Balance of Payments Quiz

A credit item in the balance of payments is:

• an item for which the country must be paid.

• any loan given out by the country.

• any imported item.

• an item that creates a monetary claim owed to a foreigner.

In a nation's balance of payments, every transaction between residents and non-residents should be recorded _____ time(s).

• one

• two

• zero

• four

Which of the following capital transaction items is entered as a debit in the China's Balance of Payments?

• A Chinese resident sells his Moutai stock to a U.S. resident.

• A Chinese resident sells his Credit Suisse stock to a French resident.

• A Chinese resident transfers $100 from his account at Wells Fargo Bank in San Francisco to her account at a Beijing branch of ICBC.

• A French resident transfers $100 from her account at ICBC in Beijing to her Wells Fargo Bank in San Francisco.

The net value of flows of financial assets and similar claims (excluding official international reserve asset flows) is called the:

• financial account balance.

• current account balance.

• trade balance.

• official reserve balance.

When a U.S. resident increases her holdings of a foreign financial asset, this item is recorded as a:

• credit entry in the U.S. current account.

• debit entry in the U.S. current account.

• credit entry in the U.S. capital account.

• debit entry in the U.S. capital account.

Official reserve assets are:

• the gold holdings in the nation’s central bank.

• money like assets that are held by governments and that are recognized by governments as fully acceptable for payments between them.

• government T-bills and T-bonds.

• government holdings of SDR’s.

In October 2004, exports of goods from Australia decreased $2.4 billion to $76.4 billion, and imports of goods increased $3.1 billion to $140.5 billion. This :

• increased the financial account deficit.

• increased the current account deficit.

• increased the balance of payments surplus.

• increased the balance of payments deficit.

A nation is considered to be a(n) _____ in the international market, if its current account is in surplus.

• importer

• exporter

• borrower

• lender

Gold is a major reserve asset that is currently being used in official reserve transactions.

• True

• False

The current account balance is equal to the difference between domestic product and national expenditure.

• True

• False