国际金融学课后题答案

Chapter 1:
Keeping Up With a Changing World-Trade Flows，Capital Flows，and the Balance Of Payments
L Chapter Overview
The chapter begins by discussing on the importance of international economic integration, citing recent current events that demonstrate the widely varying opinions of the advantages and disadvantages of international trade and finance・ The chapter sets the stage to logically examine these opinions and stresses the need to begin by understanding how international transactions are measured・
The second section of the chapter defines the broad concept of globalization which includes increased market integration, the expansion of world governance, and the increased mobility of people and information; and the narrow focus of economic integration, which refers to the strengthening of existing and creation of new international linkages・ The chapter then proceeds to distinguish the real and financial sectors that link the world s economies. Historical data are presented to give a sense of the growth of world trade and transactions in global financial markets during the past few decades・
In the third section of the chapter, international balance of payments accounting is described in terms of a double entry bookkeeping system・ The components of each of the three major accounts, (1) the current account, (2) the private capital account, and (3) the official settlements balance, are discussed in detail. The usage of the terms balance of payments deficit and balance of payments surplus are equated to a positive official settlements balance and a negative official settlements balance respectively, as distinct from the term overall balance of payments which must be zero by construction・
The next section provides a series of concrete examples of international transactions and the ways that these impact the balance of payments accounts・ The examples used are: (1) The importation of an automobile, which registers as a debit under current account merchandise and a credit under capital flows in the category of foreign assets in the U.S. (2) The services consumed by a student who travels abroad, which registers as a debit under current account services, and a credit under capital flows in the category of foreign assets in the U.S. (3) The purchase of a domestic treasury bill by a foreign resident, which registers as a credit under capital flows as a foreign asset in the U.S., and as a debit under capital flows as a U.S. asset abroad・(4) The payment of interest by the U.S. on a foreign-held asset, which registers as debit under current account income and a credit under capital inflows in the foreign assets in the U.S. category. (5) The provision of humanitarian aid abroad by a U.S. charitable organizations in the form of a donation of wheat, which registers as a credit in the current account merchandise category, and a debit in the unilateral transfers category.
The next section provides a discussion of what it means for a country to be a net creditor or net debtor in terms of capital account balances・ The section applies the material to an examination of debt relief for heavily indebted poor countries (a hot political topic which may provide a good opportunity for class discussion).
The final section of the chapter relates current account balances to capital flows. It examines this issue based solely on accounting identities provided earlier. Domestic savings less domestic investment determine the current account balance as well as net capital flows. Thus, the current account balance is directly related to net capital flows.
II.Outline
A.Why It Is Important to Understand International Money and Finance
B・ International Economic Integration: The Importance of Global Trade and Financial Markets
1 ・ The Real and Financial Sectors of an Economy
2.World Trade in Goods and Services
3.Inteinational Transactions in Financial Assets
4.The Most Globalized Nations
C・ The Balance of Payments
1.Balance of Payments as a Double-Entry Bookkeeping System
2.Balance-of-Payments Accounts
a.The Current Account
1)Goods
2)Services
3)Income
b.Capital Account
c.The Official Settlements Balance
3.Deficits and Surpluses in the Balance of Payments
4.Other Deficit and Surplus Measures
D. Examples of International Transactions and How they Affect the Balance of Payments
1.Example 1: Import of an Automobile
2.Example 2: A College Student Travels Abroad
3.Example 3: A Foreign Resident Purchases a Domestic Treasury Bill
4.Example 4: The United States Pays Interest on a Foreign-Held Asset
5.Example 5: A Charitable Organization in the United States Provides Humanitarian
Aid Abroad
6.Example Combined
E・ The Capital Account and the International Flow of Assets
1.Example: A College Student
2.A Capital Account Surplus
3.The United States as a Net Debtor
4.Debt Relief for the Heavily Indebted Poor Countries
F・ Relating the Current Account Balance and Capital Flows
G・ Chapter Summary
IIL Fundamental Issues
1.How important is the global market for goods and services?
2.How important are the international monetary and financial markets?
3.What is a country's balance of payments, and what does this measure?
4.What does it mean for a country to be a net debtor or net creditor?
5.What is the relationship between a nation's current account balance and its capital flows? IV.Chapter Features
1 ・ Management Notebook: "What are the Most Globalized Firms?"
