practice questions: international economics

1. (a) i. What is balance of payments accounts? (1)ii. what are its main components? (1)iii. What principle is followed in entering each transaction in BoP? What is its implication? (2)(b) Describe the main components of current account and financial account. (4) 2. (a) Why is the concept of current account balance economically important? (2)(b) What is net international investment position (NIIP) of a country? Explain the sources of changes in NIIP? How does valuation changes affect NIIP of a country?(d) What possible explanation can be given for the paradoxical coexistence of negative NIIP and positive NII? 3. Can a country run a perpetual trade balance deficit? Explain.4. Can a country run a perpetual current account deficit. Explain.5. Current account deficit of a country can be looked at from different perspectives. Explain.6. How is current account determined in a small open economy?7. How is current affected by different types of shocks?8. How is current account determined in a productive economy ?