Question Details

 An increase in the current account deficit 



1. Recently, the UK experienced an annual balance of trade representing a __________.
a. large surplus (exceeding £100 billion)	   c. level of zero
b. small surplus	                        d. deficit

 2. An increase in the current account deficit will place _______ pressure on the home currency value, other things equal.
a. upward
b. downward
c. no
d. upward or downward (depending on the size of the deficit)

 3. Which of the following would likely have the least direct influence on a country's current account?
a. inflation.
b. national income.
c. exchange rates.
d. tariffs.
e. a tax on income earned from foreign stocks.

 4. The North American Free Trade Agreement (NAFTA) increased restrictions on:
a. trade between Canada and Mexico.
b. trade between Canada and the U.S.
c. direct foreign investment in Mexico by U.S. firms.
d. none of the above.

5. The primary component of the current account is the:
a. balance of trade.	                           c. balance of capital market flows.
b. balance of money market flows.	                d. unilateral transfers.




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