MID TERM EXAMINATION Course International Finance Question 1 US Balance of Payments, 2011 (billions of dollars) Current Account Merchandise trade Exports 1,497 4 Imports 2,235 8 Services Balance 178 5 Travel and Transportation, net 31 3 Military transaction, net 11 6 Other services, net 158 8 Income receipts and payments balance 227 0 Unilateral transfers balance 133 0 Capital and Financial Account Capital account transactions, net 1 2 U S owned assets abroad 483 6 U S official reserve assets 16.
MID-TERM EXAMINATION Course: International Finance Question 1: US Balance of Payments, 2011 (billions of dollars) Current Account Merchandise trade Exports Imports 1,497.4 -2,235.8 Services Balance Travel and Transportation, net Military transaction, net Other services, net 178.5 31.3 -11.6 158.8 Income receipts and payments balance 227.0 Unilateral transfers balance -133.0 Capital and Financial Account Capital account transactions, net -1.2 U.S.-owned assets abroad U.S official reserve assets U.S other assets abroad Foreign-owned assets in the U.S Foreign official assets in the U.S Other foreign assets in the U.S Financial derivatives, net Statistical discrepancy -483.6 -16 -467.6 1,000.9 211.9 789.0 39.0 -89,2 Given the items shown in the above table, calculate the U.S Current account balance, Financial account balance and Official settlement balance Question Using the diagrams on the money market and foreign exchange market, explain the impact of an increase in US output and decrease in EU money supply on exchange rate E(USD/EUR) Question Based on the monetary model to exchange rates, explain the impact of an increase in U.S interest and increase in EU output on exchange rate E(USD/EUR) Question Based on the real exchange rate approach to exchange rates, explain how does an increase in the real exchange rate affect exports and imports?