To compensate for trade imbalances, a rising trade surplus will cause capital inflows to rise / fall / remain unchanged / change ambiguously; and the domestic real interest rate to rise / fall / remain unchanged / change ambiguously.

A small, open economy with a fixed exchange rate system faces a balance of payments deficit due to a combination of high import levels and capital outflows. The central bank is using its foreign exchange reserves to support the fixed exchange rate, but these reserves are rapidly depleting. The government is considering policy options such as moving to a flexible exchange rate system, implementing capital controls, or seeking external financial assistance.   In this case, the policy choices are primarily aimed at:   A) Maintaining the fixed exchange rate at all costs   B) Addressing the balance of payments deficit and stabilizing the exchange rate   C) Completely closing off the economy from international trade   D) Ignoring the balance of payments deficit

Consider the investment identity, taking into account the government sector and international trade: I = Sp + Sg + Financial Account Surplus where I = investment, Sp positive foreign savings. = private domestic savings, Sg = government savings, and a financial account surplus implies Suppose exports decrease. As a result, the inflow of foreign savings private domestic savings government savings will

Suppose a country has an overall balance of trade so that exports of goods and services equal imports of goods and services. Does that imply that the country has balanced trade with each of its trading partners

Suppose that the Mexican government decides to fix or peg the dollar-peso exchange rate at P20 = $1. If foreign-exchange traders on one day want to exchange $60 million for pesos, to enforce the peg the Mexican government will need to come up with

In the balance-of-payments of Canada, merchandise imports are recorded as: a positive entry a financial account entry changes in official reserves a current account entry transfers

A trade deficit occurs when a country: A) Has higher exports than imports B) Has higher imports than exports C) Implements strict import quotas D) Lowers tariffs on all imports

National Saving - Investment = X - IM A country whose National Saving is greater than its Investment will experience a Trade deficit (IM > X) Balanced trade (IM – X) = 0 O Trade surplus (X > IM)

Which of the following creates a supply of Japanese yen in foreign exchange markets? Multiple Choice A Canadian student purchases a new Japanese car. A Canadian goes on a business trip to Japan. A Japanese company sells an insurance policy to a Canadian citizen. A Japanese tourist takes a trip to the Canadian Rockies. A Japanese investor receives dividends on some Canadian stock,

Suppose total Canadian exports in the month of June were $123.6 billion and total imports from foreign countries were $191.7 billion. What was the balance of trade? Instructions: Round your answer to one decimal place and include a negative sign, if necessary. billion.