Answer the following statements true (T) or false (F)
1. In the balance of payments statement, a current account deficit is always matched by a capital and financial accounts surplus.
2. When a nation is experiencing a balance-of-payments deficit, its treasury or central bank will engage in a net sale of its official reserves.
3. The purchase of a foreign hotel by a U.S. company is recorded as a credit in the financial account of the U.S. balance-of-payments statement.
4. In the dollar/yen market, if the supply of yen increases other things being equal, the dollar will appreciate.
5. Relatively high rates of U.S. inflation compared to other countries will increase the supply of, and decrease the demand for, dollars in foreign exchange markets.
1. T
2. T
3. F
4. T
5. T
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Which of the following sets of preferences satisfies the property of transitivity?
a. Cookies are preferred to pie. Pie is preferred to brownies. Cookies are preferred to brownies. b. Cookies are preferred to pie. Brownies are preferred to pie. Pie is preferred to cookies. c. Cookies are preferred to ice cream. Ice cream is preferred to brownies. Brownies are preferred to cookies. d. Cookies are preferred to pie. Ice cream is preferred to cookies. Pie is preferred to ice cream.
Government bureaus are likely to be very inefficient because:
a. they are overly concerned with profit-maximization b. they face intense competition c. they seek to fulfill their mission and then dissolve d. none of the above