Arizona State University

ECN 306

Chapter 16 and Chapter 17

1)If an item in an international transaction results in a resident of a foreign country getting a monetary claim against a resident of the United States, then in the U.S. balance of payments that item is a(n):

2. If a country's net foreign investment is positive, that country:

3. The three broad categories that make up a country's balance of payments are the:

.

4. A country's current account balance:

5. The sum of the debit items in the balance of payments equals the:

6. If an Italian investor sells U.S. government securities to a U.S. buyer, how will this item be entered in the balance of payments?

7. Importation of goods into a country, purchases by firms in a country of services from firms outside the country, and purchases by investors in a country of equity interests in a corporation outside of the country are all examples of:

8. The                                             is the statement that shows the amounts of a country's foreign assets and foreign liabilities at a point in time.

9. A country's goods and services balance measures the country's net exports and is often called the country's:

10.                                          is any flow of lending to or purchase of an ownership interest in a foreign entity that is controlled by the domestic entity that makes the loan or purchases the interest in the foreign entity.

11. A country's                                             is the country's current account balance plus its (nonofficial) financial account balance.

12. In the context of a country's balance of payments, unilateral transfers arise from: transactions where only one country is involved.

13. The set of accounts recording all of the flows of value between a nation's residents and the residents of the rest of the world during a specific period of time is called the:

14. Which of the following capital transaction items is entered as a debit in the U.S. balance of payments?

15. The current account balance does NOT equal:

16. If the balance of payments account of a country shows a current account deficit, it means that:

17. The                                           market is the foreign exchange trading that is done by banks with their customers.

18. If a country's government acts to reduce the fixed value of its currency, the change is called a(n):

19. In the European Union, the                                                 set a process that has resulted in the adoption of the euro as the currency of more than half of the EU countries.

20. A government can fix the exchange rate of its currency by:

21. When a resident of Germany buys a U.S. Treasury bond, there will be a(n):

22. The interbank part of the foreign exchange market involves banks trading with

                                                in foreign exchange.

23. The center of global foreign exchange trading is:

24. If a British pound equals 1837 South Korean won (the currency of South Korea), what is the British pound equivalent of a South Korean won?

25. An increase in the U.S. exports of goods and services will result in a(n)                               foreign currency and a(n)                                       U.S. dollars in the foreign exchange market.

26. Which of the following is NOT a function of the interbank part of the foreign exchange market?

27. The currency that is most often used to accomplish trading between two other currencies is the     , which is often referred to as a vehicle currency.

28. If the exchange rate of a currency is determined by the foreign exchange market without the intervention of government, the exchange rate system is known as a(n)           exchange rate system.

29. An appreciation of the U.S. dollar refers to:

30. Because most exporters want to be paid in the currency of their home country, exports of goods generally cause:

31. When the United States imports goods, those imports create a(n):

32. The rate at which one country's currency is exchanged for another country's currency within two days after the exchange is agreed to is referred to as the: