Assignment:
Sample Questions
1. Which of the following is classified as a credit in the US balance of payments?
A) US exports
B) US gifts to other countries
C) A flow of gold out of the US
D) Foreign loans made by US companies
2. In a country's balance of payments, which of the following transactions are debits?
A) Domestic bank balances owned by foreigners are decreased
B) Foreign bank balances owned by domestic residents are decreased
C) Assets owned by domestic residents are sold to nonresidents
D) Securities are sold by domestic residents to nonresidents
3. ____________ is an example of a debit transaction in the balance of payments.
A) Exports of goods and services
B) Unilateral transfers to foreigners
C) Capital inflows
D) Receipt of a vase as a gift from a foreign country
4. ____________ is an example of a credit transaction in the balance of payments.
A) Import of goods and services
B) Unilateral transfers to a foreign country
C) Capital inflows
D) Capital outflow
5. The balance of payments is the sum of which of the following?
A) Current account balance
B) Current account balance + financial account balance
C) Current account balance + financial account balance + statistical discrepancy
D) None of the above
6. Which of the following is an example of a surplus in the balance of payments?
A) The excess of debits over credits in the current and financial accounts
B) The excess of credits over debits in the current account
C) The excess of credits over debits in the financial account
D) Both B & C
7. Which of the following is not included in the current account?
A) Currently produced goods and services
B) Income on foreign investments
C) Unilateral transfers
D) Direct Foreign Investment
8. If a foreign investor purchases $800 of US treasury bills and pays by drawing down his bank balances in the US by an equal amount, what would the entries be in the US balance of payments?
A) Treasury stock - credit of $800; Cash - debit of $800
B) Capital outflow - credit of $800; Capital inflow - debit of $800
C) Treasury stock - debit of $800; Cash - credit of $800
D) Capital inflow - credit of $800; Capital outflow - debit of $800
9. If the US government gives a US bank balance of $900 to the government of Argentina as aid, what entries would be made in the US balance of payments?
A) Goodwill - credit of $900; Cash - debit of $900
B) Unilateral transfers made - debit of $900; Capital inflow - credit of $900
C) Goodwill - debit of $900; Cash - credit of $900
D) Unilateral transfers made - credit of $900; Capital inflow - debit of $900
10. If a US resident were to visit Japan and spend $500 on food and shelter, what entries would be made into the US balance of payments?
A) Travel services - credit of $500; Capital inflow - debit of $500
B) Accounts Payable - debit of $500; Goods imports - credit of $500
C) Travel services - debit of $500; Capital inflow - credit of $500
D) Accounts Payable - credit of $500; Inventory - debit of $500
11. Which of the following is an example of a capital outflow for the US?
A) A domestic increase of assets held by foreign investors
B) A reduction in US foreign asset holdings
C) Unilateral transfers from foreigners
D) A domestic decrease of assets held by foreign investors
12. Which of the following is an example of a capital inflow for the US?
A) A domestic decrease of assets held by foreign investors
B) A reduction in US foreign asset holdings
C) An increase in US foreign asset holdings
D) Importation of goods and services