02 Jun Question ECON216 Week 8 – Tutorial 7 Husted & Melvin, Chapters 11 and 12
Question
ECON216
Week 8 – Tutorial 7
Husted & Melvin, Chapters 11 and 12
Chapter 11, Question 1
Identify whether each of the following is a debit or a credit in the country of Freedonia’s BOP and
indicate where the item would be classified.
a)
Freedonian firms export $250 million worth of goods.
b)
Freedonian citizen’s purchase $50 million worth of tickets on US Airways flights.
c)
A Freedonian firm purchases a shoe factory in Mexico for $30 million.
d)
Freedonia receives $5 million in foreign aid from the United States.
e)
Freedonian citizens deposit $15 million in Citibank account in New York.
f)
Freedonia imports $220 million worth of goods.
g)
Freedonian firms borrow $45 million by issuing bonds in the United States.
h)
U.S. firms earn (and repatriate) $5 million in profits from operations in Freedonia.
i)
The Freedonia central bank buys $10 million in U.S. Treasury bills.
Chapter 11, Question 8
Use the information in the following table on Switzerland’s international transactions to answer the
following questions (amounts are millions of U.S. dollars):
Balance of Payments Account
Amount
Merchandise imports
Merchandise exports
$92,871
$93,859
Services imports
$15,406
Services exports
$26,683
Investment income receipts
$43,720
Investment income payments
$27,702
Unilateral transfers
-$ 3,736
a. What is the balance of trade?
b. What is the current account?
c. Did Switzerland become a larger international net creditor during this year?
Chapter 12, Question 3
Using Table 12.1, calculate the price of one Australian dollar in terms of Japanese yen on Friday,
October 7, 2011.
Chapter 12, Question 4
According to Table 12.1, were one-month interest rates higher in the United States or in the U.K. on
Friday, October 7, 2011? How do you know?
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