Question QUESTION 1 The U.S. has had a deficit on the current a

05 Jun Question QUESTION 1 The U.S. has had a deficit on the current a

Question
QUESTION 1

The U.S. has had a deficit on the current account for nearly 37 years and this has transformed the U.S. from a net creditor nation to an international net debtor nation. What conclusions or assessments have been drawn about this trend and its economic consequences?

International trade economists on the whole are not necessarily alarmed by this trend, but increasingly some economists appear worried about the likelihood of negative consequences.

There is no doubt that the U.S. has suffered measurable negative effects.

A positive aspect is that U.S. exceptionalism appears to be at work since the income received on U.S. assets abroad exceeds the income the U.S. pays on its liabilities to foreigners.

All of the above.

Only a and c.

QUESTION 2

Indicate if you agree or disagree with the following statement and why:

“For a country that has a surplus in its current account (like China) and wants to reduce this surplus, one way to do so would be to encourage its people to save more and spend less.”

Agree; a shift to more saving would decrease the surplus.

Agree; a shift to more saving would increase the surplus.

Disagree; a shift to more saving would decrease the surplus.

Disagree; a shift to more saving would increase the surplus.

None of the above.

QUESTION 3

Suppose that Haiti received $300 million in clothing, tents and medicines from country X following the devastating 2010 earthquake. Which below correctly shows how this transaction would have been reflected Haiti’s balance of payments account?

Xg = +$300 million; FA = -$300 million.

Mg = -$300 million; FA = +$300 million.

Mg = -$300 million; NUT = +$300 million.

Xg = +$300 million; NUT = -$300 million.

Mg= +$300 million; Statistical discrepancy = -$300 million.

QUESTION 4

The current account balance is equal to which of the following?

The difference between domestic product and domestic expenditure.

The difference between national saving and domestic investment.

Net foreign investment.

All of the above.

Only a and b.

QUESTION 5

Use the table on top to answer this question. The table represents the U.S. balance of
payments. U.S. citizen buys 6 shares of Land Rover stock for $500. Where and with what sign is the first part of this transaction recorded in the U.S. balance of payments?

Cell C, +$500

Cell C, -$500

Cell D, +$500

Cell D, -$500

Cell E, +$500

QUESTION 6

Use the table on top to answer this question. The table represents the U.S. balance of payments. Boeing exports several airplanes to Singapore Airlines for $400 million. Where and with what sign is the first part of this transaction recorded in the U.S. balance of payments?

Cell A, -$400 million

Cell A, +$400 million

Cell C, -$400 million

Cell C, +$400 million

Cell D, -$400 million

QUESTION 7

Use the table below to answer this question. The table represents the U.S. balance of payments. A U.S. citizen receives a $1,000 dividend check from Nissan of Japan. The U.S. citizen has held Nissan stock for years. Where and with what sign is the first part of this transaction recorded?

Cell B, +$1,000

Cell B, -$1,000

Cell C, +$1,000

Cell C, -$1,000

Cell D, -$1,000

QUESTION 8

Which diagram in Figure 1 depicts a nation that borrowed prudently on international capital markets and the return on its investment is more than sufficient to service the foreign debt.

Diagram A

Diagram B