balance of payments. questions

633. The current account of the UK balance of payments records
a)Transactions in financial assets such as stock and bonds
b)Trade in goods only
c)Trade in services only
d) Trade in goods and services, investment income and transfers
ANSWER: D
634. An economist might argue that a current account deficit can be consistent with a healthy economy
a)when the economy is not growing so fast -- wrong, because even if an economy is not growing so fast, because there is no connection and with a slow growth in economy there can be both deficit and surplus
b)when the deficit is partly due to a rise in imports of new technology - right, because if there is an import of new technology, it might affect production and productivity in future by increasing capacity utilisation
c)when the deficit is partly due to a rise in standards of living of consumers - wrong, because rise in standards of living of consumers might and so increase in demand of imported goods will mean that there will be no expand in production and productivity in domestic goods and services
d)all of the above - wrong
ANSWER: B
635. Which one of the following would appear as a credit item in the UK balance of payments?
a)the purchase by a French company of a UK insurance business - money coming into the country
b)money sent by UK residents to their relatives overseas - money going out
c)expenditure by the british government in maintaining foreign embassies overseas - money going out
d)the expenditure of Japanese tourists on holiday in Britain - I don’t know
ANSWER: D
636. ANSWER: C
637. Which one of the following is a debit item on the current account of the UK’s balance of payments?
a) foreign tourists choosing to spend money in London whilst on holiday - money spent in country
b)sales of Sky televison programmes to the US - money coming in
c)exports from UK ports transported on UK merchant ships - money coming in
d)the costs of supporting UK armed forces in overseas counties - money going out
ANSWER: D
638. A government may seek to improve the current account of the balance of payments by introducing either expenditure-reducing or expenditure-switching policies. Which of the following expenditure-reducing policy?
a)a rise in income tax- right- reduces expenditure by domestic residents
b)devaluation of the currency - wrong, will not reduce expenditure
c)the introduction of an export subsidy - increase in government expenditure
d)the introduction of an import tariff - expenditure-switching policy
ANSWER: A
639. “Increase in imports causes the UK’s current account deficit to worsen by 4 billion” Which of the following is most likely to have the situation described in the headline? An increase in the UK’s
a)exchange rate - right, with a rise in the exchange rate exports are less competitive and imports prices decrease and so Import volume increasing
b)aggregate supply
c)level f taxation
d)rate of productivity growth
ANSWER: A
640. Which one of the following items would appear as a credit item on the UK balance of payments?
a)the purchase of wine from a French vineyard by a British wine merchant - money going out
b)a group of american tourists flying to Britain using concorde - money not coming into
c)the purchase of UK produced digital cameras by a german company - money coming in
d)the purchase of shares in a british oil company by Japanese investors - private industry
ANSWER: C
641. ANSWER: B