17. If there are no statistical discrepancies, countries with current accountdeficits must receive net capital inflows.(a) True, because net exports must finance net capital outflows.(b) True, because net imports must be financed by net capital inflows.(c) False, because countries might export less and yet not get any capitalinflows to pay their exports hence incur debt.(d) False, because countries might export more and yet not get any cap-ital outflows as they merely accumulate forex reserves18. Although the export ratio can be larger than one - as it is in Singapore -the same cannot be true of the ratio of imports to GDP.(a) True, you could export more than you can consume, but you cannotimport more than you can consume based on your income(b) False, imports can be greater than GDP because trade balance canbe negative.(c) False, imports can be greater than GDP because excess exports canhelp finance imports.(d) True, you could export more than you can produce, but you cannotimport more than you can produce because you cannot pay for it19. If the dollar is expected to appreciate against the yen, uncovered interestparity implies that the U.S. nominal interest rate must be greater thanthe Japanese nominal interest rate.(a) False, the dollar return minus its expected appreciation should equalthe return on Japanese assets.(b) False, the dollar return plus its expected appreciation should equalthe return on Japanese assets.(c) True, the dollar return minus its expected appreciation should equalthe return on Japanese assets.(d) True, the dollar return plus its expected appreciation should equalthe return on Japanese assets.

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17. If there are no statistical discrepancies, countries with current account deficits must receive net capital inflows. (a) True, because net exports must finance net capital outflows. (b) True, because net imports must be financed by net capital inflows. (c) False, because countries might export less and yet not get any capital inflows to pay their exports hence incur debt. (d) False, because countries might export more and yet not get any cap- ital outflows as they merely accumulate forex reserves

17. If there are no statistical discrepancies, countries with current account deficits must receive net capital inflows. (a) True, because net exports must finance net capital outflows. (b) True, because net imports must be financed by net capital inflows. (c) False, because countries might export less and yet not get any capital inflows to pay their exports hence incur debt. (d) False, because countries might export more and yet not get any cap- ital outflows as they merely accumulate forex reserves

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

17. If there are no statistical discrepancies, countries with current account
deficits must receive net capital inflows.
(a) True, because net exports must finance net capital outflows.
(b) True, because net imports must be financed by net capital inflows.
(c) False, because countries might export less and yet not get any capital
inflows to pay their exports hence incur debt.
(d) False, because countries might export more and yet not get any cap-
ital outflows as they merely accumulate forex reserves
18. Although the export ratio can be larger than one - as it is in Singapore -
the same cannot be true of the ratio of imports to GDP.
(a) True, you could export more than you can consume, but you cannot
import more than you can consume based on your income
(b) False, imports can be greater than GDP because trade balance can
be negative.
(c) False, imports can be greater than GDP because excess exports can
help finance imports.
(d) True, you could export more than you can produce, but you cannot
import more than you can produce because you cannot pay for it
19. If the dollar is expected to appreciate against the yen, uncovered interest
parity implies that the U.S. nominal interest rate must be greater than
the Japanese nominal interest rate.
(a) False, the dollar return minus its expected appreciation should equal
the return on Japanese assets.
(b) False, the dollar return plus its expected appreciation should equal
the return on Japanese assets.
(c) True, the dollar return minus its expected appreciation should equal
the return on Japanese assets.
(d) True, the dollar return plus its expected appreciation should equal
the return on Japanese assets.

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