1. List the items under each main balance of payments account and explain each by giving examples.

2. Give two debit and two credit item transactions as discussed above (One example given was U.S. foreign direct investment in Mexico entered in U.S. balance of payments as a debit item)

3. If there is a significant current account deficit in a country, how would the adjustment back to balance of payments come about under 1.) fixed exchange rates, 2.) purely floating exchange rates, 3) managed float?

4. Why is "beggar thy neighbor" policy is a dangerous one to pursue? Explain the underlying process that leads to self-destruction.

5. Give your own example of three stages in which the J-Curve effect occurs.

6. Give a brief historical description of capital mobility and its evolvement over time

7. Explain capital flight and give three examples of how capital flight might occur. Be sure to use your original examples.

Answer rating: 100% (QA)

Balance of Payments Accounts 1 Main Accounts Current Account Tracks importsexports of goods and services income payments eg interest dividends and cur... View the full answer