The chapters in this document are displayed in reversed order, with the last chapter appearing first.
This change ensures all chapters are included in the test bank. Chap 1 to 20 Included ✅
Economics Today, 21e (Miller)
Chapter 20 Exchange Rates and the Balance of Payments
32.1 The Balance of Payments and International Financial Flows
1) The balance of payments is
A) the value of goods and services bought and sold in the world market.
B) a summary record of a country's economic transactions with foreign residents and governments.
C) a summary record of a country's purchases and sales of goods and services in the world market.
D) the value of merchandise goods bought and sold in the world market.
Answer: B
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
2) A system of accounts that measures the transactions of goods, services, income, and financial assets
between domestic households, businesses, and governments and residents of the rest of the world during
a specific time period is the
A) capital account.
B) current account.
C) balance of payments.
D) balance of trade.
Answer: C
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
3) Net unilateral transfers would appear in a nation's
A) current account.
B) capital account.
C) official reserve transaction account.
D) financial account.
Answer: A
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
1
Copyright © 2026
,4) A country's balance of payments shows a
A) detailed record of the import and export of services for the country.
B) detailed record of the country's imports.
C) summary record of international financial assistance received by the country.
D) summary record of a country's economic transactions with foreign residents and governments over a
year.
Answer: D
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
5) The balance of trade is defined as
A) the difference between the value of goods and services exported and the value of goods and services
imported.
B) the difference between the value of goods exported and the value of goods imported.
C) the difference between the value of services exported and the value of services imported.
D) none of these.
Answer: B
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
6) Which of the following is NOT a deficit item on a country's balance of payments?
A) gold sales to foreigners
B) imports
C) a personal gift to a foreign individual
D) none of these
Answer: D
Diff: 2
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
7) Which of the following is an example of a surplus item on the balance of payments?
A) private gifts to foreign residents
B) public gifts to foreign residents
C) interest receipts from foreign residents
D) purchases of gold from foreign residents
Answer: C
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
2
Copyright © 2026
,8) Which of the following is a deficit item on the balance of payments?
A) exports of merchandise
B) foreign tourist dollars spent domestically
C) sales of gold to foreigners
D) purchases of foreign assets
Answer: D
Diff: 2
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
9) In the balance of payments, any transaction that leads to a receipt by a resident of a country is a
A) minus item.
B) debit item.
C) surplus item.
D) deficit item.
Answer: C
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
10) An example of a transaction that will be a surplus item on the U.S. balance of payments is
A) a U.S. resident purchasing Japanese rice wine.
B) a German subsidiary's plant in Alabama purchasing parts from the main plant in Frankfurt.
C) a gift of corn from the U.S. government to India.
D) a tourist from France buying a ticket to fly from New York to Chicago on United Airlines.
Answer: D
Diff: 2
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
11) An example of a deficit item on the U.S. balance of payments is
A) the sale of a spark plug made by a U.S. firm in Michigan to a Nissan plant in Tennessee.
B) the purchase of Chinese yuan by a U.S. firm.
C) a deposit in a bank in Chicago by the government of Saudi Arabia.
D) the payment of a dividend by a Japanese firm to a U.S. family.
Answer: B
Diff: 2
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
3
Copyright © 2026
, 12) Which of the following is a deficit item on the U.S. balance of payments accounts?
A) A U.S. firm sells a product to a Mexican firm.
B) An Italian tourist in Miami purchases a beach ball.
C) A Spaniard buys 100 shares of Alphabet stock.
D) A U.S. resident buys a mobile device in China.
Answer: D
Diff: 2
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
13) In the balance of payments, which of the following is TRUE of the sum of the capital account balance,
the current account balance, and the financial account balance?
A) This sum is either positive or negative, depending on whether the sum of all surplus and deficit items
associated with cross-border transactions is positive or negative.
B) This sum must always be zero, because the sum of all surplus and deficit items associated with cross-
border transactions must equal zero.
C) This sum is positive only if the U.S. government operates with a budget surplus.
D) This sum is positive only if the U.S. government operates with a budget deficit.
Answer: B
Diff: 2
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
14) Suppose a country has a current account surplus and that there is no intervention by finance
ministries or central banks. This current account surplus indicates that the country has
A) a deficit in its financial account.
B) a surplus in its financial account.
C) the financial account balance is positive.
D) the financial account balance is balance is negative.
