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Free CFA-Level-I Exam Braindumps (page: 304)

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PDF with 3963 Questions

Which of the following transactions belong to the Current account?

  1. Balance of services.
    II. Unrequited transfers.
    III. Purchase of a foreign company.
    IV. Income from foreign investments.
  2. I, II, III & IV
  3. I, II & III
  4. I only
  5. I, II & IV
  6. II only
  7. I & II
  8. III only
  9. IV only

Answer(s): D

Explanation:

The current account consists of Trade and Services balance, Net income from all foreign investments and Unrequited transfers, which include aid to foreign countries, losses due to expropriation of property by foreign governments, etc. Hence, I, II and IV are directly specified as part of the Current account. A purchase of a foreign firm is a capital investment and as such belongs to the Capital account.



John makes T-shirts and sells them only to American citizens and he purchases one bottle of French wine with his income. Which of the following will be true?

  1. John will not be affecting the U.S. trade deficit.
  2. John will be reducing the U.S. capital account surplus.
  3. John will be adding to the U.S. trade deficit.
  4. John will be reducing the U.S. trade deficit.

Answer(s): C

Explanation:

John adds to the U.S. trade deficit because he purchases imports why contributing no exports to the trade balance.



________ permits the producers of each nation to concentrate on the things they do best while trading for those things they do least well.

  1. None of these answers
  2. A tariff
  3. A quota
  4. Trade

Answer(s): D

Explanation:

Trade leads to mutual gains because it allows each country to specialize more fully in the production of those things that it does best.



What would the bid-ask spread be for pound sterling quoted at $14419-28?

  1. 6.4%
  2. 0.64%
  3. 6.2%
  4. 0.62%
  5. 0.63%

Answer(s): D

Explanation:

Percent spread = [(1.4428 - 1.4419)/1.4428] x 100 = 0.062%






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