If a transaction in the balance of payments of Country A enters the foreign exchange market, then it is fair to say that:
a. Sources of funds in Country A's balance of payments are supplies of Country A's currency to the foreign exchange market.
b. Uses of funds in Country A's balance of payments are demands for Country A's currency in the foreign exchange market.
c. Uses of funds in Country A's balance of payments are supplies of Country A's currency in the foreign exchange market.
d. Transactions in Country A's balance of payments have no counterpart in the foreign exchange market.
Question 2 - A major macroeconomic leakage from the circular flow is:
a. Consumption
b. Savings
c. Saving
d. All of the above.
e. None of the above.
Question 3 - If a transaction in the balance of payments of Country A enters the foreign exchange market, then it is fair to say that:
a. Sources of funds in Country A's balance of payments are supplies of Country A's currency.
b. Sources of funds in Country A's balance of payments are demands for Country A's currency.
c. Uses of funds in Country A's balance of payments are demands for Country A's currency.
d. Transactions in Country A's balance of payments have no counterpart in the foreign exchange market.
Question 4 - A major macroeconomic leakage from the circular flow is:
a. Consumption
b. Savings
c. Saving
d. Gross private domestic investment
e. All of the above.
Question 5 - The major difference between the balance of payments and the foreign exchange market is that:
a. Actually, there is no difference. All sources of funds in the balance of payments are demands for foreign exchange and all uses of funds in the balance of payments are supplies of foreign exchange.
b. Actually, there is no difference. All sources of funds in the balance of payments are supplies of foreign exchange and all uses of funds in the balance of payments are demands of foreign exchange.
c. The balance of payments includes many more transactions than are included in the foreign exchange market.
d. The foreign exchange market includes many more transactions than are in the balance of payments.
Question 6 - A major macroeconomic leakage from the circular flow is:
a. Consumption
b. Savings
c. Saving
d. Gross private domestic investment
e. Government spending.
Question 7 - When a country has flexible exchange rates the:
a. Capital account must be equal to and carry the opposite sign of the financial account
b. Reserves account must be positive.
c. Reserves account must be negative.
d. Current account must equal the reserves account.
e. None of the above.
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