1

An American buys a Japanese car, paying by writing a check on an account with a bank in New York. How would this be accounted for in the balance of payments?

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I do not want to answer this Question current account, a Japanese good import current account, a U.S. good import financial account, a U.S. asset import financial account, a U.S. asset export Only B and D.

2
Suppose the Federal Reserve wanted to reduce the money supply without using open-market operations. It could try to get the public to ________ their currency-deposit ratio and ________ banks' reserve requirements, which would in turn change the banks' reserve-deposit ratio.
0 1 2 3 4 5 I do not want to answer this Question decrease; lower decrease; raise increase; lower increase; raise None of the above

3
The United States issues a $10,000 debt forgiveness to Argentina. How is this accounted for in the balance of payments?

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I do not want to answer this Question financial account, U.S. asset import current account, Argentina transfer payment current account, U.S. service export financial account, U.S. asset export current account, Argentina good import

The money supply is $10 million, currency held by the nonbank public is $2 million, and the reserve-deposit ratio is 0.2. Bank reserves are equal to

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I do not want to answer this Question $1.6 million $2 million $4 million $8 million $10 million

6
Assume that the currency-deposit ratio is 0.2 and the reserve-deposit ratio is 0.1. The Federal Reserve carries out open-market operations, purchasing $1 million worth of bonds from banks. This action will increase the money supply by

0 1 2 3 4 5

I do not want to answer this Question $1 million $2 million $3 million $4 million $5 million

7
If a U.S. company imports 10 Toyotas from Japan at $15,000 each, and the Japanese company buys airline tickets on a U.S. airline with the money, how does this affect the U.S. balance of payments accounts?

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I do not want to answer this Question debit: imports; credit: capital and financial account debit: capital and financial account; credit: imports debit: imports; credit: exports debit: exports; credit: imports

Which of the following transactions would be included in Japans current account?

0 I do not want to answer this Question 1 A Japanese citizen purchases 50 shares of Google stock. 2 An American citizen purchases 50 shares of Toshiba stock 3 A Japanese citizen purchases a new Toyota made in Japan 4 An American citizen purchases a new Toyota made in Japan 5 None of the above

9
If there are no net factor payments from abroad and no unilateral transfers, net exports of $10 billion is the same as
0 I do not want to answer this Question 1 a current account deficit of $10 billion. 2 a capital and financial account surplus of $10 billion. 3 net acquisition of foreign assets of $10 billion. 4 net foreign borrowing of $10 billion.

10

Suppose a wealthy Canadian donates $10 million to charities in Mexico. Mexican net exports ________ and the current account balance ________.
0 1 2 3 4 I do not want to answer this Question fall; rises rise; rises are unchanged; is unchanged fall; is unchanged

11

Which of the following would increase net exports in the United States?

0 I do not want to answer this Question 1 The United States purchases 500 silver necklaces from Mexico 2 The government of Mexico purchases 500 Ford F-150 pickup trucks from the United States. 3 A Mexican citizen purchases 25 shares of stock in Ford Motor Company 4 The U.S. government donates $5 million to Mexico to help victims of drought in Mexico

12

If a country has a current account surplus, it also has

0 I do not want to answer this Question 1 a capital and financial account surplus. 2 an increase in its official reserve assets. 3 a balance of payments deficit. 4 an increase in its holding of net foreign assets.

13

The official settlements balance or balance of payments is the sum of

0 I do not want to answer this Question 1 the current account balance, the capital account balance, the non reserve portion of the financial account balance, the statistical discrepancy 2 the current account balance and the capital account balance 3 the current account balance, the capital account balance, the non reserve portion of the financial account balance 4 the current account balance and the non reserve portion of the financial account balance 5 None of the above

14

In a fractional reserve banking system with no currency where res is the ratio of reserves to deposits, the money multiplier is

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I do not want to answer this Question 1 - res 1 + res 1/res res2 res

15

Assume that the reserve-deposit ratio is 0.2. The Federal Reserve carries out open-market operations, purchasing $1 million worth of bonds from banks. This action increased the money supply by $2,600,000. What is the currency-deposit ratio?

0 1

I do not want to answer this Question 0.2

2 3 4 5

0.3 0.4 0.5 0.1

16

If a U.S. firm buys tulips from a Dutch firm and the Dutch firm uses the dollars it gets to buy U.S. stocks, the U.S. trade balance ________ and the U.S. capital and financial account ________.
0 1 2 3 4 I do not want to answer this Question rises; rises rises, falls falls, falls falls rises