All of the following are surplus items on the balance of payments accounts EXCEP
ID: 1124005 • Letter: A
Question
All of the following are surplus items on the balance of payments accounts EXCEPT
A.foreign tourists spending funds in the United States.
B.exports of merchandise.
C.sales of U.S. dollars to foreign residents.
D.U.S. residents purchases of gold from foreign residents.
The effect of an import quota is
A. to lead to a decrease in demand.
B.to make the supply curve horizontal at the amount of the quota.
C.to make the supply curve vertical at the amount of the quota.
D. to shift the supply curve up by the amount of the quota.
Under the Bretton Woods Agreement, the goal of the IMF was to
A.finance international transactions in gold.
B.lend to countries experiencing balance of payment deficits.
C.help less developed countries advertise their goods in the developed countries.
D.provide oversight to the functioning of central banks in the member countries.
If the Japanese yen depreciates against the U.S. dollar
A.the price of Japanese imports from the United States will decrease.
B.the price of Japanese imports to the United States decreases.
C.there is no change in the price of Japanese exports to the United States.
D.the price of United States exports to Japan decreases.
Explanation / Answer
Ans:
1) Option D
U.S. residents purchases of gold from foreign residents.
The balance of payments include all economic transactions between a country and the rest of the world during a period.A balance of payments deficit means imports of a country such as goods, services and capital are more than it exports.Hence U.S. residents purchases of gold from foreign residents is an item of deficit.
2) Option A
to lead to a decrease in demand.
The import quota will decrease the quantity imported and this will lead to increase in the price. Due to increase in the price the quantity demanded decreases.
3) Option B
lend to countries experiencing balance of payment deficits.
The main objectives of Bretton Woods Agreement was to accomplish global monetary cooperation and facilitate international trade. Hence by lend to countries experiencing balance of payment deficits, IMF will facilitate international trade.
4) Option B
the price of Japanese imports to the United States decreases.
When yen depreciates against the U.S. dollar, for every U.S.dollar we will receive more yen making the Japanese imports cheaper.Hence the price of Japanese imports to the United States decreases.
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