ECO102H1 Lecture Notes - Lecture 89: Canadian Dollar, Purchasing Power Parity, Big Mac Index

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C + i + g + ca = c + t + s. Ca = s - i + t - g. Net change in country"s investments abroad + net change in foreign investments in country +/- net change in foreign official currency reserves. Current account + financial account = 0 = 0 balance of payments. Factor incomes account (gnp): net investment income=money received from foreign-located assets-income paid to domestic assets owned by foreigners. Deficit (negative trade balance): country does not save enough. Surplus (positive trade balance): country saves too much. Current account = r (net investment income) + nx. = c + i + g + nx + r. = c + i + g + ca. Supply of cad is demand for foreign currency. Appreciate: currency gets stronger/more foreign to local currency. Increased demand for local currency or decreased demand for foreign currency.

Related Questions

Balance of payments: Using the following data for a given year, calculate

Item	Value
The rise in the country's private financial assets abroad	623
Imports of merchandise	782
Investment income, net	-27
Transfers, net	-15
Export of services	504
Rise in foreign private financial assets in the country	580
Exports of merchandise	903
Rise in foreign governments financial assets in the country	224
Imports of services	735
Rise in-country government s financial assets abroad	29

(a) The current account balance.

(b) The financial account balance.

viridianmosquito185

Exports of goods & services	$1000
Imports of goods & services	$800
The net change in assets owned abroad	$590
The net change in foreign-owned assets at home	$400
Unilateral transfers received	$100
Unilateral transfers paid	$200
Investment income paid to foreigners	$300
Investment income received from foreigners	$400
The balance on the capital account	$0

1. The balance on the current account is A) $100. B) $200. C) 0. D) - $100

2. The balance on the financial account is A) -$90. B) -$190. C) $100. D) $200

3. The statistical discrepancy is A) -$5. B) $5. C) $10. D) -$10

4. From the domestic economy's perspective,

A) there is a net international capital inflow equal to $190.

B) there is a net international capital outflow equal to $190.

C) the net international capital flow is zero.

D) its domestic absorption exceeds its GNP by $200.

orangewildebeest926

Q46. An appreciation of the U. S. dollar would
a. encourage foreigners to invest in the United States
b. discourage foreigners from buying U. S. goods
c. discourage the travel abroad of U. S. citizens
d. encourage foreign travel in the United States

Q47. The financial account of the balance of payments includes the purchase and sale of physical assets but not of financial assets.
a. true
b. false

Q48. Special Drawing Rights are issued by the
a. International Monetary Fund
b. Bretton Woods Organization
c. General Agreement on Tariffs and Trade
d. World Bank

Q49. The balance of payments includes
a. only exports, imports, and service transactions
b. the balance on current account, plus all capital transactions and all official transactions and the statistical discrepancy
c. only the official transactions
d. all goods and services produced in a nation's economy during a given year

Q50. A debit item on the U. S. balance of payments is any transaction that
a. results in a loss by U. S. sellers
b. results in a loss by U. S. buyers
c. makes foreigners use up their holdings of U. S. dollars
d. makes U. S. dollars available to foreigners

ECO102H1 Lecture Notes - Lecture 89: Canadian Dollar, Purchasing Power Parity, Big Mac Index

ECO102H1 Full Course Notes

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