This notebook first considers the largest multinational enterprises (MNEs) in the world and then considers the world's most globalized finns. The measure of globalization that is used is the transnationality index of the United Nations Conference on Trade and
Development (UNCTAD). This measure averages the values of the ratios of foreign sales to total sales, foreign assets to total assets and employees abroad to total employees.
Typically the most globalized firms are the MNEs of smaller advanced economies.
For Critical Analysis: Being globalized should not be an objective in and of itself. A firm may want to globalize if there are gains that enhance its profitability. For example,
a firm may want to globalize if there are economies of scale to be enjoyed in doing so.
2.Management Notebook: "Are Trade and Foreign Direct Investment Substitutes or
Complements?"
Traditional thought has considered trade and foreign direct investment (FDI) as
alternative means of serving a foreign market. Consequently, trade and FDI have been viewed as substitutes. More recent research has shown 什mt the relationship between trade and FDI may likely be considerable more complex; suggesting that trade and FDI may be either substitutes or complements. FDI may serve as a means by which a firm can improve its competitiveness and increase trade as opposed to substitute for trade.
For critical analysis: The service sector tends to be very localized and does not typically
trade in intermediate products・ Hence, if a firm established a presence in a foreign market-to service a foreign market-it no longer needs to export to the foreign market・
3.Online Notebook: "Are U.S. Exports Understated Because of the Internet?”
This Notebook examines measurement problems in tracking international trade・ One particular problem is that small value exports-transactions of less than S2,500-need not be reported・ Because most internet transactions are small value transactions, U.S.
exports may be understated・ As a result, the U.S. trade deficit may not be as large as that reported by the U.S. Commerce Department.
For Critical Analysis: The U.S. trade deficit may not be as large as reported・ Hence, the large U.S. current account deficit may no be as large as reported・
V.Answers to End of Chapter Questions
ing the table provided above:
a.The balance on goods and services is a deficit of $21 Q00・
b.The current account balance is a deficit of S1,020,900・
c.The capital account balance would be a surplus of $1,020,900.
3.The balance on merchandise trade is the difference between exports of goods, 719 and
the imports of goods, 1,145, for a deficit of 426・ The balance on goods, services and income is 719 + 279 +284 - 1145 - 210- 269, for a deficit of 342. Adding unilateral
transfers to this gives a current account deficit of 391,卜342 + (-49)=- 391]. (Note that income receipts are credits and income payments are debits.)
4.Because the current account balance is a deficit of 391, then without a statistical
discrepancy, the capital account is a surplus of 391・ In this problem, however, the statistical discrepancy is recorded as a positive amount (credit) of 11. Hence,什w sum of the debits in the balance of payments must exceed the credits by 11 ・ So, the deficit of the current account must be greater than Hie surplus on the capital account by 11. The capital account, therefore, is a surplus of 391 - 11 = 380.
5. A balance-of-payments equilibrium (see page 19) is when the debits and credits in the
current account and the private capital account sum to zero・ In the problem above we do not know the private capital account balance・ We cannot say, therefore, whether this country is experiencing a balance-of-payments surplus or deficit or if it is in
equilibrium・
6.The current account is a deficit of $541,830 and the private capital account balance is a
surplus of $369,068・ The U.S., therefore, has a balance of payments deficit・
7.Positive aspects of being a net debtor include the possibility of financing domestic
investment that is not possible through domestic savings; thereby allowing for domestic capital stock growth which may allow job, productivity, and income growth・ Negative aspects include the fact that foreign savings may be used to finance domestic
consumption rather than domestic savings; which will compromise the growth
suggested above・
Positive aspects of being a net creditor include the ownership of foreign assets which can represent an income flows to the crediting country. Further, the net creditor position also implies a net exporting position・ A negative aspect of being a net creditor includes the fact that foreign investment may substitute for domestic investment.
8. A nation may desire to receive both portfolio and direct investment due to the type of
investment each represents・ Portfolio investment is a financial investment while direct investment is dominated by the purchase of actual, real, productive assets. To the extent that a country can benefit by each type of investment, it will desire both types of
investment. Further, portfolio investment tends to be short-run in nature, while FDI tends to be long-run in nature・ This is also addressed in much greater detail in Chapter
7.
