TCQT chap2.1

Recently, the U.S. experienced an annual balance of trade representing a ____

• Large surplus

• Small surplus

• Level of zero

• Deficit

A high home inflation rate relative to other countries would ____ the home country's current account balance, other things equal. A high growth in the home income level relative to other countries would ____ the home country's current account balance, other things equal.

• Increase; increase

• Increase; decrease

• Decrease; decrease

• Decrease; increase

The direct foreign investment positions by U.S. firms have generally ____ over time. Restrictions by governments on direct foreign investment have generally ___ over time.

• Increase; decrease

• Increase; increase

• Decrease; decrease

• Decrease; increase

If a country's government imposes a tariff on imported goods, that country's current account balance will likely ____ (assuming no retaliation by other governments).

• Decrease

• Increase

• Remain unaffected

• Either A or C are possible

____ purchases more U.S. exports than the other countries listed here.

• Italy

• Spain

• Mexico

• Canada

An increase in the current account deficit will place ____ pressure on the home currency value, other things equal.

• Upward

• Downward

• No

• Upward or downward (depending on the size of the deficit)

If the home currency begins to appreciate against other currencies, this should ____ the current account balance, other things equal (assume that substitutes are readily available in the countries, and that the prices charged by firms remain the same).

• Have no impact on

• Increase

• Reduce

• All of the above are equally possible

The International Financial Corporation was established to __________.

• Enhance development solely in Asia through grants.

• Enhance economic development through non-subsidized loans (at market interest rates).

• Enhance economic development through low-interest rate loans (below-market rates).

• Enhance economic development of the private sector through investment in stock of corporations.

The World Bank was established to:

• Enhance development solely in Asia through grants.

• Enhance economic development through non-subsidized loans (at market interest rates).

• Enhance economic development through low-interest rate loans (below-market rates).

• Enhance economic development of the private sector through investment in stock of corporations.

The International Development Association was established to:

• Enhance development solely in Asia through grants.

• Enhance economic development through non-subsidized loans (at market interest rates).

• Enhance economic development through low-interest rate loans (below-market rates).

• Enhance economic development of the private sector through investment in stock of corporations.