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Eun & Resnick 4e
CHAPTER 3 Balance of Payments
Balance-of-Payments Accounting
Balance-of-Payments Accounts
The Current Account
The Capital Account
Statistical Discrepancy
Official Reserve Account
International Finance in Practice: How One Word Haunts Dollar
The Balance-of-Payments Identity
Balance-of-Payments Trends in Major Countries
International Finance in Practice: The Dollar and the Deficit
Summary
MINI CASE: Mexico’s Balance-of-Payments Problem
Appendix 3A: The Relationship between Balance of Payments and National Income Accounting
Balance of Payments Accounting
Balance of payments
a) is defined as the statistical record of a country’s international transactions over a certain period of time presented in the form of a double-entry bookkeeping
b) provides detailed information concerning the demand and supply of a country’s currency
c) can be used to evaluate the performance of a country in international economic competition
d) all of the above
Answer: d - p. 59
1. If the United States imports more than it exports, then
a) The supply of dollars is likely to exceed the demand in the foreign exchange market, ceteris paribus.
b) One can infer that the U.S. dollar would be under pressure to depreciate against other currencies
c) a) and b)
d) None of the above
Answer: c - p. 59
2. If Japan exports more than it imports, then
a) The supply of dollars is likely to exceed the demand in the foreign exchange market, ceteris paribus.
b) One can infer that the yen would be likely to appreciate against other currencies
c) a) and b)
d) None of the above
Answer: b - p. 59 There’s no guarantee that the U.S. is Japan’s only trading partner.
3. Generally speaking, any transaction that results in a receipt from foreigners
a) Will be recorded as a debit, with a negative sign, in the U.S. balance of payments
b) Will be recorded as a debit,...