Module 2

 The Current Account Balanceshould be (in millions of $):"

1266 deficit

The Japanese currently hold about 15% of the US Treasury securities. If the US trade deficit with Japan is reduced, the most likely impact of this will be to:

Decrease the Japanese share in the US treasury market.

In the US BOP accounts, a decrease in a real estate loan made by US commercial bank to companies located in Mexico should be treated as:

a credit to capital account

In the US Balance of Payments accounts, a $50 million spending by Canadian tourists in a Stanley Cup Finals held in the US, should be treated as:

a credit to service account

In the US BOP accounts, a $50 million investment in Southeast Asia by Hewlett Packard should be treated as:

a debit to capital account

In the US Balance of Payments accounts, a $850 million purchase of crude oil from Saudi Arabian by Exxon (a US company), should be treated as:

a debit to current account

In the US Balance of Payments accounts, a $600 million purchase of Japanese Yen by the US Federal Reserve Bank should be treated as:

a debit to official reserve account

The primary component of the current account is the :

balance of goods

A dividend payment received by Exxon from its stock holders in UK should be recorded in the US Balance of Payment account as a:

credit to current account

If US national income declined, but that of Japan remained constant, then US imports from Japan will:

decrease

If US trade deficit with Japan increased (and everything else remains constant), then the US dollar is most likely to _______ against the Japanese yen

depreciate

If inflation increases in the US but remains constant in UK, US imports from UK will:

increase

If the US Dollar appreciated against the Japanese yen, (and everything else remains constant), then US imports from Japan would:

increase

A high inflation rate relative to other countries would _________ the home country’s trade deficit, other things being equal. A high growth in the home income level relative to other countries would _____ the home country’s trade deficit, other things equal.

increase, increase

Based on national income accounting relations, an increase in the US trade deficit can be caused by a _______ in the budget deficit, or a _______ in the US saving rate, or a ______ in the US investment rate.

rise, fall, rise