Question # 00052870
Posted By: solutionshere
Updated on: 03/08/2015 02:30 PM Due on: 03/09/2015
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Question 13 of 18
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2.0 Points
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Which
of the following capital transaction items is entered as a debit in the U.S.
balance of payments?
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A. A
U.S. resident transfers $100 from his account at Credit Suisse in Basel
(Switzerland) to his account at a San Francisco branch of Wells Fargo
Bank.
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B. A
French resident transfers $100 from his account at Wells Fargo Bank in San
Francisco to his Credit Suisse account in Basel.
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C. A
U.S. resident sells his IBM stock to a French resident.
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D. A U.S. resident sells his Credit Suisse
stock to a French resident.
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Question 14 of 18
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2.0 Points
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Which
of the following is considered a capital inflow?
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A. A
sale of U.S. financial assets to a foreign buyer
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B. A
loan from a U.S. bank to a foreign borrower
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C. A
purchase of foreign financial assets by a U.S. buyer
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D. A U.S. citizen's repayment of a loan from a
foreign bank
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Question 15 of 18
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2.0 Points
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When a
U.S. resident increases her holdings of a foreign financial asset, this item
is recorded as a:
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A. credit
entry in the U.S. current account.
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B.
debit entry in the U.S. current account.
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C.
credit entry in the U.S. capital account.
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D. debit entry in the U.S. capital
account.
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Question 16 of 18
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2.0 Points
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In
September 2005, exports of goods from the U.S. decreased $3.3 billion to $73.4
billion, and imports of goods increased $3.8 billion to $144.5 billion. This
increased the deficit in:
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A.
the balance of payments.
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B.
the financial account.
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C.
the current account.
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D. unilateral transfers.
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Question 17 of 18
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6.0 Points
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When
countries have severe balance of payments difficulties caused by unsustainable
current account deficits, they can approach the International Monetary Fund
(IMF) for assistance. In providing financial assistance, the IMF generally
insists that the country implement a series of policy changes designed to
reduce the deficit. These programs are controversial as they tend to focus on
demand reduction. Explain why demand reduction would solve a current account
deficit problem. Would a program designed to increase the nation's GDP growth
rate be a method of reducing a current account deficit? Why or why not? (100-
150 words)
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Question 18 of 18
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7.0 Points
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We
often hear that trade deficits are bad for a country. Do you agree or disagree
with this viewpoint? Explain carefully in 100- 150 words.
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Solution: Homework 4