Quizific | Current Account Balance Quiz

A current account _ indicates that the United States is _ its claims on foreign wealth

surplus; increasing

surplus; decreasing

deficit; increasing

balance; decreasing

A current account _ indicates that the United States is _ its claims on foreign wealth.

deficit; decreasing

deficit; increasing

surplus; decreasing

balance; increasing

Holding other factors constant, which of the following would increase the size of the U.S. current account deficit?

An increase in the amount of services purchased from foreigners

An increase in unilateral transfers from Americans to foreigners

An increase in Americans’ net investment income

Only (A) and (B) of the above

Holding other factors constant, which of the following would increase the size of the U.S. current account surplus?

Payments by the U.S. government to help emerging democracies in Eastern Europe

Increasing travel by American college students to Japan

Payments by foreign governments to the U.S. to help pay for the Persian Gulf war

Both (A) and (B) of the above

Economists closely follow the current account balance because they believe it can provide information on the future movement of

interest rates.

gold flows

exchange rates.

special drawing rights

The capital account describes the flow of capital between the United States and other countries. Capital inflows are

American purchases of foreign assets.

foreign purchases of American assets.

both (A) and (B) of the above.

neither (A) nor (B) of the above

Which of the following appears in the capital account part of the balance of payments?

A gift to an American from his English aunt

A purchase by the Honda corporation of a U.S. Treasury bill

A purchase by the Bank of England of a U.S. Treasury bill

Income earned by the Honda corporation on its automobile plant in Ohio

Given the size of the statistical discrepancy needed to balance the balance of payments account, one can infer that

hidden capital flows into the U.S. are inconsequential

items in the balance of payments are measured quite accurately.

many international transactions go unrecorded.

all of the above.

Many believe that the statistical discrepancy is primarily the result of

large hidden capital flows into the U.S.

large hidden capital flows out of the U.S

measurement errors due to exchange rate calculations.

None of the above.

The current account balance plus the capital account balance equals

the official reserve transactions balance.

the trade balance.

the change in government reserve assets

both (A) and (C) of the above.

Current Account Balance Quiz

A current account _____ indicates that the United States is _____ its claims on foreign wealth

A current account _____ indicates that the United States is _____ its claims on foreign wealth.