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AP Intermediate 2nd Year Open Economy Macroeconomics — practice questions

Explore 50 free Open Economy Macroeconomics questions in AP Intermediate 2nd Year Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Open Economy Macroeconomics questions and exercises with answers

Showing questions 1–30 of 50.

The balance of payments records a country's transactions with whom?Read the answer and worked solution →Trade in goods and services plus transfer payments are recorded in which account?Read the answer and worked solution →Receipts that residents get for free, without supplying goods or services, are called what?Read the answer and worked solution →Which of these is a transfer payment in the current account?Read the answer and worked solution →The balance of trade is the difference between exports and imports of what?Read the answer and worked solution →In the balance of trade, how is the export of goods entered?Read the answer and worked solution →A trade deficit arises when a country does what?Read the answer and worked solution →Which group of flows is covered by invisibles in the current account?Read the answer and worked solution →A surplus on the current account means the nation is what?Read the answer and worked solution →Which of these is a non-factor service within invisibles?Read the answer and worked solution →Net international earnings on labour, land and capital are called what?Read the answer and worked solution →On the capital account, buying a foreign asset is entered as what?Read the answer and worked solution →Shares of an Indian firm sold to a Chinese buyer are entered how in the capital account?Read the answer and worked solution →Capital account surplus arises when capital inflows are greater than what?Read the answer and worked solution →Which of these is a capital inflow?Read the answer and worked solution →A current account deficit must be financed by what, in an equilibrium BoP?Read the answer and worked solution →Without reserve movements, current account plus capital account equals what?Read the answer and worked solution →In a BoP deficit, what does the reserve bank do with foreign exchange?Read the answer and worked solution →A decrease in official reserves is called an overall BoP what?Read the answer and worked solution →Who are the ultimate financiers of any deficit in the balance of payments?Read the answer and worked solution →Which BoP item reflects the difficulty of recording every international transaction?Read the answer and worked solution →Official reserve transactions matter more under which exchange rate regime?Read the answer and worked solution →Transactions made for profit, independent of the BoP position, are called what?Read the answer and worked solution →Which transactions are determined by the gap in the balance of payments?Read the answer and worked solution →Which BoP item is treated as the accommodating item?Read the answer and worked solution →Under the IMF's BPM6 format, the BoP has which three accounts?Read the answer and worked solution →Under the new classification, trade in bonds and equity shares is placed in which account?Read the answer and worked solution →India exports goods worth 150 and imports goods worth 240 (million USD). The trade balance is what?Read the answer and worked solution →A trade balance of -90 and net invisibles of +52 give a current account balance of what?Read the answer and worked solution →The price of one currency in terms of another is called what?Read the answer and worked solution →

Worked practice questions

The balance of payments records a country's transactions with whom?

  1. The rest of the world
  2. Only its own central bank
  3. Only its state governments
  4. Only its domestic firms
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Correct answer: A. The rest of the world

BoP is a record of dealings between residents of a country and the rest of the world over a set period, usually a year.

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Trade in goods and services plus transfer payments are recorded in which account?

  1. Capital account
  2. Current account
  3. Reserve account
  4. Fiscal account
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Correct answer: B. Current account

The current account holds trade in goods, services and transfers, while asset deals go to the capital account.

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Receipts that residents get for free, without supplying goods or services, are called what?

  1. Factor incomes
  2. Export earnings
  3. Transfer payments
  4. Capital gains
Show answer and solution

Correct answer: C. Transfer payments

Transfers such as gifts, remittances and grants involve no goods or services in return.

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