Practice Questions
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Which of the following best describes the impact of a surplus in the current account on a country’s economy?
A surplus means the country sells more goods to other countries than it buys. Other options are incorrect because This option confuses spending with e...
How do changes in exchange rates influence a country's current account balance in the context of varying fiscal policies?
A weaker currency makes imports more expensive. Other options are incorrect because Many think a stronger currency means more exports; Some believe th...
How does a depreciation of the domestic currency typically affect the current account balance of a country?
When a country's currency loses value, its goods become cheaper for other countries. Other options are incorrect because This answer suggests that che...
How does globalization influence the current account balance by affecting net income and trade surpluses?
Globalization helps countries trade more easily. Other options are incorrect because This answer suggests that trade surpluses go down, which is not t...
How can an increase in net transfers affect a country's current account balance when considering the impact of foreign investments?
When net transfers increase, it means more money is coming into the country. Other options are incorrect because Some might think that more money alwa...
What does the current account balance primarily measure in an economy?
The current account balance shows how much a country earns from selling goods and services compared to what it spends on imports. Other options are in...
What does the trade balance in a current account represent?
The trade balance shows how much a country sells to others compared to how much it buys. Other options are incorrect because Some might think the trad...
Which of the following best describes how net income affects the current account balance?
When net income goes down, people and businesses spend less. Other options are incorrect because Some might think that more income always means more m...
Which of the following statements about the current account balance dynamics are true? Select all that apply.
Other options are incorrect because Some people think that more imports always hurt the balance; A surplus means selling more than buying, but it does...
If Argentina increases its imports significantly, what is the likely impact on its current account balance?
When a country imports more, it buys more from other countries. Other options are incorrect because Some might think that buying more means earning mo...
In the context of current account balance dynamics, if an increase in exports leads to a current account surplus, then an increase in imports is to a current account deficit as: A. Decrease in exports is to current account surplus B. Increase in domestic production is to current account surplus C. Decrease in net exports is to current account deficit D. Increase in foreign investment is to current account surplus
When a country imports more than it exports, it has fewer net exports. Other options are incorrect because This suggests that selling less abroad woul...
If Argentina experiences a significant increase in imports, what is the most likely immediate effect on its current account balance?
When imports go up, it means Argentina is buying more from other countries. Other options are incorrect because Some might think that more trade means...
Given the scenario where Argentina experiences a significant rise in imports of agricultural products, which of the following statements best categorizes the impact on its current account balance?
When Argentina imports more, it buys more from other countries. Other options are incorrect because This answer suggests that more exports will happen...
In the context of Argentina's economy, an increase in imports will likely lead to a decrease in __________, affecting the current account balance.
When a country buys more from other countries, it has fewer goods to sell abroad. Other options are incorrect because Some might think that more impor...
How would an increase in imports typically affect a country's current account balance and its economic health?
When a country imports more, it spends more money on goods from other countries. Other options are incorrect because Some might think that buying more...
Order the following steps that occur when a country experiences an increase in imports, affecting its current account balance.
When a country buys more goods from other countries, its exports become less than its imports. Other options are incorrect because Some might think th...
Argentina is experiencing a significant increase in imports due to rising consumer demand for foreign goods. How is this likely to affect Argentina's current account balance, and what broader implications might this have for the country's economic health?
When Argentina buys more foreign goods, it spends more money abroad. Other options are incorrect because This answer suggests that more imports will b...
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