11 Int Finance
.docx
keyboard_arrow_up
School
Georgia State University *
*We aren’t endorsed by this school
Course
2105
Subject
Economics
Date
May 15, 2024
Type
docx
Pages
2
Uploaded by SargentPolarBear4034 on coursehero.com
ECON in Our World
Course: ECON 2105
Topic
Module 11. International Finance
Individual or Group Activity:
Individual
Assignment Submission Notes:
Each student should submit one copy. Assignment Type:
Open ended with short answer
Directions
Data:
The below data shows balance on current account of the United State of America. Figure 1
: Balance on Current Account for the United States
https://fred.stlouisfed.org/graph/?g=BJRX
Discuss:
a.
Since 1999, what is the sign of the current account balance for the United States?
The sign of the current account balance is negative.
b.
As of 2020, why is the current account balance for the United States negative?
The US's negative current account balance stems from overspending compared to income. This
reliance on foreign capital is fueled by factors like the federal budget deficit, low savings, and trade
imbalances, exacerbated by the pandemic and fiscal stimulus.
c.
If the current account for the United States is in deficit, what sign should we expect the
financial account balance of the United States to have?
The current account deficit leads to a surplus in the financial account as foreign capital and investments flow into the country.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Related Questions
Question: "In a scenario where a country operates under
a floating exchange rate system, what would likely be the
effect of a significant increase in its central bank's interest
rates on the country's current account balance? Assume
other global economic conditions remain constant." a)
The current account balance will improve due to
increased foreign investment. b) The current account
balance will deteriorate due to increased imports and
decreased exports. c) The current account balance will
improve due to decreased imports and increased
exports. d) The change in interest rates will have no
effect on the current account balance.
arrow_forward
points) possible
Dinotopia's Balance of Payments Account, 2014 (billions of S)
CURRENT ACCOUNT
Exports of products and services
Imports of products and services
Net investment/labour/transfer income
FINANCIAL ACCOUNT
Dinotopian investments in R.O.W.
R.O.W. Investments in Dinotopia
594
-534
30
- 117
116
The table shown above has selected data from Dinotopia's 2014 Balance of International Payments. From these data it can be determined that in 2014 Dinotopia had a
O A. financial account balance of $1 billion.
OB. current account balance of $10 billion.
C. current account balance of $624 billion.
O D. current account balance of $60 billion.
arrow_forward
True / False Question , explain breifly ( 3 sentences would be enough )
1. Imports into Japan are positively correlated with the value of the yen.
arrow_forward
20- Balance of payments (BOP) is measuring all international economic transactions between the residents of a country and foreign residents. Please expand the statement by discussing what economic activities are measured by BOP? And why it always be balanced?
arrow_forward
A new accountant works on the Balance of Payments of a country and records the following into the financial account.Which is the only one recorded correctly?
Select one:
a. Transfer of ownership of assets
b. External assets
c. Trade in goods
d. Imports of services
e. Incomes paid to people working in a country temporarily
arrow_forward
5:06
A & & & O M P
Page 2 of 5
QUESTION 2
The table below contains data on international transactions for the country of Econia. All figures
are in thousands of Econia Dollars (E$), and you may assume that there is no statistical
discrepancy generated by the collection of the data on the various kinds of transactions.
Complete the table by filling in the light-blue shaded cells.
Payments
from the rest
of the world
All figures in thousands of E$
Payments
from Econia
to the rest of
the world
Net
Payments to
Econia
to Econia
Sales and purchases of goods & services
Factor payments
5,250
2,500
1,500
1,000
Transfers
750
1,250
-500
Sales & purchases of assets
10,000
Total Current Account
10,250
Total Financial Account
Page 3 of 5
QUESTION A3
arrow_forward
arrow_forward
International Macroeconomics
a) Why do economists typically view trade as beneficial to all countries involved? Explain what are the gains to trade. Are all individuals within a country better off as a resultof trade with other countries? Explain your reasoning.
b) Consider a country that adopts a fixed exchange rate regime. What are the potential benefitsof adopting a fixed exchange rate regime? What are the potential costs of adopting a fixedexchange rate regime?
arrow_forward
View the data below for the exchange rate between the US dollar and the Japanese yen.
How many yen could you get per dollar at the earliest date shown on the chart? Explain.
How many yen could you get per dollar at the most recent date shown on the chart? Explain.
