The current account shows international transactions in goods and services, the capital account ...

The current account shows international transactions in goods and services, the capital account shows international transactions involving the flow of financial assets, and the official reserve transactions account shows movement of international reserves.
 a. True
  b. False

QUESTION 2

If the interest rate increases, the
 a. cost of saving will increase
  b. cost of borrowing will increase
  c. firm should decrease the amount of capital it owns by selling capital
  d. firm should acquire more capital
  e. supply of loanable funds will increase

QUESTION 3

The current account shows international transactions in goods and services, the capital account shows international transactions involving the flow of financial assets, and the official reserve transactions account shows movement of international reserves.
 a. True
  b. False

QUESTION 4

Which of the following does not contribute to differences in interest rates?
 a. Different loans are for different periods of time.
  b. Large loans generate more administrative costs per dollar than smaller loans.
  c. Different loans are subject to different tax rules.
  d. Loans to established businesses are evaluated differently from loans to new businesses.
  e. The longer the period of repayment, the greater the risk of higher-than-expected inflation.

QUESTION 5

If the current account shows a deficit, the capital account must show a surplus of the same amount.
 a. True
  b. False

QUESTION 6

The term structure of interest rates describes the relationship between the rate of interest charged and the
 a. length of time until repayment of the loan
  b. amount of the loan
  c. riskiness of the borrower
  d. identity of the borrower
  e. age of the lender