Question 1

In 2017,Canada had a current account deficit of approximately $64 billion.In the absence of any statistical discrepancy,this deficit would imply that during that year,Canada

Accepted Answer

A current account deficit implies that a country has imported more goods, services, and capital than it has exported. To finance this deficit, the country must have a capital inflow equal to the deficit amount, in this case, $64 billion. This capital inflow can come in the form of investments, loans, or other financial mechanisms.

Question 2

Consider Canada's balance of payments.When a grocery importer in Sweden buys Quebec maple syrup,this transaction

Accepted Answer

The answer of Consider Canada's balance of payments.When a grocery...

Question 3

A country's balance of payments is sometimes incorrectly said to be "in surplus." This usually refers to a situation where

Accepted Answer

The answer of A country's balance of payments is sometimes...

Question 4

Consider the balance-of-payments accounting information for Lalaland in 2018 as shown in the table below.All values are in billions of dollars and any variables not provided below have a value of zero.  TABLE 34-1 Refer to Table 34-1.What is the net change in the stock of Lalaland's investments abroad in 2018?

Accepted Answer

The answer of Consider the balance-of-payments accounting information for Lalaland...

Question 5

Consider a country's balance of payments accounts.The difference between the payments and receipts from international transactions in goods and services (plus net foreign-investment income)is represented in the

Accepted Answer

The difference between payments and receipts from international transactions in goods and services (plus net foreign-investment income) is represented in the current account balance. This account includes trade in goods and services, as well as primary and secondary income. The other options listed (official financing account, capital service account, merchandise account) do not specifically relate to the balance of payments of goods and services.

Question 6

Consider a country's balance of payments accounts.The difference between the payments and receipts from international transactions in assets is represented in the

Accepted Answer

The difference between the payments and receipts from international transactions in assets is recorded in the capital account balance. This includes international investment and borrowing transactions such as foreign direct investment, portfolio investment, and loans. The current account balance, on the other hand, records the difference between a country's payments and receipts for trade in goods and services, while the merchandise account specifically records the balance of trade in goods only. The official financing account represents transactions between a country and international organizations, and is not directly related to transactions in assets.

Question 7

Consider Canada's balance of payments.Suppose Canada's current account has a deficit of $12 billion in 2013.It follows that Canada must have a capital account ________ of ________,meaning that there is a capital flow of this amount ________ Canada.

Accepted Answer

The balance of payments consists of the current account and the capital (and financial) account. A deficit in the current account must be offset by a surplus in the capital account of the same amount, meaning there is a capital inflow into Canada to balance the deficit.

Question 8

A country's balance of payments is sometimes incorrectly said to be "in deficit." This statement often refers to a situation where

Accepted Answer

The answer of A country's balance of payments is sometimes...

Question 9

Consider a country's balance of payments.An excess of payments over receipts on the current account

Accepted Answer

An excess of payments over receipts on the current account must be balanced by an excess of receipts over payments on the capital account, reflecting the principle that a deficit in the current account (more money leaving the country to pay for imports than is entering from exports) is financed by inflows on the capital account (such as foreign investment in the country).

Question 10

An appreciation of the Canadian dollar implies ________ in the value of the dollar relative to other currencies,such that ________.

Accepted Answer

An appreciation of the Canadian dollar means that the value of the dollar has increased relative to other currencies. This means that fewer Canadian dollars are required to purchase foreign currency, hence option C is the correct choice. Option A and B are contradictory as both cannot be correct at the same time. Option D and E suggest a fall in the value of the dollar, which is opposite to the given scenario of appreciation of the Canadian dollar. Therefore, option C is the correct choice.

Question 11

Consider the balance-of-payments accounting information for Lalaland in 2018 as shown in the table below.All values are in billions of dollars and any variables not provided below have a value of zero.  TABLE 34-1 Refer to Table 34-1.What is the capital account balance for Lalaland in 2018?

Accepted Answer

The answer of Consider the balance-of-payments accounting information for Lalaland...

Question 12

Canada's balance of payments is sometimes incorrectly said to be "in deficit." The reason this must be incorrect is that

Accepted Answer

The balance of payments for any country, including Canada, is always perfectly balanced because it is an accounting framework that records all economic transactions between residents of the country and the rest of the world. It includes the current account, the capital account, and the financial account, with any deficits in one account being offset by surpluses in others, ensuring the overall balance of payments balances out.

Question 13

Consider the balance-of-payments accounting information for Lalaland in 2018 as shown in the table below.All values are in billions of dollars and any variables not provided below have a value of zero.  TABLE 34-1 Refer to Table 34-1.What is the current account balance for Lalaland in 2018?

Accepted Answer

The answer of Consider the balance-of-payments accounting information for Lalaland...

Question 14

Consider Canada's balance of payments.Suppose Canada's current account has a surplus of $18 billion in 2013.It follows that Canada must have a capital account ________ of ________,meaning that there is a capital flow of this amount ________ Canada.

Accepted Answer

By definition, the current account and capital account must balance each other out in the balance of payments. If the current account has a surplus of $18 billion, this means that Canada's exports exceeded its imports by $18 billion in that year. This also means that there is an excess supply of Canadian dollars in the foreign exchange market. To balance this out, there must be a capital outflow of $18 billion, meaning that foreigners are investing money in Canada or Canadians are investing abroad. Therefore, the capital account must have a deficit of $18 billion to balance out the current account surplus of $18 billion.