Has the dollar appreciated or depreciated in value over time? Explain.
arrow_forward
News Analysis: Exchange rates hold the key to trade between Japan and the United States (NEW)
3. Exchange rates and U.S. exports: A graphical relationship
The following graph shows exports from the United States to Japan. (Note: U.S. exports are measured in yen on this graph, which will enable you to
see U.S. exports on the same graph as Japanese exports in a later problem.)
EXCHANGE RATE (Dollars per yen)
Exports from the U.S.
Exports from the U.S.
?
(
·
X
arrow_forward
Case I: The Effect of War on the Economy of El Dorado
If a war broke out abroad, it would affect the El Dorado economy in many ways. Use the model
of the large open economy to examine each of the following effects of such a war. What happens
in the El Dorado to saving, investment, the trade balance, the interest rate, exchange rate, price
level and unemployment? (To keep things simple, consider each of the following effects
separately.)
Questions
a. The El Dorado government, fearing it may need to enter the war, increases its purchases of
military equipment.
b. Other countries raise their demand for high-tech weapons, a major export of the El Dorado.
The war makes El Dorado consumers uncertain about the future, and the consumers save
с.
more in response.
d. Analyze the combined effects of (a) & (b) on Aggregate Demand (AD), Money Supply and
Money Demand in the El Dorado Economy.
arrow_forward
QUESTION 4
Consider the following two figures.
Japanese Yen per 1 uS Dollar Graph
Danish Krone per 1 Euro Graph
12 Mar 2018 16:00 UTC - 11 Apr 2018 16:48 UTC
12 Mar 2018 16:00 UTC - 11 Apr 2018 16:10 UTC
107.07591
7.4648491
106, 39703
7.4552022|
1d5.1Ma16
105.03928
7.4359083.
104.36040
7.4262613
Apr9 Mar 12
Mar 12
Mar 19
Mar 26
| Apr 2
Apr 2
| Apr 9
Mar 19
Mar 26
Which of the following statements is correct?
A. the left figure describes a fixed exchange rate; the right figure describes a fixed exchange rate
O B. the left figure describes a flexible exchange rate; the right figure describes a flexible exchange rate
C. the left figure describes a fixed exchange rate; the right figure describes a flexible exchange rate
D. the left figure describes a flexible exchange rate; the right figure describes a fixed exchange rate
arrow_forward
QUESTION 12
Table 1 shows the summary of China's balance of payments and net international investment position. Please mark the only
INCORRECT statement about Table 1.
Source: IMF
BALANCE OF PAYMENTS (Percent of GDP)
Current account balance
Trade balance
Services balance
Net international investment position
Gross official reserves (billions of U.S. dollars)
Table 1. China: Selected Economic Indicators¹
2017 2018
2016
1.7
4.4
-2.1
17.7
3,098
1.5
3.9
-2.1
-2.1
16.8
15.2
3,236 3,168
0.2
27
2019
2020
0.7
1.8
2.7
3.5
-1.8
-1.0
16.0
14.5
3,223 3,357
2021
1.6
3.0
-0.7
13.8
3,448
2022
1.5
2.7
-1.0
14.0
3,696
China's low stock of gross official reserves suggests that the nation is vulnerable to a balance of payment crisis and a large
a. devaluation of the CNY
b. China's large NIIP should be consistent with the fact that it supplies capital and invests in the rest of the world
c. The fact that China has a large and positive NIIP position means that the has relatively high savings rates
d. China…
arrow_forward
Find US net export (current account balance) and its relation with US savings and investment. Draw a figure to show it.
arrow_forward
Exchange rate topic: When the exchange rate changes, will the European divers on vacation overseas pay a different price for their scuba equipment rentals?
arrow_forward
The diagram to the right most likely shows the impact on the Canadian economy of
A. an increase in the worldwide demand for petroleum products, a major Canadian export good.
B. changes in world tastes in favour of Canadian goods.
C. a decrease in foreign incomes.
D. an outbreak of inflation outside of Canada.
If the Bank of Canada makes no transactions in the foreign-exchange market, the Canadian dollar will undergo
a depreciation.
Use the three-point curve drawing tool to show how a flexible exchange rate serves as a "shock absorber" to the external
shock depicted in the accompanying graph.
Carefully follow the instructions above, and only draw the required objects.
………….
Price Level (P)
FO
Real GDP (Y)
ASO
AD1
ADO
Q
arrow_forward
Question-1) -a) What is schematic balance of payments account table?
Draw and explain.
b) How does international trade effect economic growth?
arrow_forward
Question
Match the term to its correct definition.
Column A
1.
2.
3.
4.
5. f
6.
