QUESTION 12 Suppose that the United States government received $10 million dolla

Question

QUESTION 12 Suppose that the United States government received $10 million dollars in aid from foreign nations for hurricane disaster relief. How would this be recorded in the US balance of payments? O a debit to the current account Oa credit to the current account a debit to the capital account a credit to the official reserves account QUESTION 13 Assume that the US government increases its tariffs on imported steel. All else being equal, which of the following would occur? The US BOT would decrease. The US BOT would increase. The US BOT would be unaffected by the change. Cannot be determined QUESTION 14 Suppose that the yen/pound exchange rate on 1/1/2015 was ¥120 pound. One month later, the rate was ¥115/pound. If the J-curve theory holds, which of the following situations would occur, all else being equal? Britian's BOT would initially improve, and then gradually worsen. O Japan's BOT would initially worsen, and then gradually improve. Britian's BOT would initially worsen, and then gradually improve. The balance of trade for both nations would be unaffected

Explanation / Answer

12-

a credit to the current account

13-

US BOT would increase

14-

Japan BOT would initially worsen and then gradually improve

this is due to appreciation in Yen would results in low value of exports and this will worsen BOT of Japan

12-

a credit to the current account

13-

US BOT would increase

14-

Japan BOT would initially worsen and then gradually improve

this is due to appreciation in Yen would results in low value of exports and this will worsen BOT of Japan

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