6. Suppose Lufthansa buys 10 Boeing 747s for $150 million in 1991, financed by a five-year loan from the U.S. Export-Import Bank. There is a one year grace period on principal and interest payments. The net impact of this sale in 1991 is
a) a $150 million reduction in the U.S. trade deficit
b) a $150 million reduction in the U.S. capital account surplus
c) a 0 change in the U.S. balance of payments in 1991
d) all of the above
e) none of the above

7. The method to make the official balance of payment equal zero is through the addition of
a) the fudge factor
b) the statistical discrepancy
c) the balance on current account
d) the balance on capital account
e) none of the above

8. Tourism shows up on the
a) merchandise account
b) current account
c) capital account
d) a and c above
e) none of the above

9. In a freely floating exchange rate system, if the current account is running a deficit
a) the balance of payments must run a deficit
b) the balance of payments must be zero
c) the capital account must run a surplus
d) b and c above
e) none of the above

10. The accounting statement that summarizes all the economic transactions between residents of the home country and residents of all other countries is called the
a) balance of trade
b) current account balance
c) balance of payments
d) capital account balance
e) none of the above

11. The redemption of U.S. treasury bonds by a Frenchman shows up as
a) a credit on the capital account
b) a debit on the trade account
c) a credit on the official reserves account
d) a debit on the official reserves account
e) none of the above

12. The sale of American computers to the Spanish government shows up as
a) a debit on the official reserves account
b) a credit on the official reserves account
c) a credit on the merchandise trade account
d) a debit on the current account
e) none of the above

13. In a freely-floating exchange rate system, the sale of Japanese cars to the United States will be offset by which item on the U.S. balance of payments?
a) a credit on the current account
b) a credit on the capital account
c) a debit on the trade account
d) a or b
e) b or c

14. Recent U.S. trade deficits can be attributed to
a) Japanese protectionism
b) high U.S. wages and benefits
c) lack of American competitiveness abroad
d) the U.S. savings deficit
e) all of the above

15. The U.S. savings deficit can be attributed, in part, to
a) the growing U.S. budget deficit
b) high real interest rates abroad
c) low American investment in plant and equipment
d) demographic factors

17.  A nation that is running a savings deficit
a) must spend more than it produces
b) must have a net capital outflow
c) both of the above

18. The Japanese current account surplus can best be attributed to
a) the high rate of Japanese domestic investment
b) Japanese protectionism
c) the high rate of Japanese savings
d) the government budget surplus

19. In order to reduce its current-account deficit, the United States must do which of the following?
a) reduce the federal budget deficit, or increase the surplus
b) raise national product relative to national spending
c) increase savings relative to domestic investment
d) all of the above

20. The most likely way to reduce the Japanese trade surplus is to
a) devalue the Japanese yen
b) impose quotas and tariffs on imports from Japan
c) boost Japanese savings
d) boost Japanese consumption
e) all of the above
answers(  6 d 7 b 8. b 9 d 10 c  11 e. 12.c 13. b 14 a 15 d 17. a 18.c  19.d  20. d)