Question 15

Consider Canada's balance of payments.If Canada's current account is in deficit,then we can be sure that there is a ________ on the capital account,which means a capital ________ Canada.

Accepted Answer

A surplus on the capital account indicates a capital inflow to Canada, balancing the deficit in the current account. The balance of payments must balance, so a deficit in one account is offset by a surplus in another.

Question 16

For Canada,the term "exchange rate," as used by most economists,refers to

Accepted Answer

Most economists use "exchange rate" to refer to the price of foreign currency in terms of Canadian dollars. This is because it reflects the value of a Canadian dollar relative to other currencies, and influences the prices of imports, exports, and international investments. Options A, B, D, and E are not accurate definitions of exchange rate.

Question 17

Canada's balance of payments is sometimes incorrectly said to be "in surplus." The reason this must be incorrect is that

Accepted Answer

The balance of payments for any country, including Canada, is always perfectly balanced because it is an accounting framework that records all economic transactions between residents of the country and the rest of the world. It includes the current account, the capital account, and the financial account, with any deficits or surpluses in one account being exactly offset by surpluses or deficits in the others.

Question 18

Consider the balance-of-payments accounting information for Lalaland in 2018 as shown in the table below.All values are in billions of dollars and any variables not provided below have a value of zero.  TABLE 34-1 Refer to Table 34-1.What is the net capital flow between Lalaland and the rest of the world in 2018?

Accepted Answer

The net capital flow is equal to the change in the foreign exchange reserves, which is calculated as the current account balance plus the capital and financial account balance. In Lalaland's case, the current account balance is -$20 billion and the capital and financial account balance is -$70 billion, for a total of -$90 billion. This means there was a net capital outflow of $90 billion from Lalaland to the rest of the world in 2018.

Question 19

Consider the balance-of-payments accounting information for Lalaland in 2018 as shown in the table below.All values are in billions of dollars and any variables not provided below have a value of zero.   
Refer to Table 34-1.What is the balance of payments for Lalaland in 2018?

Accepted Answer

The answer of Consider the balance-of-payments accounting information for Lalaland...

Question 20

Consider Canada's balance of payments.Suppose Canada's capital account has a deficit of $10 billion in 2013.It follows that Canada must have a current account ________ of ________,meaning that net payments of this amount from the sale of goods and services (plus net investment income)are flowing ________ Canada.

Accepted Answer

The balance of payments consists of the current account and the capital account. If the capital account has a deficit (meaning more capital is leaving the country than entering), the current account must have a corresponding surplus of the same amount to balance it out, indicating that net payments from the sale of goods and services and net investment income are flowing into Canada.

Quiz 34: Exchange Rates and the Balance of Payments

In 2017,Canada had a current account deficit of approximately $64 billion.In the absence of any statistical discrepancy,this deficit would imply that during that year,Canada

Consider Canada's balance of payments.When a grocery importer in Sweden buys Quebec maple syrup,this transaction

A country's balance of payments is sometimes incorrectly said to be "in surplus." This usually refers to a situation where

Consider a country's balance of payments accounts.The difference between the payments and receipts from international transactions in goods and services (plus net foreign-investment income) is represented in the

Consider a country's balance of payments accounts.The difference between the payments and receipts from international transactions in assets is represented in the

Consider Canada's balance of payments.Suppose Canada's current account has a deficit of $12 billion in 2013.It follows that Canada must have a capital account of ,meaning that there is a capital flow of this amount Canada.

A country's balance of payments is sometimes incorrectly said to be "in deficit." This statement often refers to a situation where

Consider a country's balance of payments.An excess of payments over receipts on the current account

An appreciation of the Canadian dollar implies in the value of the dollar relative to other currencies,such that .

Consider the balance-of-payments accounting information for Lalaland in 2018 as shown in the table below.All values are in billions of dollars and any variables not provided below have a value of zero. TABLE 34-1 Refer to Table 34-1.What is the capital account balance for Lalaland in 2018?

Canada's balance of payments is sometimes incorrectly said to be "in deficit." The reason this must be incorrect is that

Consider the balance-of-payments accounting information for Lalaland in 2018 as shown in the table below.All values are in billions of dollars and any variables not provided below have a value of zero. TABLE 34-1 Refer to Table 34-1.What is the current account balance for Lalaland in 2018?

Consider Canada's balance of payments.Suppose Canada's current account has a surplus of $18 billion in 2013.It follows that Canada must have a capital account of ,meaning that there is a capital flow of this amount Canada.

Consider Canada's balance of payments.If Canada's current account is in deficit,then we can be sure that there is a on the capital account,which means a capital Canada.

For Canada,the term "exchange rate," as used by most economists,refers to

Canada's balance of payments is sometimes incorrectly said to be "in surplus." The reason this must be incorrect is that

Consider the balance-of-payments accounting information for Lalaland in 2018 as shown in the table below.All values are in billions of dollars and any variables not provided below have a value of zero. Refer to Table 34-1.What is the balance of payments for Lalaland in 2018?

Consider Canada's balance of payments.Suppose Canada's capital account has a deficit of $10 billion in 2013.It follows that Canada must have a current account of ,meaning that net payments of this amount from the sale of goods and services (plus net investment income) are flowing Canada.