problem 1) Most frequently traded currency in the foreign exchange market is:

(a) British pound.
(b) Japanese yen.
(c) Chinese yuan.
(d) U.S. dollar.

problem 2) Euro is now a official currency of all of the following countries except:

(a) France.
(b) Slovenia.
(c) Great Britain.
(d) Spain.

problem 3) Balance of trade deficit occurs when the country:

(a) exports more goods than it imports.
(b) buys more goods from rest of the world than it sells.
(c) buys more stocks and bonds from rest of the world than it sells.
(d) both (b) and (c).

problem 4) Which of the following transactions is a debit in the current account?

(a) export of merchandise
(b) export of services
(c) gift to foreigners
(d) foreign bond purchase

problem 5) Which is essential to "balance" the BOP statement?

(a) Reserve inflow
(b) Statistical discrepancy
(c) Debit transaction
(d) Credit transaction

problem 6) In the BOP, travel and tourism are included in a category of:

(a) unilateral transfers.
(b) financial account.
(c) merchandise account.
(d) services account.

problem 7) Interest earned on foreign holdings of U.S. federal, state and local government debt are recorded in the:

(a) services account.
(b) merchandise account.
(c) transfers account.
(d) financial account.

problem 8) A present account surplus implies that:

(a) country is a net lender with rest of the world.
(b) country is running a net capital account surplus.
(c) foreign investment in domestic securities is at very low levels.
(d) All of the above.

problem 9) Security purchases in United States by foreigners is

(a) a credit item in the current account.
(b) a debit item in the financial account.
(c) a credit item in the financial account.
(d) a debit item in the current account.

problem 10) Merchandise exports minus imports equal the:

(a) basic balance.
(b) liquidity balance.
(c) official settlements balance.
(d) balance of trade.