1. For each of the following changes (other things equal), choose the appropriat
ID: 1099166 • Letter: 1
Question
1. For each of the following changes (other things equal), choose the appropriate behavior in the value of the country's current account balance.
i. Exports of goods and services increase by $10 billion, and imports of goods and services increase by $10 billion.
A.
increased (become more positive or less negative)
B.
decreased (become less positive or more negative)
C.
stayed the same
For each of the following changes (other things equal), choose the appropriate behavior in the value of the country's current account balance.
ii. To assist recovery from a foreign disaster, the country gives a foreign transport authority a collection of transport equipment that has been produced in this (donor) country and that is valued at $500 million.
A.
increased (become more positive or less negative)
B.
decreased (become less positive or more negative)
C.
stayed the same
1. If a British businessman sells U.S. government securities to a U.S. buyer, how will this item be entered in the balance of payments?
A.
It will appear in the trade account as an import.
B.
It will appear in the trade account as an export.
C.
It will appear in the financial account as an increase in foreign assets held by U.S. residents.
D.
It will appear in the financial account as a decrease in the U.S. assets held by foreigners.
A.
increased (become more positive or less negative)
B.
decreased (become less positive or more negative)
C.
stayed the same
Explanation / Answer
1) stayed the same
2) decreased (become less positive or more negative
3) It will appear in the trade account as an import
It will appear in the financial account as an increase in foreign assets held by U.S. residents.
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