Asia-Pacific Economic Cooperation (APEC)
European Union
International Trade Agreements
North American Free Trade Agreement (NAFTA)
O a
O b
O c
Od
Protectionism
United Nations (UN)
What happens when a nation's currency depreciates?
Its products become cheaper to other nations.
Its trade decreases.
Its trade increases.
Its products become more expensive to other nations.
Question 3 (1 point)
Column B
a. A trade agreement between the United States, Mexico,
and Canada established in 1994 and renegotiated as the
United States-Mexico-Canada agreement.
b. A political and diplomatic organization established to
promote economic and social cooperation between
nations.
c. Multinational agreements on trade conditions.
d. A political and economic union of European states.
e. An economics forum consisting of 21 countries in the
Asia-Pacific region.
f. The concept of protecting a country's domestic industries
from foreign…
arrow_forward
Bb NJCU Blackboard Ultra X
Content
MindTap - Cengage Le X
h Hulu | Watch
XG Suppose that Italy and X b Answered: 3. The pric X +
ng.cengage.com/static/nb/ui/evo/index.html?deploymentld3D5982817632378017929309483&elSBN=9780357133606&snapshotld%=2428921&id3D11...
>>
CENGAGE MINDTAP
Q Search this course
Homework (Ch 03)
i
When a country has a comparative advantage in the production of a good, it means that it can produce this good at a lower opportunity cost than its
trading partner. Then the country will specialize in the production of this good and trade it for other goods.
The following graphs show the production possibilities frontiers (PPFS) for Candonia and Lamponia. Both countries produce lemons and coffee, each
initially (i.e., before specialization and trade) producing 12 million pounds of lemons and 6 million pounds of coffee, as indicated by the grey stars
marked with the letter A.
Candonia
Lamponia
A-Z
32
32
28
28
PPF
24
20
20
16
16
12
12
PPF
A
4.
bongo
8.
12
16
20
24
28
32
8…
arrow_forward
9. Balance of payments
The following tables show a hypothetical balance of payments statement for the United States. (Note: All values are in billions of dollars.)
Complete the tables by filling in the missing cells. (Hint: Use the negative sign for all debits, and assume that the total balance of payments equals
zero.)
Balance of Payments
CURRENT ACCOUNT
Debits
Credits
Balance
U.S. Merchandise Exports
500
.S. Merchandise
-400
UImports
Balance of Merchandise Trade
U.S. Service Exports
U.S. Service Imports
-340
Balance on Service Trade
80
Balance on Goods and Services
Income Receipts of Americans from Abroad
650
Income Receipts of Foreigners in the U.S.
Net Income Receipts
35
Net Unilateral Transfers
Balance on Current Account
-615
Income Receipts of Foreigners in the U.S.
Net Income Receipts
35
Net Unilateral Transfers
Balance on Current Account
-615
CAPITAL ACCOUNT
Debits
Credits
Balance
Foreign Investment in the U.S.
900
U.S. Investment Abroad
-550
Balance on Capital Account
OFFICIAL…
arrow_forward
Video Link: https://youtu.be/SG8DCgjkGzY
The opening of the video, Global Mind: The Future of Globalization and Its Impact on Our World, is quite dramatic. Specifically, the narrator notes:
Globalization affects all people in every aspect of life. Because of innovation and communication technologies, we're all connected; giving us instant access to collective knowledge, culture, societies, partnerships and friendships. That is Globalization. The bottom line is the world is changing; trends around time, space, and place.
Given this general understanding along with the other material profile in the video, please identify from the following statements those two that are true and those two that are false. (T=TRUE, F=FALSE)
Statement 1: a father of his daughter, Ever since she got an iPad she wants learn all about her national culture, particularly finding out the latest news about local celebrities.
Statement 2: Technology is expanding to developing countries and will connect us all…
arrow_forward
how does "International Flow of Funds" have to do with printing and frbracation compaines? please type your answer.
arrow_forward
Question 5
(a) Under what condition will a downward slopıng foreign exchange supply curve produce
market instability?
(b) Foreign exchange markets are usually stable in the long-run. The price adjustment
process in response to goods and services may, however, be inelastic in the short-run.
With the aid of a graph, explain the adjustment of the trade balance to an exchange
rate depreciation. Substantiate your reasoning.
arrow_forward
Question 2
Table 1 represents the components of the UAE current account balance during 2019-2020.
