory purchased by a U.S. company
B) U.S. stock sold to someone in Japan
C) a Japanese bond sold to someone in the United States
D) a Chinese video game imported into the United States
20.Which of the following would be included in the U.S. current account?
A) public purchases and sales of financial assets
B) trade balance
C) financial account balance
D) private purchases and sales of financial assets
21.If a country has a positive balance of payments on the current account, then it must:
A) be exporting too much.
B) be importing too much.
C) have a surplus on the financial account.
D) have a deficit on the financial account.
22.Money flows into the United States from other countries as a result of:
A) U.S. purchases of foreign goods and services.
B) payments to foreign owners of U.S. assets.
C) domestic purchases of U.S. goods and services.
D) transfer payments from foreign sources to U.S. residents.
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