Imports have the potential to lower a country's inflation rate because of each of the following EXCEPT:A)the higher prices of foreign goods spurs domestic competitors to cut prices.B)the import of lower priced services limits what domestic competitors can charge for services.C)the import of lower priced goods limits what domestic competitors can charge for goods.D)all of the aboveIn 2007 the United States posted a current account deficit of -$731 billion. The bulk of the negative value came fromA)a goods trade deficit.B)a net transfer deficit.C)an income balance deficit.D)an income trade deficit.Portfolio investment is capital invested in activities that are ________ rather than made for ________.A)profit motivated; controlB)long term; profitC)control motivated; profitD)short term; the long termIf your company were to import and export textiles, the transactions would be recorded in the current account subcategory of ________.A)goods tradeB)services tradeC)current transfersD)income tradeAccording to the authors, what is the single most important mandate of the European Central Bank?A)Promote price stability within the European Union.B)Promote international trade for countries within the European Union.C)Establish an EMU trade surplus with the United States.D)Price, in euros, all products for sale in the European Union.For the three years from early 2002 to early 2005, the euro maintained a strong and steady rise in value against the U.S. dollar (USD). Which of the following were NOT a contributing factor in the assent of the euro and the decline in the dollar?A)A general weakening of the dollar after the attacks of September 11, 2001.B)Severe U.S. balance of payments deficits.C)Large U.S. balance of payment surpluses.D)All of the above were contributing factors.Which of the following would NOT be considered a typical BOP transaction?A)A U.S. tourist purchases gifts at a museum in London.B)The U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich.C)Toyota U.S.A. is a U.S. distributor of automobiles manufactured in Japan by its parent company.D)All are example of BOP transactions.Which of the following is NOT part of the Financial Account of the BOP?A)Other Financial items.B)Net import/export of services.C)Net portfolio investment.D)Net foreign direct investment.Anaconda Copper Inc. created a subsidiary in Chile last year to mine copper ore. The proportion of net income paid back to the parent company as a dividend would be recorded in the current account subcategory of ________.A)current transfersB)services tradeC)goods tradeD)income tradeTwo major concerns about FDI (foreign direct investment) are:A)national defense and taxes.B)who pays the taxes and who receives the taxes.C)who receives the profits and taxes.D)who controls the assets and who receives the profits.Which of the following is NOT an item to be considered in BOP calculations?A)A consumer buys a VCR made in Korea from a Florida Wal-Mart store.B)A U.S.-based firm manages the development of an oil field in Kazakhstan.C)A U.S. citizen living in Minnesota travels to Winnipeg, Canada and buys a case of LaBatt's Canadian beer.D)Purchase of a U.S. Treasury Bill by a foreign resident.The balance of paymentsA)records all international transactions for a country over a period of time.B)determines the eligibility of countries for IMF aid.C)adds up the value of all assets and liabilities of a country on a specific date.D)all of the above.Which of the following is NOT a part of the Current Account of BOP?A)Net export/import of services.B)Balance of Trade.C)Net portfolio investment.D)Net export/import of goods.The authors identify a tip for understanding BOP accounting. They recommend that you "follow the cash flow."True or false?Significant amounts of United States Treasury issues are purchased by foreign investors, therefore the U.S. must earn foreign currency to repay this debt.True or false?Which of the following led to the eventual demise of the fixed currency exchange rate regime worked out at Bretton Woods?A)Differential rates of inflation across member nations.B)Widely divergent national monetary and fiscal policies among member nations.C)Several unexpected economic shocks to member nations.D)All of the above.Another name for the International Bank for Reconstruction and Development is ________.A)the World BankB)the Recon BankC)the Marshall PlanD)the European Monetary SystemInternational debt security purchases and sales are defined as portfolio investments for financial account purposes because by definition debt securities do not provide the buyer with ownership or control.True or false?Without adjustments, the BOP should and will always balance.True or false?In the decade since 2000, the U.S. has experienced its largest bilateral trade deficits with the countries of China and Japan.True or false?
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