Table 1 Current Account Balance in Billion Dirhams
2019
2020
Exports:
Goods
1152.4
1003.0
228.2
Services
Total Exports
Imports:
Goods
331.5
856.9
774.1
Services
323.9
218.6
Total Imports
Net Exports
Net transfers + investment income net
Investment income Net
7.6
-1.7
Net transfers
Total Transfers
Current account Balance
Source Central Bank of UAE
-173.6
-159.7
1. Complete table 1
2. Interpret your results.
arrow_forward
Using the data calculate the balance on current account for this economy.
The value of the current account is: $
Round your solution to the nearest whole number and be sure to include a negative sign if necessary.
Current Account
Value
Balance
Exports of Goods
$500
Imports of Goods
1600
Balance of Trade
- 1100
Exports of Services
Imports of Services
Balance of Services
350
-300
50
50
Income Received on
400
Investments
Income Payments on
-700
Investments
Net Income on
-300
Investments
Net Transfers
-100
arrow_forward
17. Exchange rates and U.S. exports: A graphical relationship
The following graph shows exports from the United States to Japan. (Note: U.S. exports are measured in yen on this graph, which will enable you to
see U.S. exports on the same graph as Japanese exports in a later problem.)
EXCHANGE RATE (Dollars per yen)
Exports from the U.S.
EXPORTS (Yen)
Exports from the U.S.
?
Referring to the graph, why does the line showing exports from the United States slope upward?
The lower the price of the yen in term of dollars, the higher the exports from the United States to Japan.
The higher the price of the yen in term of dollars, the higher the exports from Japan to the United States.
The higher the price of the yen in term of dollars, the lower the exports from the United States to Japan.
The lower the price of the yen in term of dollars, the lower the exports from the United States to Japan.
Suppose that the exchange rate goes from $10 per 1,000 yen to $8 per 1,000 yen.
On the previous…
arrow_forward
QUESTION 3
Suppose the price of platinum were to rise. Using a diagram, explain how the change in the price of this commodity would affect the rand-dollar exchange rate, ceteris paribus.
arrow_forward
Consider this table, which shows hypothetical balance-of-payments data for the United States.
Select the correct value for each of the boxes.
Simplified Balance of Payments (Billions of Dollars)
Account
Net Balance
Merchandise
Services
Income
Unilateral Transfers
Current Account
Financial Account
Statistical Discrepancy
Trade Balance
-5
-3
-2
+10
-3
0
an American business owner purchases chocolates from Belgium in order to sell them in her shops. This would be entered as a
the
section of the U.S. current account.
The net value of the merchandise and services accounts combined gives the value of
I + G + X. If you rewrite the equation as X = GDP - (C+1+G), you can see that the current_
item under
within the national income accounting equation GDP = C +
U.S. value of X implies that
This means that the United States is producing than it is consuming, making it a
Any surplus or deficit in one account must be offset by deficits or surpluses in other balance-of-payments accounts. Because the…
arrow_forward
3) State whether each of the following events involves a financial flow to the U.S. economy or away from the U.S. economy:
a. Export sales to Germany
b. Returns being paid on past U.S. financial investments in Brazil
c. Foreign aid from the U.S. government to Egypt
d. Imported oil from the Russian Federation
e. Japanese investors buying U.S. real estate
arrow_forward
Has the globalisation of international trade and banking always been beneficial for the economies of countries ? Explain .Answer :
arrow_forward
Country: Brazil
Part 1 - What kinds of specific actions has the IMF taken in order to address economic or financial crises of your focus country? What is an example of any relationship or interaction that your focus country has had with the IMF?
