ⅠQuestions and problems for Chapter 1:1. Why we study this course in bilingual languages ?2. How important are the international monetary and financial markets?3. What is a country's balance of payments, and what does this measure?4. What does it mean for a country to be a net debtor or net creditor?5. What is the relationship between a nation's current account balance and its capitalflows?ⅡMultiple Choice Questions1. Globalization refers to:A. only increasing market integration, while international economic integrationrefers to the strengthening of existing international linkages of commerce and the addition of new international linkages.B. only the expansion of world governance and global society, while internationaleconomic integration refers to the strengthening of existing international linkages of commerce and the addition of new international linkages.C. only the increased mobility of peoples and information, while internationaleconomic integration refers to the strengthening of existing international linkages of commerce and the addition of new international linkages.D. the increasing market integration, the expansion of world governance and globalsociety, and the increased mobility of peoples and information, while international economic integration refers to the strengthening of existing international linkages of commerce and the addition of new international linkages.Answer: D2. International economic integration refers to:A. the expansion of world governance and society.B. the increased mobility of peoples and information.C. the strengthening of existing international linkages of commerce and the additionof new linkages.D. the strengthening of existing international linkages of commerce but not theaddition of new linkages.Answer: C3. Globalization refers to _________, and international economic integration refers to___________.A. a broader scope of the internationalization process, a narrower focus of theinternationalization process.B. a narrower scope of the internationalization process, a broader focus of theinternationalization process.C. the same thing as international economic integration, the strengthening ofinternational linkages of commerce.D. None of the above.Answer: A4. Open trade in goods, services, and financial assets by leading economies of theworld at levels close to those observed today:A. have never been experienced.B. had been experienced before World War I.C. had been experienced between World War I and World War II.D. had been experienced only immediately before the Korean conflict.Answer: B5. Real sector transactions deal with:A. transactions in goods and services.B. transactions in financial assets.C. transactions in both goods and services and financial assets.D. transactions in neither goods and services nor in financial assets.Answer: A6. Financial sector linkages deal with:A. transactions in goods and services.B. transactions in financial assets.C. transactions in both goods and services and financial assets.D. transactions in neither goods and services nor in financial assets.Answer: A7. In terms of real sector activity, world trade in goods and services:A. is important only to developed economies.B. is important only to developing economies.C. is important to both developed and developing economies.D. is important to neither developed nor developing economies.Answer: C8. In the last 35 years, the nearly 6 percent per annum growth in world trade has led toa _______-fold cumulative increase in world trade.A. twoB. threeC. fourD. fiveAnswer: D9. When measured as a multiple of world exports of goods and services, foreignexchange turnover in 2004 was approximately:A. 12:1.B. 38:1.C. 61:1.D. 50:1.Answer: D10. Over the last 35 years, the data on trade and financial flows show:A. decreased real flows and decreased financial flows.B. increased real flows and decreased financial flows.C. decreased real flows and increased financial flows.D. increased real flows and increased financial flows.Answer: D11. If domestic investment is greater than domestic saving,A. expenditures equal domestic income and net exports equal zero.B. expenditures are greater than domestic income and net exports are negative.C. expenditures are less than domestic income and net exports are positive.D. expenditures are greater than domestic income and net exports are positive zero.Answer: B12. If domestic investment is less than domestic saving,A. expenditures equal domestic income and net exports equal zero.B. expenditures are greater than domestic income and net exports are negative.C. expenditures are less than domestic income and net exports are positive.D. expenditures are greater than domestic income and net exports are positive zero.Answer: C13. If domestic savings equals 10 and domestic investment equals 6, then the currentaccount balance equals:A. -16B. -4C. +4D. +16Answer: C14. If a