Which of the following statements is NOT CORRECT regarding a country's current account? Depreciation would lead to a lower deficit in a country's current account. Lower exports would lead to a higher deficit in a country's current account Lower imports would lead to a lower deficit in a country's current account Appreciation would lead to a lower deficit in a country's current account.

Which of the following statements is NOT CORRECT regarding a country's current account? Depreciation would lead to a lower deficit in a country's current account. Lower exports would lead to a higher deficit in a country's current account Lower imports would lead to a lower deficit in a country's current account Appreciation would lead to a lower deficit in a country's current account.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter23: The International Trade And Capital Flows

Section: Chapter Questions

Problem 3SCQ: State whether each of the following events Involves a financial flow to the Mexican economy or a...

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If the trade deficit of the United States increases, how is the current account balance affected?
State whether each of the following events Involves a financial flow to the Mexican economy or a financial flow out of the Mexican economy: Mexico Imports sen4ces from Japan Mexico exports goods to Canada U.S. investors receive a return from past financial investments in Mexico
Table 23.7 provides some hypothetical data on macroeconomic accounts for three countries represented by A. B, and C and measured in billions of currency units. In Table 23.7, private household saving is SH, tax revenue is T, government spending is G, and investment spending is Calculate the trade balance and the net inflow of foreign saving for each country. State whether each one has a trade surplus or deficit (or balanced trade). State whether each is a net lender or borrower internationally and explain.
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What is included in the current account balance?
Imagine that the economy of Germany finds itself in the following situation: the government budget has a surplus of 1 of Germanys GDP; private savings is 20 of GDP; and physical investment is 18 of GDP. Based on the national saving and investment identity, what is the current account balance? If the government budget surplus falls to zero, how will this affect the current account balance?
Explain briefly whether each of the following would be more likely to lead to a higher level of trade for an economy, or a greater imbalance of trade for an economy. Living In an especially large country Having a domestic investment rate much higher than the domestic savings rate Having many other large economies geographically nearby Having an especially large budget deficit Having countries with a tradition of strong protectionist legislation shutting out imports
Why does the trade balance and the current account balance track so closely together over time?
Occasionally, a government official will argue that a country should strive for both a trade surplus and a healthy inflow of capital from abroad. Is this possible?
The United States’ total international transactions with other countries in 2005 were: U.S. balance on current account: - $748.7 billionFinancial inflows : + $1295.2 billionFinancial outflows : - $532.6 billion Was the current account in surplus or deficit? Was the capital account in surplus or deficit?Was the overall BOP in surplus or deficit?Did the government official reserve transactions account show an increase or decrease of its foreign currency holdings
Which of the following statements is correct? (2)(1) When a British firm invests in a bicycle manufacturing facility in South Africa,the amount concerned is entered as an inflow on the current account of theSouth African balance of payments.(2) When someone purchases a second‐hand car, the transaction is included inthe calculation of GDP in the year the sale took place.(3) A deficit on the current account of the balance of payments indicates thatthe country exported more than it imported during the period in question.(4) In the base year, the value of nominal GDP is equal to the value of real GDP.
Question 3Explain why a country can have a large trade deficit combined with a current account surplus. In explaining this, provide at least three transactions in the current account besides imports and exports. Explain how current transactions listed in this year’s capital account have implications for transactions in the current account in future years. Provide at least three examples. Suppose that a country has a current account deficit. Explain the three ways in which that deficit can be offset.