Part 2 – What are 3 examples of FDI news related to your focus country? (this could include information about investment promotion activity that your country sponsors/promotes)
Part 3 – Please post images related to the following topics (include some verbiage explaining them)
-FDI
-foreign exchange market
-regional economic integration
arrow_forward
SEE MORE QUESTIONS
Recommended textbooks for you
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Related Questions
- Question: "In a scenario where a country operates under a floating exchange rate system, what would likely be the effect of a significant increase in its central bank's interest rates on the country's current account balance? Assume other global economic conditions remain constant." a) The current account balance will improve due to increased foreign investment. b) The current account balance will deteriorate due to increased imports and decreased exports. c) The current account balance will improve due to decreased imports and increased exports. d) The change in interest rates will have no effect on the current account balance.arrow_forwardpoints) possible Dinotopia's Balance of Payments Account, 2014 (billions of S) CURRENT ACCOUNT Exports of products and services Imports of products and services Net investment/labour/transfer income FINANCIAL ACCOUNT Dinotopian investments in R.O.W. R.O.W. Investments in Dinotopia 594 -534 30 - 117 116 The table shown above has selected data from Dinotopia's 2014 Balance of International Payments. From these data it can be determined that in 2014 Dinotopia had a O A. financial account balance of $1 billion. OB. current account balance of $10 billion. C. current account balance of $624 billion. O D. current account balance of $60 billion.arrow_forwardTrue / False Question , explain breifly ( 3 sentences would be enough ) 1. Imports into Japan are positively correlated with the value of the yen.arrow_forward
- 20- Balance of payments (BOP) is measuring all international economic transactions between the residents of a country and foreign residents. Please expand the statement by discussing what economic activities are measured by BOP? And why it always be balanced?arrow_forwardA new accountant works on the Balance of Payments of a country and records the following into the financial account.Which is the only one recorded correctly? Select one: a. Transfer of ownership of assets b. External assets c. Trade in goods d. Imports of services e. Incomes paid to people working in a country temporarilyarrow_forward5:06 A & & & O M P Page 2 of 5 QUESTION 2 The table below contains data on international transactions for the country of Econia. All figures are in thousands of Econia Dollars (E$), and you may assume that there is no statistical discrepancy generated by the collection of the data on the various kinds of transactions. Complete the table by filling in the light-blue shaded cells. Payments from the rest of the world All figures in thousands of E$ Payments from Econia to the rest of the world Net Payments to Econia to Econia Sales and purchases of goods & services Factor payments 5,250 2,500 1,500 1,000 Transfers 750 1,250 -500 Sales & purchases of assets 10,000 Total Current Account 10,250 Total Financial Account Page 3 of 5 QUESTION A3arrow_forward
- arrow_forwardInternational Macroeconomics a) Why do economists typically view trade as beneficial to all countries involved? Explain what are the gains to trade. Are all individuals within a country better off as a resultof trade with other countries? Explain your reasoning. b) Consider a country that adopts a fixed exchange rate regime. What are the potential benefitsof adopting a fixed exchange rate regime? What are the potential costs of adopting a fixedexchange rate regime?arrow_forwardView the data below for the exchange rate between the US dollar and the Japanese yen. How many yen could you get per dollar at the earliest date shown on the chart? Explain. How many yen could you get per dollar at the most recent date shown on the chart? Explain. Has the dollar appreciated or depreciated in value over time? Explain.arrow_forwardNews Analysis: Exchange rates hold the key to trade between Japan and the United States (NEW) 3. Exchange rates and U.S. exports: A graphical relationship The following graph shows exports from the United States to Japan. (Note: U.S. exports are measured in yen on this graph, which will enable you to see U.S. exports on the same graph as Japanese exports in a later problem.) EXCHANGE RATE (Dollars per yen) Exports from the U.S. Exports from the U.S. ? ( · Xarrow_forwardCase I: The Effect of War on the Economy of El Dorado If a war broke out abroad, it would affect the El Dorado economy in many ways. Use the model of the large open economy to examine each of the following effects of such a war. What happens in the El Dorado to saving, investment, the trade balance, the interest rate, exchange rate, price level and unemployment? (To keep things simple, consider each of the following effects separately.) Questions a. The El Dorado government, fearing it may need to enter the war, increases its purchases of military equipment. b. Other countries raise their demand for high-tech weapons, a major export of the El Dorado. The war makes El Dorado consumers uncertain about the future, and the consumers save с. more in response. d. Analyze the combined effects of (a) & (b) on Aggregate Demand (AD), Money Supply and Money Demand in the El Dorado Economy.arrow_forwardQUESTION 4 Consider the following two figures. Japanese Yen per 1 uS Dollar Graph Danish Krone per 1 Euro Graph 12 Mar 2018 16:00 UTC - 11 Apr 2018 16:48 UTC 12 Mar 2018 16:00 UTC - 11 Apr 2018 16:10 UTC 107.07591 7.4648491 106, 39703 7.4552022| 1d5.1Ma16 105.03928 7.4359083. 104.36040 7.4262613 Apr9 Mar 12 Mar 12 Mar 19 Mar 26 | Apr 2 Apr 2 | Apr 9 Mar 19 Mar 26 Which of the following statements is correct? A. the left figure describes a fixed exchange rate; the right figure describes a fixed exchange rate O B. the left figure describes a flexible exchange rate; the right figure describes a flexible exchange rate C. the left figure describes a fixed exchange rate; the right figure describes a flexible exchange rate D. the left figure describes a flexible exchange rate; the right figure describes a fixed exchange ratearrow_forwardarrow_back_iosSEE MORE QUESTIONSarrow_forward_ios
Recommended textbooks for you
- Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax