A Norwegian citizen buys the rights to "Dancing Queen" by the Swedish band ABBA. This is a:

a credit in Sweden's capital and financial account

Mr. Miller buys $50 worth of stock in a South Korean company with money from his U.S. bank account. This transaction is

a debit in the capital and financial account of the United States

What is the relationship between the exchange rate for the currency of a nation and its current account?

Currency appreciates = more expensive exports + less expensive imports

The balance of payments on the current account can be calculated as

(visible exports + invisible exports)-(visible imports + invisible imports)

A nation has a current account deficit when

the value of all imports is greater than the value of all exports

Where does a 500 billion Yen investment by a Japanese firm to build a railway in India appear?

as a credit in the capital and financial account for India

What will be the most likely outcome when Canada moves toward a larger current account surplus with the UK?

appreciation of the Canadian Dollar vs the British Pound

When a Belgian start-up company gets a loan from a London bank, the interest the start-up company pays is primary income

for the United Kingdom, recorded as invisible trade in the current account

When other Europeans transfer savings and investments to Switzerland, the Swiss balance of payments shows _____________.

a credit in the capital and financial account

If a nation has a persistent current account deficit,

their economy is likely to be exposed to inflationary pressures

Nigeria may see its current account deficit grow when there is less demand for petroleum, their main export, because

Nigeria has to import necessities, including food and capital goods

Government transfers to international organisations like UNICEF, the World Bank, and the Red Cross are recorded as

secondary income in the current account

If a resident of France owns an investment property in Luxembourg, France records the rent paid to the property owner as

invisible trade and a credit in the current account

Rent paid by a German company to a Swiss property management firm for an office in Zurich is _________ for Switzerland.

a credit in the current account

Possible disadvantages for a nation with a current account surplus include all of the following EXCEPT:

Higher global demand for their exports causes the unemployment rate to fall

When British tourists spend less on holidays abroad during a downturn, the balance of payments for the UK shows

a reduction in invisible imports in the current account

Leakages from an economy are caused by all of the following EXCEPT:

Consumers are spending more money on goods and services made domestically

The money spent by Germans on holiday in South Africa would be recorded in the South African balance of payments as

an invisible export in the current account

The balance of trade is defined as:

the difference between visible exports and visible imports

the price of one currency in terms of another

Which of the following is included as a debit in the current account of Switzerland?

renting a villa in Italy during the summer

Payments, included rent and interest, received for the loan of factors of production in another country are considered

primary income, included as invisible trade in the current account

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IGCSE Economics Chapter 28 Balance of Payments on the Current Account

