1.
Distinguish:
a.
Import and export:
i.
An import is a good or service brought in from abroad for sale (money
out, good/service in). An export is a product or service sold abroad (money in,
good/service out).
b.
Visible and invisible trade:
i.
Visible trade accounts for imports and exports of physical merchandise.
Invisible trade accounts for business transactions that occur with no exchange
of tangible goods. That includes customer service, intellectual property and
patents.
2.
State whether the following
are:
a.
A HK toy sold in UK
i.
Export
ii.
Visible
b.
French cheese sold in HK.
i.
Import
ii.
Visible
c.
A HK tourist holidaying in
Thailand
i.
Import
ii.
Invisible
d.
Cathay Pacific buying planes
from Airbus
i.
Import
ii.
Visible
e.
The HK Police Force buying
Russian weapons
i.
Import
ii.
Visible
f.
An Australian tourist staying
at HK Disneyland
i.
Export
ii.
Invisible
3.
In which part of the HK Balance
of Payments account would the following transactions be recorded:
a.
A US company buying shares on
the HK stock market
i.
The financial account: direct investment
b.
HK citizen sending wages earned
in UK back to HK
i.
Current account: income
c.
A HK company selling prawns
direct to France
i.
Financial account: direct investment
d.
An Italian firm investing in a
chain of restaurants
i.
Financial account: direct investment
e.
HK company paying dividends to
US shareholder
i.
Current account: income
4.
Which of the above transactions
are inflows of money to HK (and are therefore credits on the balance of
payments account) and which are outflows (and thus debits)?
a. Credits: a, b, c
b. Debits: e
5.
The fictitious figures below refer
to HK’s balance of payments for 2007, 08, 09 and 2010 Calculate for each year
a.
Balance on trade in goods
i.
2007
1. 42345 – 57600 = -15255
ii.
2008
1. 123000 – 245786 = -122786
iii.
2009
1. 56363 – 66666 = -10303
iv.
2010
1. 853970 – 900000 = -46030
b.
Balance on trade in services
i.
2007
1. 654000 – 124000 = 530000
ii.
2008
1. 12789 – 9876 = 2913
iii.
2009
1. 46879 – 38945 = 7934
iv.
2010
1. 345876 – 200000 = 145876
c.
The balance of trade
i.
2007
1. 530000 – 15255 = 514745
ii.
2008
1. 2913 – 122786 = -119873
iii.
2009
1. 7934 – 10303 = -2369
iv.
2010
1. 145876 – 46030 = 99846
d.
The current account balance
i.
2007
1. 514745 – 12500 – 34000 = 468245
ii.
2008
1. -119873 + 123765 + 47987 =
51879
iii.
2009
1. -2369 + 100000 – 99999 = -92368
iv.
2010
1. 99846 + 34987 = 134833
