EC140 Chapter Notes - Chapter 35: Reserve Currency, Capital Account, Canadian Dollar

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graydonkey67

17 Apr 2016

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Balance of payments account ~ a summary record of a country"s transactions with the rest of the world, including the buying and selling of goods, services and assets. Every transaction is classiied according to whether the transaction generates a payment or receipt for canada. Credit items ~ transactions that represent a receipt for canada, ex: sale of a product. Debit items ~ transactions that represent a payment for canada, ex: purchase of a product. Two main categories to the balance of payments: current account, capital account. Current account ~ the part of the balance of payments accounts that records payments and receipts arising from trade in goods and services and from interest and dividends that are earned on foreign assets. Divided into two main section: trade account and capital-service account. Trade account ~ records payments and receipts arising from the import and export of goods. Canadian imports are debit items, while exports are credit items.

Related Questions

QUESTION 10

Below is a table for the Balance of Payments of Goegania, a prosperous island nation.

Current Account			Financial Account
Exports of Goods	$1,940		Capital Inflow	$661
Imports of Goods	???		Capital Outflow	$347
Trade Balance		???	Financial Account		???
Exports of Services	$569		Capital Account		$0
Imports of Services	???		Statistical Discrepancy		$0
Services Balance		$16	Balance of Payments		???
Income Received on Investments	$704
Income Paid on Investments	$505
Net Income on Investments		???
Net Transfers		$-168
The balance on the Current Account		???

Given this information, what is the value for the imports of goods?

Sometimes this question generates some weird numbers. Remember that you would always add the values in a category to get the total. So the total for the Financial Account is always Capital Inflow + Capital Outflow and the Trade Balance is always Exports + Imports for this table. It's just that sometimes those values being added are negative. If you get a negative answer, you should enter in the negative.

lavendertermite76

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

QUESTION 1

If a real asset located in Brazil is sold to someone in the US, the transaction would result in a credit in Brazil's balance of payments.

True

False

6.25 points

QUESTION 2

The balance of payments for a given nation records

only imports and exports of good and servies

only foreign direct investment and portfolio investments between nations

both imports and exporst of good and servieces as well as forein direct investment and portolio investments between nations
QUESTION 36.25 points

Transactions between Canada and the rest of the world are shown below. Use the following information to answer the next four questions.

Canadian citizens receive C$5 million worth of dividends from foreign investments.

Imperial Oil (Canadian firm) invests C$60 million in overseas oil discovery.

Foreign tourists spend C$45 million in Canada.

Canadian government sells C$20 million worth of treasury securities to foreign nations.

Alcan (Canadian firm) sells C$8 million worth of aluminum to US companies.

Canadian government buys C$32 million worth of gold.

Canadian firm buys C$12 million worth of computer components from Sony.

Canada sends C$4 million in aid to Mexico.

Ford spends C$30 million in constructing an assembly plant in Canada.

Find Canada's balance of trade. Enter your final answer in terms of millions of dollars. Do not enter a non-numerical value when inputting your answer.

6.25 points

QUESTION 4

Find the capital account balance (in millions of C$).

		-39
		19
		70

6.25 points

QUESTION 5

Find Canada's current account balance. Enter your final answer in terms of millions of dollars. Do not enter a non-numerical value when inputting your answer.

6.25 points

QUESTION 6

Canada's capital account balance suggests that it is a net supplier of capital to the rest of the world.

True

False

6.25 points

QUESTION 7

Suppose a nation has a current account surplus. This surplus implies

		ation
		ation

		none of the above

6.25 points

QUESTION 8

Suppose that the value of the dollar moves from Â£=$1.5 to Â£=$1.75. What effect would this have on the UK's balance of trade, all else being equal?

		UK
		UK
		UK

6.25 points

QUESTION 9

There is an inverse relationship between the demand for US exports and the US inflation rate.

True

False

6.25 points

QUESTION 10

Transactions between Great Britian and the rest of the world are shown below. Use the following information to answer the next two questions.

British companies sell 50 million pounds worth of bonds to foreigners.

British government sells 20 million pounds of treasury securities to foreigners.

British citizens receive 2 million pounds in interest from foreign investments.

British companies buy 85 million pounds worth of American produced steel.

GlaxoSmithKline (British firm) sells 40 million pounds of pharmaceutical drugs abroad.

British government buys 15 million pounds of gold in FX market.

British bankers invest 12 million pounds in foreign banks.

Find Great Britian's balance of trade. Enter your answer in terms of millions of pounds. Do not use the pound sign or any other non-numerical value when inputting your answer.

and

Transactions between Great Britian and the rest of the world are shown below. Use the following information to answer the next two questions.

British companies sell 50 million pounds worth of bonds to foreigners.

British government sells 20 million pounds of treasury securities to foreigners.

British citizens receive 2 million pounds in interest from foreign investments.

British companies buy 85 million pounds worth of American produced steel.

GlaxoSmithKline (British firm) sells 40 million pounds of pharmaceutical drugs abroad.

British government buys 15 million pounds of gold in FX market.

British bankers invest 12 million pounds in foreign banks.

Find Great Britian's balance of trade. Enter your answer in terms of millions of pounds. Do not use the pound sign or any other non-numerical value when inputting your answer.

EC140 Chapter Notes - Chapter 35: Reserve Currency, Capital Account, Canadian Dollar

EC140 Full Course Notes

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