7) The ) more rapid growth in the United States than elsewhere. b) our merchandi

Question

7) The ) more rapid growth in the United States than elsewhere. b) our merchandise trade with other nations. c) America's leadership in the formation of global production networks d) remittances. e) trade in services. S. current account deficit is caused by all of the following factors except Eco 142.A-p. 2 8) Which of the following is a credit item in the US balance of payments? a) US imports of BMWs. b) Robby G. sending money back home to Austria. c) Foreigners using American airlines. d) An increase in US foreign exchange reserves. e) A U.S. bank loan to Brazil. 9) A currency is likely to depreciate for all of the following reasons except if its country has: a) a relatively higher interest rate compared to elsewhere. b) a relatively higher inflation rate than its major trading partners. c) relatively faster economic growth than its major trading partners, impacting its trade balance d) growing political instability e) slowing productivity gains. 10) When a country's currency is priced against a trade-weighted basket of its key partners currencies, we call this: a) nominal exchange rate (ER). b) real ER. c) cross ER. d) fixed ER. e) effective ER Part II: True/False-Explain Questions (4 points maximum each)

Explanation / Answer

7. A

Explanation: The US is not a rapidly growing economy. Rather, countries like India and China are growing at a much faster rate.

The remaining options add to the current account deficit of the USA.

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