nation's domestic savings equals 6 and a nation's domestic investment equals 10,then the nation is experiencing:A. a net capital outflow.B a net capital inflow.C. no net capital inflow or outflow.D. a current account surplus.Answer: B15. If a nation's domestic saving is 25 and the nation's domestic investment is 30, thenthe nation is experiencing:A. a current account surplus.B. a current account deficitC. a net capital inflowD. both B and CAnswer: D16. A current account deficit in the U.S. is:A. necessarily bad because it represents a lack of domestic saving.B. necessarily good because it represents foreign savings in the U.S.C. necessarily bad because it undermines the U.S.'s ability to experience economicgrowth.D. is neither good nor bad.Answer: D17. The balance of payments systemA. is another method for calculating GDP.B. insures that the net exports are always equal to zero.C. measures the total value of a domestic economy's transactions with the rest of theworld.D. attempts to limit the fluctuation in international exchange rates.Answer: C18. The balance on merchandise trade is a component ofA. the current account.B. the capital account.C. foreign direct investment.D. portfolio investment.Answer: A19. A debit entry in the balance of payments accounts representsA. a transaction that includes a payment from abroad a domestic resident.B. a transaction that includes a payment abroad by a domestic resident.C. a decrease in the current account deficit.D. an increase in the capital account surplus.Answer: B20. Which of the following transactions are not included in the current account?A. Exports of manufactured goods.B. Imports of manufactured goods.C. Payments of interest and dividends on foreign assets held by a domestic U.S.resident.D. The purchase of foreign assets by a domestic U.S. resident.Answer: D21. When a country faces a current account deficit, it also faces:A. a services trade deficit.B. a capital account deficit.C. a capital account surplus.D. a merchandise trade deficit.Answer: C22. In terms of balance of payments accounting, which of the following would berecorded as a debit entry?A. Exports of merchandise.B. Exports of services.C. A foreigner's purchase of a U.S. Treasure bond.D. An increase in a U.S. citizen's account at a foreign bank.Answer: D23. Given the following data, what is the country's current account balance?Merchandise trade balance = -120; Services trade balance = +45; Unilateral transfers made in excess of those received = 15.A. -60B. -90C. -100D. -150Answer: D24. Suppose an American tourist travels to Mexico, and uses U.S. dollars to purchase ahotel room in Mexico City. This transaction is recorded as aA. credit in the current account and debit in the capital account.B. debit in the capital account and a credit in the current account.C. credit in the capital account and debit in the current account.D. credit in the capital account and debit in the capital account.Answer: C25. Foreign direct investment is a component ofA. portfolio investment.B. the current account.C. total trade in services.D. the capital account.Answer: D26. In order for the purchase of stocks to be categorized as foreign direct investment, itmust represent at least _______ percent of the foreign entity's outstanding stockA. 1B. 10C. 25D. 40Answer: B27. Purchases of stock that are too small too be considered foreign direct investment areclassified asA. depreciation.B. investment spending.C. portfolio investment.D. capital investment.Answer: C28. After accounting for statistical discrepancies, a capital accountA. surplus will always imply a current account surplus.B. surplus will always imply a current account deficit.C. surplus will always exceed the associated current account surplus.D. deficit will always exceed the associated current account surplus.Answer: B29. The United States is currently a net debtor nation. This necessarily implies that theA. federal government owes money to foreign investors.B. value of U.S. held assets abroad is lower than the value of foreign held assets inthe U.S.C. value of the U.S. dollar is less than the average value of foreign currencies.D. U.S. is running a deficit in manufactured goods trade.Answer: B30. A balance of payments deficit is defined as a situation in whichA. the value of payments made to foreigners exceeds the value of payments receivedfrom foreigners in a given period of time.B. the federal government must borrow in order to meet its budget obligations.C. the value of manufactured good exports is less than the value of importedmanufactured goods.D. balance of payments credits exceed balance of payments debits.Answer: A31. In recent years, the U.S. has generally had a capital accountA. surplus and a current account surplus.B. surplus and a current account deficit.C. deficit and a current account surplus.D. deficit and a current account deficit.Answer: B。