Which of the following statements regarding the balance of payments account are correct, ceteris paribus? Select...
Which of the following statements regarding the balance of payments account are correct, ceteris paribus?
Select all correct answers:
a) An increase in dividends from foreign portfolio investments would lead to an increase in the current account.
b) A current account surplus will always lead to an increase in the home country’s official foreign exchange reserves.
c) An increase in the trade deficit would lead to an increase in the current account.
d) A country with a current account deficit is receiving net capital flows.
Homework Answers
a) False. Increase in dividends will be recorded in the capital account of the balance of payment.
b) True. When a country has current account surplus, there will be more exports and less imports. There will be increase in the foreign exchange reserves.
c) Trade deficit implies imports being greater than exports. This will lead to decrease in current account. Hence, False.
d) True. To balance the bop deficits have to be financed with inflow of capital.
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Which of the following statements regarding the balance of
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QUESTION 2 Select all of the following that are true regarding a fx transaction, ceteris paribus: O As a currency appreciates, exports are reduced An modest increase in a country's inflation rate will appreciate its currency A reduction in long term fiscal policy investment in a country will appreciate the currency As a currency appreciates, inflation due to imports is reduced A modestly more contractionary monetary policy will appreciate a country's currency
In the table given below, Singapore’s balance of payments (BoP)
comprises:
(a) Current account of goods, services & factor income (primary
& secondary income balance)
(b) Capital & Financial account as DFI & Portfolio
Investment
(c) Errors & Omissions
(d) A+B+C = BoP reflected in E
(e) Reserve Assets
(f) Official reserves (stock as accumulated over the years)
Explain the balance of payments position of Singapore and why
traditionally, its trade in services rather than trade in goods
dominated its...
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