Answer: A
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
4
Copyright © 2026
This change ensures all chapters are included in the test bank. Chap 1 to 20 Included ✅
Economics Today, 21e (Miller)
Chapter 20 Exchange Rates and the Balance of Payments
32.1 The Balance of Payments and International Financial Flows
1) The balance of payments is
A) the value of goods and services bought and sold in the world market.
B) a summary record of a country's economic transactions with foreign residents and governments.
C) a summary record of a country's purchases and sales of goods and services in the world market.
D) the value of merchandise goods bought and sold in the world market.
Answer: B
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
2) A system of accounts that measures the transactions of goods, services, income, and financial assets
between domestic households, businesses, and governments and residents of the rest of the world during
a specific time period is the
A) capital account.
B) current account.
C) balance of payments.
D) balance of trade.
Answer: C
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
3) Net unilateral transfers would appear in a nation's
A) current account.
B) capital account.
C) official reserve transaction account.
D) financial account.
Answer: A
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
1
Copyright © 2026
,4) A country's balance of payments shows a
A) detailed record of the import and export of services for the country.
B) detailed record of the country's imports.
C) summary record of international financial assistance received by the country.
D) summary record of a country's economic transactions with foreign residents and governments over a
year.
Answer: D
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
5) The balance of trade is defined as
A) the difference between the value of goods and services exported and the value of goods and services
imported.
B) the difference between the value of goods exported and the value of goods imported.
C) the difference between the value of services exported and the value of services imported.
D) none of these.
Answer: B
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
6) Which of the following is NOT a deficit item on a country's balance of payments?
A) gold sales to foreigners
B) imports
C) a personal gift to a foreign individual
D) none of these
Answer: D
Diff: 2
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
7) Which of the following is an example of a surplus item on the balance of payments?
A) private gifts to foreign residents
B) public gifts to foreign residents
C) interest receipts from foreign residents
D) purchases of gold from foreign residents
Answer: C
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
2
Copyright © 2026
,8) Which of the following is a deficit item on the balance of payments?
A) exports of merchandise
B) foreign tourist dollars spent domestically
C) sales of gold to foreigners
D) purchases of foreign assets
Answer: D
Diff: 2
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
9) In the balance of payments, any transaction that leads to a receipt by a resident of a country is a
A) minus item.
B) debit item.
C) surplus item.
D) deficit item.
Answer: C
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
10) An example of a transaction that will be a surplus item on the U.S. balance of payments is
A) a U.S. resident purchasing Japanese rice wine.
B) a German subsidiary's plant in Alabama purchasing parts from the main plant in Frankfurt.
C) a gift of corn from the U.S. government to India.
D) a tourist from France buying a ticket to fly from New York to Chicago on United Airlines.
Answer: D
Diff: 2
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
11) An example of a deficit item on the U.S. balance of payments is
A) the sale of a spark plug made by a U.S. firm in Michigan to a Nissan plant in Tennessee.
B) the purchase of Chinese yuan by a U.S. firm.
C) a deposit in a bank in Chicago by the government of Saudi Arabia.
D) the payment of a dividend by a Japanese firm to a U.S. family.
Answer: B
Diff: 2
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
3
Copyright © 2026
, 12) Which of the following is a deficit item on the U.S. balance of payments accounts?
A) A U.S. firm sells a product to a Mexican firm.
B) An Italian tourist in Miami purchases a beach ball.
C) A Spaniard buys 100 shares of Alphabet stock.
D) A U.S. resident buys a mobile device in China.
Answer: D
Diff: 2
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
13) In the balance of payments, which of the following is TRUE of the sum of the capital account balance,
the current account balance, and the financial account balance?
A) This sum is either positive or negative, depending on whether the sum of all surplus and deficit items
associated with cross-border transactions is positive or negative.
B) This sum must always be zero, because the sum of all surplus and deficit items associated with cross-
border transactions must equal zero.
C) This sum is positive only if the U.S. government operates with a budget surplus.
D) This sum is positive only if the U.S. government operates with a budget deficit.
Answer: B
Diff: 2
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
14) Suppose a country has a current account surplus and that there is no intervention by finance
ministries or central banks. This current account surplus indicates that the country has
A) a deficit in its financial account.
B) a surplus in its financial account.
C) the financial account balance is positive.
D) the financial account balance is balance is negative.
Answer: A
Diff: 1
Topic: 32.1 The Balance of Payments and International Financial Flows
Learning Outcome: Macro-15: Describe how government policies and exchange rates affect open economy
macroeconomics
AACSB: Analytical thinking
4
Copyright © 2026
