If a country has a fixed exchange rate then the: Multiple Choice capital account surplus or...
If a country has a fixed exchange rate then the:
Multiple Choice
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capital account surplus or deficit must be matched by a deficit or surplus in the official reserve account.
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current account surplus or deficit must be matched by a deficit or surplus in the official reserves account.
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official settlements balance will be equal in size, but opposite in sign, to the change in the official reserves.
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current and capital account balances will be equal in size, but opposite in sign.
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None of the options.
Homework Answers
Ans current and capital account balances will be equal in size, but opposite in sign.
If a country has a fixed exchange rate then the current and capital account balances will be equal in size, but opposite in sign.
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If a country has a fixed exchange rate then the:
Multiple Choice
capital account surplus or...
Suppose a country has a current account surplus of $8 billion, but a financial account deficit...
Suppose a country has a current account surplus of $8 billion, but a financial account deficit of $5 billion. a) Is its balance of payments a deficit, surplus or neither? The balance of payments is (select one). b) What change in official exchange reserves would you see? Note: Keep $0 for the second part if you think there is no change. The official exchange reserves would (select one) by $0 billion. c) Is the central bank buying or selling foreign...
Assume that a country’s balance-of-payments accounts are recorded correctly. If there is no change in a country’s offici...
Assume that a country’s balance-of-payments accounts are recorded correctly. If there is no change in a country’s official reserves account, a surplus in the capital account must be: Multiple Choice None of the options. reflected in an appreciation of the country’s currency. reflected in a decrease in a country’s foreign indebtedness. offset by a surplus in the current account. offset by a deficit in the current account.
When a country has a current account surplus then it is: Multiple Choice lending to foreigners and increasing its net...
When a country has a current account surplus then it is: Multiple Choice lending to foreigners and increasing its net foreign wealth. borrowing from foreigners and/or reducing its holdings of foreign denominated financial assets. reducing its net foreign wealth. borrowing from foreigners, reducing is holdings of foreign denominated financial assets, and reducing its net foreign wealth. None of the options.
The sum of currency and bank deposits at the central bank is called: a. the money...
The sum of currency and bank deposits at the central bank is called: a. the money supply. b. domestic assets. c. the monetary base. d. fractional reserves. Official intervention in the foreign exchange market to defend a fixed exchange rate when the value of the country's currency is under downward pressure causes a. international reserve holdings to rise. b. a downward pressure on the country's interest rates. c.an increase in the liabilities of the central bank. d. the domestic money...
1. If a fixed exchange rate is set below the equilibrium rate in a fixed exchange...
1. If a fixed exchange rate is set below the equilibrium rate in a fixed exchange rate system it will create a deficit in the balance of payments. a surplus in the balance of payments. inflation. deflation. 2. Which of the following items is not a flow? A.Unilateral transfers. B. The increase in foreign assets held by Australian investors over a period of six months. C. Foreign exchange reserves lost by the Reserve Bank as a result of intervention in...
If a country has a current account surplus and a net capital inflow in the private...
If a country has a current account surplus and a net capital inflow in the private financial account, the country’s international reserves are mostly like to a. Increase. b. Decrease. c. Remain unchanged
Under the fixed exchange rate system, 1. Is it possible for a country to have positive...
Under the fixed exchange rate system, 1. Is it possible for a country to have positive balances for both of its current account and capital account at the same time? If so, is the situation sustainable or not? Explain. 2. Is it possible for a country to have negative balances for both of its current account and capital account at the same time? If so, is the situation sustainable or not? Explain.
A country with a floating exchange rate faces a short-run recession and current account deficit. Policymakers...
A country with a floating exchange rate faces a short-run recession and current account deficit. Policymakers want to use temporary expansionary monetary policy to increase both output and the current account balance. Will they be successful? Only with increasing output Only with increasing the current account balance No, not with either goal Yes, with both goals In the short run, if taxes rise, output will_and the exchange rate will increase; appreciate increase; depreciate decrease; appreciate decrease; depreciate With a fixed...
Suppose that a certain country has a current account surplus in its balance of payments. Does...
Suppose that a certain country has a current account surplus in its balance of payments. Does this mean that the country will necessarily have a financial account deficit? Explain why or why not.
1. Under a floating exchange rate regime with a high degree of capital mobility, in the...
1. Under a floating exchange rate regime with a high degree of capital mobility, in the short run an expansionary fiscal policy will most likely create pressure on: a. the domestic currency to appreciate. b. the domestic currency to depreciate. c. monetary authorities to revalue the domestic currency. d. monetary authorities to devalue the domestic currency. 2. Under a floating exchange rate regime with a high degree of capital mobility, a change in the exchange rate value of domestic currency...
Suppose a country has a current account surplus of $8 billion, but a financial account deficit of $5 billion. a) Is its balance of payments a deficit, surplus or neither? The balance of payments is (select one). b) What change in official exchange reserves would you see? Note: Keep $0 for the second part if you think there is no change. The official exchange reserves would (select one) by $0 billion. c) Is the central bank buying or selling foreign...
The sum of currency and bank deposits at the central bank is called: a. the money supply. b. domestic assets. c. the monetary base. d. fractional reserves. Official intervention in the foreign exchange market to defend a fixed exchange rate when the value of the country's currency is under downward pressure causes a. international reserve holdings to rise. b. a downward pressure on the country's interest rates. c.an increase in the liabilities of the central bank. d. the domestic money...
A country with a floating exchange rate faces a short-run recession and current account deficit. Policymakers want to use temporary expansionary monetary policy to increase both output and the current account balance. Will they be successful? Only with increasing output Only with increasing the current account balance No, not with either goal Yes, with both goals In the short run, if taxes rise, output will_and the exchange rate will increase; appreciate increase; depreciate decrease; appreciate decrease; depreciate With a fixed...
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