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
For a country with Current Account surplus and net capital inflow, International reserves are most likely to increase. The answer is option (a) of the set of answers given.
If a country has a current account surplus and a net capital inflow in the private...
A current account surplus for a country means that a. The country earns more than it spends. b. The country saves less than its domestic investment. c. The country’s private sector saves more than the government. d. The country imports more goods and services than it exports.
If a country has a fixed exchange rate then the: Multiple Choice capital account surplus or deficit must be matched by a deficit or surplus in the official reserve account. current account surplus or deficit must be matched by a deficit or surplus in the official reserves account. official settlements balance will be equal in size, but opposite in sign, to the change in the official reserves. current and capital account balances will be equal in size, but opposite in...
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...
Question 18 If a country experiences a surge of exports that leads to greater trade surplus, what must happen to this country's financial account to maintain its balance of payments, all else equal? a. The financial account balance will decrease. b. The financial account balance will be unchanged. c. The financial account balance will increase. d. The financial account balance is unrelated to the current account and can change in any direction. 3.33 points Question 19 Suppose that Tesla (an...
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.
If a country runs a surplus in financial account, its current account has a deficit. True, false, or uncertain? Explain.
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.
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...
What is a nation's cash inflow and outflow on its current account and its capital account given the following information? imports $145 exports 211 direct investments abroad 72 foreign investments in the country 143 foreign purchases of domestic securities 86 purchases of foreign securities 29 net income from foreign investments 37 government spending abroad 22
In 2019 Country A had a current account deficit of $1.2 billion. CountryA’s capital account was in a $100 million surplus. In addition, CountryA’s factors of production located in foreign countries earned $600 million.Country A had a trade deficit of $800 million. Assume Country A neithergave nor received unilateral transfers. Country A’s GDP was $9 billion.Answer the following questions about Country A in 2019. and show your work. (a) What happened to Country A’s net foreign assets during that year?Did...