Module 7

Question 1

Export

Answer 1

Any transaction that brings money into the country

Question 2

Import

Answer 2

Any transaction that takes money out of a country

Question 3

Balance of Payments

Answer 3

We measure imports and exports in this accounting system

Question 4

2 parts in Balance of Payments

Answer 4

1) International Transactions Accounts (ITA)

2) International Investment Position (IIP)

Question 5

Accounts in International Transactions Accounts

Answer 5

1) Current Account
2) Capital and Financial Accounts
3) Statistical Discrepancy

(Current account and capital and financial accounts must sum to zero, the remainder is statistical discrepancy)

Question 6

Makeup of Current Account

Answer 6

1) Exports and Imports
2) Primary & Secondary Income
3) Government Transactions

Question 7

Primary Income

Answer 7

When a person is paid for their job by someone in another country

Question 8

Secondary Income

Answer 8

Sending money to people in other countries

Question 9

Capital Account

Answer 9

Mostly licenses and intellectual property (copyrights, patents)

Question 10

Financial Accounts

Answer 10

Assets

1) US owned assets in other countries
2) Foreign owned assets in the US

Question 11

Exchange Rate

Answer 11

The price of dollars in terms of another currency

Question 12

Floating exchange rate

Answer 12

An exchange rate set by a market

Question 13

Fixed exchange rate

Answer 13

Exchange rate set by a government

Question 14

What causes the up and down movement of currency in an exchange rate?

Answer 14

Scarcity

Question 15

Exports ________ the value of your currency and imports _________ the value

Answer 15

Increase

Decrease

Question 16

Appreciation

Answer 16

Exchange rate rose because of the market

Question 17

Depreciation

Answer 17

Exchange rate fell because of the market

Question 18

Revaluation

Answer 18

Government raised the exchange rate

Question 19

Devaluation

Answer 19

The government lowered the exchange rate

Question 20

Import prices ________ when the $ falls

Export prices _____ when the $ falls

Answer 20

Rise

Fall

Question 21

Article 2 section 2

Answer 21

President shall have the power, with advice and consent of senate, to make treaties, provided 2/3 of senators present concur; and he shall nominate and appoint ambassadors

Question 22

Section 232

Answer 22

President can place tariffs on goods if necessary for national security - protect resources needed by the military

Question 23

How do countries control trade?

Answer 23

1) exchange rates
2) tariffs
3) quotas
4) licensing
5) health and safety rules
6) ownership requirements/capital controls