托马斯国际金融课后习题答案托马斯国际金
Suggested answers to questions and problems (in the textbook) Chapter 2
2. Disagree, at least as a general statement. One meaning of a current account surplus is that
the country is exporting more goods and services than it is importing. One might easily
judge that this is not good—the country is producing goods and services that are
exported, but the country is not at the same time getting the imports of goods and services
that would allow it do more consumption and domestic investment. In this way a current
account deficit might be considered good—the extra imports allow the country to
consume and invest domestically more than the value of its current production. Another
meaning of a current account surplus is that the country is engaging in foreign financial
investment—it is building up its claims on foreigners, and this adds to national wealth.
This sounds good, but as noted above it comes at the cost of foregoing current domestic
purchases of goods and services. A current account deficit is the country running down
its claims on foreigners or increasing its indebtedness to foreigners. This sounds bad, but
it comes with the benefit of higher levels of current domestic expenditure. Different
countries at different times may weigh the balance of these costs and benefits differently,
so that we cannot simply say that a current account surplus is better than a current
account deficit.
4. Disagree. If the country has a surplus (a positive value) for its official settlements
balance, then the value for its official reserves balance must be a negative value of the
same amount (so that the two add to zero). A negative value for this asset item means that
funds are flowing out in order for the country to acquire more of these kinds of assets.
Thus, the country is increasing its holdings of official reserve assets.
6. Item e is a transaction in which foreign official holdings of U.S. assets increase. This is a
positive (credit) item for official reserve assets and a negative (debit) item for private
capital flows as the U.S. bank acquires pound bank deposits. The debit item contributes
to a U.S. deficit in the official settlements balance (while the credit item is recorded
\in deficit). All other
transactions involve debit and credit items both of which are included in the official
settlements balance, so that they do not directly contribute to a deficit (or surplus) in the
official settlements balance.
8. a. Merchandise trade balance: $330 - 198 = $132 Goods and services balance: $330 - 198 + 196 - 204 = $124 Current account balance: $330 - 198 + 196 - 204 + 3 - 8 = $119 Official settlements balance: $330 - 198 + 196 - 204 + 3 - 8 + 102 - 202 + 4 = $23
b. Change in official reserve assets (net) = - official settlements balance = -$23.
The country is increasing its net holdings of official reserve assets.
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10. a. International investment position (billions): $30 + 20 + 15 - 40 - 25 = $0.
The country is neither an international creditor nor a debtor. Its holding of international
assets equals its liabilities to foreigners.
b. A current account surplus permits the country to add to its net claims on foreigners.
For this reason the country's international investment position will become a positive
value. The flow increase in net foreign assets results in the stock of net foreign assets
becoming positive. Chapter 3
2. Exports of merchandise and services result in supply of foreign currency in the foreign
exchange market. Domestic sellers often want to be paid using domestic currency, while
the foreign buyers want to pay in their currency. In the process of paying for these
exports, foreign currency is exchanged for domestic currency, creating supply of foreign
currency. International capital inflows result in a supply of foreign currency in the
foreign exchange market. In making investments in domestic financial assets, foreign
investors often start with foreign currency and must exchange it for domestic currency
before they can buy the domestic assets. The exchange creates a supply of foreign
currency. Sales of foreign financial assets that the country's residents had previously
acquired, and borrowing from foreigners by this country's residents are other forms of
capital inflow that can create supply of foreign currency. 4. The U.S. firm obtains a quotation from its bank on the spot exchange rate for buying yen
with dollars. If the rate is acceptable, the firm instructs its bank that it wants to use dollars
from its dollar checking account to buy 1 million yen at this spot exchange rate. It also
instructs its bank to send the yen to the bank account of the Japanese firm. To carry out
this instruction, the U.S. bank instructs its correspondent bank in Japan to take 1 million
yen from its account at the correspondent bank and transfer the yen to the bank account
托马斯国际金融课后习题答案托马斯国际金
