International Finance Theory and Policy
by Steven M. Suranovic

Finance 6

Finance 6

Finance Problem Set 6 2-4

1. Suppose that each situation listed is the dominant effect on a country’s balance of payments.  Indicate by filling in the blank spaces whether the current account and capital account will be in surplus or deficit

 


Current Account Balance


Financial Account Balance

 A. a country is a net borrower
 from the rest of the world 

 

 

 B. a country is repaying past debts

 

 

 C. a country exports more goods and  services than it imports

 

 

 D. a country sells foreign assets and  repatriates the proceeds

 

 

 E. a country is a net lender
 to the rest of the world

 

 

 F. a country earns more income on  foreign assets than foreigners earn
 in its country

 

 

 

International Finance Theory and Policy - Chapter 6: Last Updated on 5 /01/08