International economics

Table of Contents

1. Topic pack - International economics - introduction
2. Section 3.1 International trade (notes)
3. Section 3.1 International trade (questions)
4. Section 3.1 International trade - simulations and activities
5. Section 3.2 Exchange rates (notes)
6. Section 3.2 Exchange rates - questions
7. Section 3.2 Exchange rates - simulations and activities
8. Section 3.3 Balance of payments - notes
9. Section 3.3 Balance of payments - questions
   1. Current account - short answer
   2. The balance of payments - self-test questions
   3. Balance of payments - calculation (1)
   4. Balance of payments - calculation (2)
   5. Methods of correction - short answer
   6. Balance of payments - essay
   7. Can the beast be tamed? America's monster trade gap
10. Section 3.4 Economic integration - notes
11. Section 3.4 Economic integration - questions
12. Section 3.5 Terms of trade - notes
13. Section 3.5 Terms of trade - questions
14. Print View

Current account - short answer

Question 3

Identify the components of the Canadian current account that will be affected by each of the following transactions, and calculate the net effect on their invisible balance of the balance of payments.

(a) a tourist from Spain spends $800 in Canada
(b) a multinational company operating in Canada makes $20,000 profit and sends this to Sweden
(c) a large corporation located in France pays interest of $55,000 on a loan from a Canadian bank

Question 4

The following information shows the income elasticity of demand for imports in three countries:

(a) Explain the term 'income elasticity of demand'.

(b) According to the figures for income elasticity, and assuming that exports stay constant, calculate which country will experience the biggest improvement in their balance of payments on current account from a recession.