Multiple Choice Questions.doc

Multiple Choice Questions Multiple Choice. Choose the best answer to each of the following questions. 1. If a nations domestic savings equals 6 and a nations domestic investment equals 10, then the nation is experiencing: A. a net capital outflow. B. a net capital inflow. C. no net capital inflow or outflow. D. a current account surplus. 2. If a nations domestic saving is 25 and the nations domestic investment is 30, then the nation is experiencing: A. a current account surplus. B. a current account deficit C. a net capital inflow D. both B and C 3. The balance on merchandise trade is a component of A. the current account. B. the capital account. C. foreign direct investment. D. portfolio investment. 4. A debit entry in the balance of payments accounts represents A. a transaction that includes a payment from abroad a domestic resident. B. a transaction that includes a payment abroad by a domestic resident. C. a decrease in the current account deficit. D. an increase in the capital account surplus. 5. When a country faces a current account deficit, it also faces: A. a services trade deficit. B. a capital account deficit. C. a capital account surplus. D. a merchandise trade deficit. 6. Given the following data, what is the countrys current account balance? Merchandise trade balance = -120; Services trade balance = +45; Unilateral transfers made in excess of those received = 15. A. -60 B. -90 C. -100 D. -150 7. Which of the following exchange rates is adjusted for price changes? A. Nominal exchange rate. B. Real exchange rate. C. Effective exchange rate. D. Forward exchange rate. 8. An economic transaction is recorded in the balance of payments as a credit if it leads to A. a payment to foreigners. B. the receipt of a payment from foreigners. C. a decrease in foreign exchange reserves. D. neither an inflow nor an outflow of value. 9. When American residents buy bonds from Her Majesty’s Treasury