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Questions 30

Answers

1
Any country that engages in international trade needs to keep a record of ALL transactions. This record is known as the
gross domestic product
capital and financial account
current account
balance of payments
2
A Norwegian citizen buys the rights to "Dancing Queen" by the Swedish band ABBA. This is a:
a credit in Norway's capital and financial account
a credit in Sweden's capital and financial account
secondary income included in invisible trade in Norway's current account
a debit included as invisible trade in Sweden's current account
3
Mr. Miller buys $50 worth of stock in a South Korean company with money from his U.S. bank account. This transaction is
a credit in the capital and financial account of the United States
an example of a secondary payment in the current account of South Korea
a debit in the capital and financial account of the United States
a debit in South Korea's capital and financial account
4
What is the relationship between the exchange rate for the currency of a nation and its current account?
Currency appreciates = more expensive exports + less expensive imports
Currency depreciates = positive impact on the quality of domestic goods
Currency depreciates = negative impact on the current account balance
Currency appreciates = less expensive exports + more expensive imports
5
The United States sends financial aid to Tanzania to fight an outbreak of the Marburg virus. For the USA, this is:
invisible trade in current account
a debit in the capital and financial account
a debit in current account
A credit in the current account
6
The balance of payments on the current account can be calculated as
visible exports - visible imports
(visible imports + visible exports)-(invisible imports + invisible exports)
government expenditure - government income
(visible exports + invisible exports)-(visible imports + invisible imports)
7
A nation has a current account deficit when
the value of all imports is greater than the value of all exports
the value of all exports is greater than the value of all imports
the value of visible imports is greater than the value of visible exports
the value of invisible exports is less than the value of invisible imports
8
Where does a 500 billion Yen investment by a Japanese firm to build a railway in India appear?
none of the above
as a credit in the capital and financial account for India
as a credit in the capital and financial account for Japan
as an visible good in the current account for Japan
9
If Egypt imposes trade barriers to reduce imports, their balance of payments will move toward
a decrease in secondary income
a capital and financial account surplus
a current account surplus
a current account deficit
10
What will be the most likely outcome when Canada moves toward a larger current account surplus with the UK?
Canadian maple syrup sold in the UK will become less expensive
depreciation of the Canadian Dollar vs the British Pound
appreciation of the Canadian Dollar vs the British Pound
British tea sold in Canada will become more expensive
11
An Icelandic contractor working in Saudi Arabia sends his paycheck home to his family. Iceland records this transfer as:
a credit in current account
a debit in the current account
a credit in the capital and financial account
secondary income received for capital goods and services
12
When a Belgian start-up company gets a loan from a London bank, the interest the start-up company pays is primary income
for the UK, recorded as savings in the capital and financial account
for Belgium, recorded as investment in the capital and financial account
for the United Kingdom, recorded as invisible trade in the current account
for the London bank, recorded as visible trade in the UK current account
13
Australia exports wheat to China. The balance of payments for Australia would show a:
debit in the capital and financial account
debit in the current account
credit in the capital and financial account
credit in the current account
14
When other Europeans transfer savings and investments to Switzerland, the Swiss balance of payments shows _____________.
a sale of capital goods and services
a credit in the current account
a credit in the capital and financial account
dividends paid to shareholders
15
If a nation has a persistent current account deficit,
their economy is likely to be exposed to inflationary pressures
they will need to reduce their foreign exchange surplus
they are becoming increasingly dependent on income from exports
the prices of many imported goods will continue to decrease
16
Nigeria may see its current account deficit grow when there is less demand for petroleum, their main export, because
the decreased demand for petroleum lead to inflated prices for commodities
Nigeria has to import necessities, including food and capital goods
Nigeria imports mostly consumer goods, including luxury clothing and cars
a decrease in demand for petroleum causes a decrease in demand for cocoa
17
Government transfers to international organisations like UNICEF, the World Bank, and the Red Cross are recorded as
visible income in the current account
primary income in the current account
secondary income in the current account
invisible income in the capital and financial account
18
If a resident of France owns an investment property in Luxembourg, France records the rent paid to the property owner as
invisible trade and a credit in the capital and financial account
invisible trade and a credit in the current account
secondary income and a credit in the current account
visible trade and a debit in the current account
19
Rent paid by a German company to a Swiss property management firm for an office in Zurich is _________ for Switzerland.
a debit card from a bank account
a debit in the current account
a credit in the current account
a debit in the financial account
20
Possible disadvantages for a nation with a current account surplus include all of the following EXCEPT:
Appreciation of the currency of that nation, making their exports cost more
Less global demand for the goods and services produced in that nation
Consumers and firms may have stopped buying imports due to a recession
Higher global demand for their exports causes the unemployment rate to fall
21
What might cause a nation to enjoy a long-term current account surplus?
all of the above
the exchange rate for their currency makes their exports less expensive
the goods and services they export have a reputation for high quality
imported goods are more expensive than goods produced domestically
22
When British tourists spend less on holidays abroad during a downturn, the balance of payments for the UK shows
a decrease in invisible exports in the capital and financial account
decreased investment in the capital and financial account
a reduction in invisible imports in the current account
a growing deficit in the current account
23
Leakages from an economy are caused by all of the following EXCEPT:
People investing their money in foreign rather that domestic companies
Decreasing demand for goods and services produced domestically
Consumers are spending more money on goods and services made domestically
A country becoming increasingly dependent on imports
24
The Japanese firm Toyota acquires a factory in Texas. This acquisition is:
all of the above
an investment in an asset in the United States by a Japanese firm
a debit in Japan's capital and financial account
a credit in the capital and financial account of the United States
25
The money spent by Germans on holiday in South Africa would be recorded in the South African balance of payments as
an invisible export in the current account
a net transfer of visible income from Germany
an invisible import in the current account
an export in the capital and financial account
26
The balance of trade is defined as:
(visible exports + invisible exports)-(visible imports + invisible imports)
the difference between visible exports and visible imports
when the value of exports exceeds the value of imports
government transfers to and from overseas agencies such as the EU or UN
27
Crude oil, semiconductors, natural gas, coal, and computers imported by South Korea would be calculated as
current account visible trade
balance of payments on the current account
capital and financial account visible trade
current account invisible trade
28
The exchange rate is
a way of recording changes in the inflation rate and unemployment rate
the price of one currency in terms of another
a record of all transactions relating to international trade
part of the balance of payments where all exports and imports are recorded
29
Which of the following is included as a debit in the current account of Switzerland?
making a long term loan to a small business in Germany
buying shares in an Austrian company
renting a villa in Italy during the summer
buying Euros with Swiss Francs on the Foreign Exchange market
30
Payments, included rent and interest, received for the loan of factors of production in another country are considered
visible trade, included in the balance of payment on the current account
primary income, included as invisible trade in the current account
secondary income, included in invisible trade in the current account
invisible trade, included in the capital and financial account

IGCSE Economics Chapter 28 Balance of Payments on the Current Account Flashcards | StudBud