9.Domestic Savings - Domestic Investment = Current Account Balance Domestic
Savings - Domestic Investment = Net Capital Flows Therefore, Current Account
Balance = Net Capital Flows
ing the equations above, private savings of 5 percent of income, government savings
of-1 percent, and investment expenditures of 10 percent would results in a current
account deficit of 6 percent of income and a capital account surplus (net capital inflows) of 6 percent of income・ This could be corrected with a reduction in the government deficit (to a surplus) and/or an increase in private savings.
11.The transnationality index for World Films is:
(533/1233 + 227/615 + 322/1256)/3 = (0.432 + 0.369 + 0.256)/3 = 1.057/3 = 0.352. The transationality index for Music Publishers Worldwide is:
(455/2456 + 246/809 + 900/2467)/3 = (0.185 + 0.304 + 0.365)/3 = 0.854/3 = 0.285.
Based on this index, World films is the most globalized firm.
VI.Multiple Choice Questions
1.Globalization refers to:
A.o nly increasing market integration, while international economic integration refers to
the strengthening of existing international linkages of commerce and the addition of new international linkages・
B.only the expansion of world governance and global society, while international
economic integration refers to the strengthening of existing international linkages of commerce and the addition of new international linkages・
C.only the increased mobility of peoples and information, while international economic
integration refers to the strengthening of existing international linkages of commerce and the addition of new international linkages・
D.t he increasing market integration, the expansion of world governance and global
society, and the increased mobility of peoples and information, while international
economic integration refers to the strengthening of existing international linkages of commerce and the addition of new international linkages・
Answer: D
2.International economic integration refers to:
A.the expansion of world governance and society.
B・ the increased mobility of peoples and information・
C・ the strengthening of existing international linkages of commerce and the addition of new linkages・
D. the strengthening of existing international linkages of commerce but not the addition
of new linkages・
Answer: C
3.Globalization refers to ________ , and international economic integration refers to
A.a broader scope of the internationalization process, a narrower focus of the
internationalization process.
B.a narrower scope of the internationalization process, a broader focus of the
internationalization process.
C・ the same thing as international economic integration, the strengthening of
international linkages of commerce.
D・ None of the above.
Answer: A
4.Open trade in goods, services, and financial assets by leading economies of the world
at levels close to those observed today:
A.have never been experienced・
B・ had been experienced before World War I.
C.had been experienced between World War I and World War II.
D.had been experienced only immediately before the Korean conflict.
Answer: B
5.Real sector transactions deal with:
A.transactions in goods and services・
B・ transactions in financial assets.
C.transactions in both goods and services and financial assets.
D.transactions in neither goods and services nor in financial assets.
Answer: A
6.Financial sector linkages deal with:
A.transactions in goods and services.
B・ transactions in financial assets・
C・ transactions in both goods and services and financial assets.
D・ transactions in neither goods and services nor in financial assets.
Answer: A
7.In terms of real sector activity, world trade in goods and services:
A.is important only to developed economies.
B・ is important only to developing economies・
C・ is important to both developed and developing economies・
D. is important to neither developed nor developing economies.
Answer: C
8.In the last 35 years, the nearly 6 percent per annum growth in world trade has led to
a ______ -fold cumulative increase in world trade・
A.two
B・ three
C・ four
D. five
Answer: D
9.When measured as a multiple of world exports of goods and services, foreign exchange
turnover in 2004 was approximately:
A. 12:1.
B. 38:1.
C. 61:1.
D. 50:1.
Answer: D
10.Over the last 35 years, the data on trade and financial flows show:
A.decreased real flows and decreased financial flows.
B.increased real flows and decreased financial flows.
C.decreased real flows and increased financial flows. D・ increased real flows and
increased financial flows・
Answer: D
11 ・If domestic investment is greater than domestic saving,
A.expenditures equal domestic income and net exports equal zero.
B.expenditures are greater than domestic income and net exports are negative・
C.expenditures are less than domestic income and net exports are positive・
D・ expenditures are greater than domestic income and net exports are positive zero.
Answer: B
12.If domestic investment is less than domestic saving,
A.expenditures equal domestic income and net exports equal zero.
B.expenditures are greater than domestic income and net exports are negative・
C.expenditures are less than domestic income and net exports are positive・
D・ expenditures are greater than domestic income and net exports are positive zero.
Answer: C
13.If domestic savings equals 10 and domestic investment equals 6, then the current
account balance equals:
A.-16
B.-4
C.+4
D.+16
Answer: C
14.If a nation^ domestic savings equals 6 and a nation s domestic investment equals 10,
then the nation is experiencing:
A. a net capital outflow.
B a net capital inflow.
