Econ 175 Chapter 14 Discussion Questions, Study notes of Economics

Download Econ 175 Chapter 14 Discussion Questions and more Study notes Economics in PDF only on Docsity! Econ 175; Ch. 14; Discussion Questions (24 Questions) A. Multiple-Choice Questions. 1. Debt service payments appear in a. the current account. b. the capital account. c. the cash account. d. errors and omissions. e. both a and b are correct. 2. The typical IMF stabilization package involves a. welcoming foreign investment. b. Devaluation of the exchange rate. c. liberalization of exchange controls. d. increase in interest rates. e. all of the above. f. None of the above. 3. Which of the following was not a factor contributing to the Latin American debt crisis of the late 1970s and/or early 1980s? a. The oil shocks. b. Trade liberalization among developing countries. c. An increase in interest rates. d. More-developed country, especially U.S., recession. 4. Special Drawing Rights are financial assets created by a. the World Bank. b. the United Nations Development Program. c. multinational corporations. d. the International Monetary Fund. 5. A significant problem of a dual exchange rate system is that it a. is difficult to administer. b. leads companies to pursue rent-seeking behavior. c. promotes black markets. d. all of the above. e. none of the above. 6. A closed economy that attempts to be completely self-reliant is termed a. autarchic. b. protectionist. c. austerity. d. primitive. 1 7. The debt service ratio is the ratio of a. external debt to the size of the service sector. b. external debt to total GNP. c. internal debt to the size of the service sector. d. internal debt to total GNP. e. none of the above. 8. The gradual decline over time in the value of one currency in terms of another as a result of market forces of supply and demand is called a. revaluation. b. depreciation. c. devaluation. d. appreciation. e. none of the above. 9. In the balance of payments accounts all of the following are autonomous items except (a) imports. (b) exports. (c) foreign investment. (d) changes in official reserves. 10. Which of the following is not an example of a unilateral transfer? (a) A US foreign aid package to Pakistan. (b) A US government loan to Poland. (c) Money sent by naturalized Americans to their families in their home countries. (d) None of the above. Answer questions 11 through 17on the basis of the balance of payments items listed below: (a) Use of official reserves +14 (b) Merchandise imports -120 (c) Foreign investment in the U.S. +35 (d) Travel & transport receipts +10 (e) Merchandise exports +90 (f) U.S. investment abroad -20 (g) Travel & transport payments -5 (h) Other services net +3 (i) Investment income payments -25 (j) Unilateral transfers -2 (k) Investment income receipts +20 11. The U.S. balance of merchandise trade is: (a) +30 (b) -30 (c) -28 (d) -21 (e) +5 12. The balance on current account is: (a) -31 (b) -29 (c) -23 (d) +1 (e) –1 2