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1、 1International Finance Assignment Problems (2) Name: Student No.: I. Choose the correct answer for the following questions (only ONE correct answer) (5 credits for each question, total credits 4 x 15 = 60)1. According to the principle of the balanced balance of payments, if a country reduces its fo
2、reign exchange reserves by $20 million and the statistical discrepancy is in the credit entry of $5 million in a given period of time, the country runs _ of its balance of payments during that period of time. A. $15 million deficits B. $25 million deficits C. $20 million deficits D. $5 million defic
3、its 2. If a countrys domestic saving is greater than domestic investment, the country probably has _. A. a current account surplus B. a net capital outflow C. a current account deficit D. Both A and B are possible. 3. A debit entry in the balance-of-payments account represents a transaction that _.
4、A. a domestic resident receives a payment from abroad B. a domestic resident makes a payment to a foreign resident C. will improve the current account status D. will have no affects on the nations foreign exchange reserves 4. In terms of balance-of-payments account, which of the following would be r
5、ecorded as a debit entry in the U.S. BOP? A. exports of merchandise B. exports of services C. purchase of the U.S. Treasury bonds by non-residents D. an increase of the deposit in a U.S. residents account at a foreign bank 5. A balance-of-payments deficit is defined as a situation in which _. A. the
6、 value of payments made to the foreigners exceeds the value of receipts received from the foreigners in a given period of time B. the government must borrow in order to meet its budget obligations C. the value of manufactured good exports is less than the value of imported goods D. a nation earns mu
7、ch in extra assets or reduced liabilities in its dealings with the rest of the world 6. Which of the following would NOT be considered as a typical BOP transaction? A. Toyota USA is a US distributor of automobiles manufactured in Japan by its parent company. B. A U.S. subsidiary of European financia
8、l giant, Credit Suisse, pays dividends to its parent in Zurich. C. A US tourist purchases gifts at a museum in London. D. All are example of BOP transactions. 7. The balance of payments is a statistical record which measures the total value of _. A. a countrys foreign exchange reserves in a certain
9、period of time B. a countrys foreign trades between the residents of a country and its non-residents for a given period of time C. all economic and financial transactions between the residents of a country and its non-residents for a given period of time D. a countrys capital inflows and outflows at
10、 a particular date in a given year 8. A British pension fund sells some of its holdings of the stocks of U.S. companies in order to buy U.S. corporate bonds. This transaction will affect _. A. the U.S. international investment position B. the British international investment position C. both countri
11、es international investment position D. None of the above. This is because both countries international investment position unchanged, only the composition of foreign investments in both U.S. and U.K. changes. 9. Which of the following transactions is included in Chinas balance-of-payments account?
12、A. A U.S. embassy in Beijing pays salaries to its American staffs. B. The World Bank furnishes the Chinese government with a loan. C. A U.S. student pays tuition fees for his 4 year-study in Beijing University. D. The Chinese embassy in Washington buys telecommunication equipments from a Chinese com
13、pany in Shanghai. 10. If the U.S. runs current account deficits, we can expect that _. A. it may act as a net debtor in the rest of the world B. its domestic saving may less than its domestic investment C. its domestic production is less than its domestic consumption D. all of the above 11. The trad
14、e deficit means that _. A. residents are importing more goods than they are exporting B. residents are borrowing more funds than they are lending C. residents are receiving more payments than they are making D. residents are producing more goods than they are consuming 12. Which of the following is
15、an example of an exchange of financial assets? A. the exchange of butter for wheat B. the exchange of information technologyC. the exchange of a fixed-rate loan for a floating-rate loanD. the exchange of gold for jewelry 13. For most countries, the subcategory that typically dominates the current account is _.A. unilateral transfersB. goods trade C. income trade D. services trade 14. When cate
