Economics MCQs

Page No. 365

The balance of payments is divided into two major accounts the ?


acurrent account the capital account

✓


bcurrent account the trade account

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ctrade account the capital account

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dcurrent account the reserve account

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The record of a country’s transactions in goods, services and assets with the rest of the world is its ?


a balance of trade

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b capital account

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c current account

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dbalance of payments

✓


View Answer balance of payments

Direct investment and security purchases are classified as ?


a capital account transactions

✓


bcurrent account transactions

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cunilateral transfer transactions

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dmerchandise trade transactions

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The argument that U.S current account deficits cause net job losses for Americans ?


ais true by definition in all possible circumstances

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bis supported by recent U.S history

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cfocuses only on the overall economy and is thus always true

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dfails to recognize that a current account deficit is matched by an equal inflow of foreign funds which finances employment increasing investment spending

✓



In balance of payments accounting tourism and travel are classified in the ?


amerchandise trade account

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bservices account

✓


c unilateral transfers account

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dcapital account

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View Answer services account

Purchases of government securities in the United States by foreigners is ?


aa credit item in the current account

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ba debit item in the capital account

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ca credit item in the capital account

✓


da debit item in the current account

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In the calculation of gross domestic product net exports are ?


athe sum of merchandise trade and services

✓


bthe current account plus long-term capital

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cthe value of merchandise exports minus imports

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dshort-term capital plus the basic balance

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A nation wishing to reduce its current account deficit would be advised to ?


aengage in more government spending

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b reduce government taxes

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cincreases private investment spending

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ddecrease domestic consumption

✓



Current account deficit are offset by______________?


amerchandise trade deficits

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bmerchandise trade surpluses

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ccapital/financial account surpluses

✓


dcapital/financial account deficits

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Debit entries on the balance of payments are the entries that would ?


amean a loss of foreign exchange

✓


b bring foreign exchange into the country

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cindicate a surplus exist

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dexist at the bottom line after all accounts are totaled

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