International Economics Unit 3 Set 1 MCQs

Q1 | Which of the following would call for inpayments to the United States?

American imports of German steel

Gold flowing out of the United States

American unilateral transfers to less-developed countries

American firms selling insurance to British shipping companies

Q2 | In a country’s balance of payments, which of the following transactions are debits?

Domestic bank balances owned by foreigners are decreased

Foreign bank balances owned by domestic residents are decreased

Assets owned by domestic residents are sold to nonresidents

Securities are sold by domestic residents to nonresidents

Q3 | Which of the following is classified as a credit in the U.S. balance of payments?

U.S. exports

U.S. gifts to other countries

A flow of gold out of the U.S.

Foreign loans made by U.S. companies

Q4 | What is "immiserizing growth"?

Export-biased growth that worsens terms of trade so that a country is worse off as a result.

The specialization of low-income countries in production of low-wage products.

Trade that hurts the poorest group of people.

Improvement in a country's terms of trade at the expense of other countries.

Q5 | What is the "transfer problem"?

The fact that international transfers affect terms of trade when they are not taken into account.

Rich countries do not transfer a sufficient amount of money to poor countries.

Negative effects on a country that transfers money to others.

The severe indebtedness of some low-income countries.

Q6 | Unlike the balance of payments, the balance of international indebtedness indicates the international:

Investment position of a country at a given moment in time

Investment position of a country over a one-year period

Trade position of a country at a given moment in time

Trade position of a country over a one-year period

Q7 | Which of the following indicates the international investment position of a country at a given moment in time?

The balance of payments

The capital account of the balance of payments

The current account of the balance of payments

The balance of international indebtedness

Q8 | Concerning the U.S. balance of payments, which account is defined in essentially the same way as the net export of goods and services, which comprises part of the country’s gross domestic product?

Merchandise trade account

Goods and services account

Current account

Capital account

Q9 | If an American receives dividends from the shares of stock she or he owns in Toyota, Inc., a Japanese firm, the transaction would be recorded on the U.S. balance of payments as a:

Capital account debit

Capital account credit

Current account debit

Current account credit

Q10 | If the United States government sells military hardware to Saudi Arabia, the transactionwould be recorded on the U.S. balance of payments as a:

Current account debit

Current account credit

Capital account debit

Capital account credit

Q11 | The U.S. balance of trade is determined by:

Exchange rates

Growth of economies overseas

Relative prices in world markets

All of the above

Q12 | U.S. military aid granted to foreign countries is entered in the:

Merchandise trade account

Capital account

Current account

Official settlements account

Q13 | If the U.S. faces a balance-of-payments deficit on the current account, it must run a surplus on:

The official settlements account

The capital account

Either the official settlements account or the capital account

Both the official settlements account and the capital account

Q14 | The current account of the U.S. balance of payments does not include:

Investment income

Merchandise exports and imports

The sale of securities to foreigners

Unilateral transfers

Q15 | The U.S. has a balance of trade deficit when its:

Merchandise exports exceed its merchandise imports

Merchandise imports exceed its merchandise exports

Goods and services exports exceed its goods and services imports

Goods and services imports exceed its goods and services exports

Q16 | The value to American residents of income earned from overseas investments shows up in which account in the U.S. balance of payments?

Current account

Trade account

Unilateral transfers account

Capital account

Q17 | What would be the effects of an export subsidy on oil imposed by Russia?

Relative world supply of oil rises and relative world demand falls.

Relative world supply of oil falls and relative world demand rises.

Relative world supply of and relative world demand for oil rise.

Relative world supply of and relative world demand for oil fall.

Q18 | What is the Metzler paradox?

An export subsidy can lead to an increase in the internal price of the subsidized good.

It is the same as immiserizing growth.

A tariff on imports can lead to a decline in the internal price of the go

Q19 | A country that is a net international debtor initially experiences:

An augmented savings pool available to finance domestic spending

A higher interest rate, which leads to lower domestic investment

A loss of funds to trading partners overseas

A decrease in its services exports to other countries

Q20 | Credit (+) items in the balance of payments correspond to anything that:

Involves receipts from foreigners

Involves payments to foreigners

Decreases the domestic money supply

Increases the demand for foreign exchange

Q21 | Debt (–) items in the balance of payments correspond to anything that:

Involves receipts from foreigners

Involves payments to foreigners

Increases the domestic money supply

Decreases the demand for foreign exchange

Q22 | When all of the debit or credit items in the balance of payments are combined:

Merchandise imports equal merchandise exports

Capital imports equal capital exports

Services exports equal services imports

The total surplus or deficit equals zero

Q23 | In the balance of payments, the statistical discrepancy is used to:

Ensure that the sum of all debits matches the sum of all credits

Ensure that trade imports equal the value of trade exports

Obtain an accurate account of a balance-of-payments deficit

Obtain an accurate account of a balance-of-payments surplus

Q24 | All of the following are credit items in the balance of payments, except:

Investment inflows

Merchandise exports

Payments for American services to foreigners

Private gifts to foreign residents

Q25 | All of the following are debit items in the balance of payments, except:

Capital outflows

Merchandise exports

Private gifts to foreigners

Foreign aid granted to other nations