C.no net capital inflow or outflow.
D・ a current account surplus.
Answer: B
15.If a nation's domestic saving is 25 and the nation s domestic investment is 30, then the
nation is experiencing:
A.a current account surplus.
B.a cuiTent account deficit
C・ a net capital inflow
D.both B and C
Answer: D
16.A current account deficit in the U.S. is:
A.necessarily bad because it represents a lack of domestic saving・
B.necessarily good because it represents foreign savings in the U.S.
C・ necessarily bad because it undermines the U.S.'s ability to experience economic growth ・
D.is neither good nor bad・
Answer: D
17.The balance of payments system
A.is another method for calculating GDP・
B.insures that the net exports are always equal to zero・
C.measures the total value of a domestic econom/s transactions with the rest of the
world.
D.attempts to limit the fluctuation in international exchange rates.
Answer: C
18.The balance on merchandise trade is a component of
A.the current account.
B.the capital account.
C・ foreign direct investment.
D.portfolio investment.
Answer: A
19. A debit entry in the balance of payments accounts represents
A.a transaction that includes a payment from abroad a domestic resident.
B.a transaction that includes a payment abroad by a domestic resident. C・ a decrease
in the current account deficit・
D・ an increase in the capital account surplus.
Answer: B
20.Which of the following transactions are not included in the current account?
A.Exports of manufactured goods・
B.Imports of manufactured goods・
C・ Payments of interest and dividends on foreign assets held by a domestic U.S.
resident ・
D.The purchase of foreign assets by a domestic U.S. resident.
Answer: D 21 ・When a country faces a current account deficit, it also faces:
A.a services trade deficit.
B.a capital account deficit.
C.a capital account surplus・
D・ a merchandise trade deficit.
Answer: C
22.In terms of balance of payments accounting, which of the following would be recorded
as a debit entry?
A.Exports of merchandise.
B.Exports of services.
C・ A foreigner's purchase of a U・S・ Treasure bond・
D・ An increase in a U.S. citizen's account at a foreign bank・
Answer: D
23.Given the following data, what is the countrys current account balance? Merchandise
trade balance = -120; Services trade balance = -45; Unilateral transfers made in excess of those received = 15.
A.-60
B.-90
C.-100
D.・150
Answer: D
24.Suppose an American tourist travels to Mexico, and uses U.S. dollars to purchase a
hotel room in Mexico City. This transaction is recorded as a
A.credit in the current account and debit in the capital account.
B.debit in the capital account and a credit in the current account.
C.credit in the capital account and debit in the current account.
D.credit in the capital account and debit in the capital account.
Answer: C
25・ Foreign direct investment is a component of
A.portfolio investment.
B.the current account.
C・ total trade in services.
D・ the capital account.
Answer: D
26.In order for the purchase of stocks to be categorized as foreign direct investment, it
must represent at least _______ percent of the foreign entity's outstanding stock
A. 1
B. 10
C. 25 D・ 40
Answer: B
27.Purchases of stock that are too small too be considered foreign direct investment are
classified as
A.depreciation.
B.investment spending・
C・ portfolio investment.
D・ capital investment.
Answer: C
28.After accounting for statistical discrepancies, a capital account
A. surplus will always imply a current account surplus.
B・ surplus will always imply a current account deficit.
C・ surplus will always exceed the associated current account surplus.
D・ deficit will always exceed the associated current account surplus.
Answer: B
29.The United States is currently a net debtor nation・ This necessarily implies that the
A.federal government owes money to foreign investors・
B.value of U.S. held assets abroad is lower than the value of foreign held assets in the
U.S.
C.value of the U.S. dollar is less than the average value of foreign currencies・
D.U・S・ is running a deficit in manufactured goods trade・
Answer: B
30. A balance of payments deficit is defined as a situation in which
A.Hie value of payments made to foreigners exceeds the value of payments received
from foreigners in a given period of time.
B.the federal government must borrow in order to meet its budget obligations・
C.the value of manufactured good exports is less than the value of imported
manufactured goods・
D.balance of payments credits exceed balance of payments debits・
Answer: A
31 ・In recent years, the U.S. has generally had a capital account
A.surplus and a current account surplus.
B.surplus and a current account deficit・
C・ deficit and a current account surplus・D・ deficit and a current account deficit・
Answer: B。