1. Net transfers from abroad are a(n)
entry on the current account.
2. The current, financial, and capital accounts must sum to
.
3. The balance of payments is divided into three major accounts, the account, the
account, and the account.
4. The United States has a large on the current account but a large
on the financial account.
5. The government
foreign currency for dollars if it wants to peg the exchange rate at a higher rate than would normally prevail in the market.
6. If there is an excess supply of a country’s currency at the fixed exchange rate, there is a balance of payments .
7. The Bretton Woods agreement broke down in the early 1970s because Germany had too high an inflation rate relative to the United States
. (True/ False)
8. When European countries joined together to create the euro, they created a strong, central fiscal authority to unify the finances of its members. (True/ False) (Related to Application 3 on page 427.)