Question 1

The global financial crisis has pushed China closer to ________.

Accepted Answer

A)  operating independently from the central banks of other countries 
B)  discontinuing its relationship with the Bank for International Settlements 
C)  liberalizing its currency 
D)  controlling its currency 
A)  operating independently from the central banks of other countries 
B)  discontinuing its relationship with the Bank for International Settlements 
C)  liberalizing its currency 
D)  controlling its currency C

Question 2

Which of the following best describes the special drawing right?

Accepted Answer

A)  an international reserve asset created to supplement members' existing reserve assets 
B)  the official currency for international trade established by the World Bank 
C)  a substitute for the fixed value of gold as determined by currency rates 
D)  a contribution made by countries to join the IMF 
A)  an international reserve asset created to supplement members' existing reserve assets 
B)  the official currency for international trade established by the World Bank 
C)  a substitute for the fixed value of gold as determined by currency rates 
D)  a contribution made by countries to join the IMF A

Question 3

Which type of exchange rate arrangement is based on supply and demand?

Accepted Answer

A)  soft peg 
B)  hard peg 
C)  crawling 
D)  floating 
A)  soft peg 
B)  hard peg 
C)  crawling 
D)  floating D

Question 4

Forecasters must predict the magnitude,direction,and ________ of an exchange rate change or movement.

Accepted Answer

A)  length 
B)  timing 
C)  altitude 
D)  depth 
A)  length 
B)  timing 
C)  altitude 
D)  depth

Question 5

The International Fisher Effect links interest rates and exchange rates.

Accepted Answer

A) True 
 B)False

Question 6

Thomas is planning a vacation to Country X. On a tourism Web site,he reads that the government of Country X limits the amount of money a tourist may convert into the country's currency. Country X most likely uses which of the following?

Accepted Answer

A)  import deposit requirements 
B)  multiple exchange rates 
C)  import licensing 
D)  quantity controls 
A)  import deposit requirements 
B)  multiple exchange rates 
C)  import licensing 
D)  quantity controls

Question 7

What methods are used by managers to forecast exchange rates? What are the main factors that influence exchange rates?

Accepted Answer

Fundamental forecasting uses trends in e

Question 8

In order to join the IMF,a country must contribute a certain sum of money,called a ________.

Accepted Answer

A)  special drawing right 
B)  trade balance 
C)  monetary reserve 
D)  quota 
A)  special drawing right 
B)  trade balance 
C)  monetary reserve 
D)  quota

Question 9

None of the new members of the EU has yet been allowed to adopt the euro as its currency.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following links together the central banks of the world and acts as a central banker's bank?

Accepted Answer

A)  the IMF 
B)  the World Bank 
C)  the BIS 
D)  the EMU 
A)  the IMF 
B)  the World Bank 
C)  the BIS 
D)  the EMU

Question 11

The SDR is equal in value to the U.S. dollar.

Accepted Answer

A) True 
 B)False

Question 12

The Bretton Woods Agreement established a system of fixed exchange rates under which each IMF member country set a ________.

Accepted Answer

A)  quota 
B)  par value 
C)  gold standard 
D)  nominal interest rate 
A)  quota 
B)  par value 
C)  gold standard 
D)  nominal interest rate

Question 13

Governments use a multiple exchange rate system to ________.

Accepted Answer

A)  increase their budget surplus 
B)  reduce exports 
C)  control foreign exchange convertibility 
D)  limit deposit requirements 
A)  increase their budget surplus 
B)  reduce exports 
C)  control foreign exchange convertibility 
D)  limit deposit requirements

Question 14

Which of the following was part of the stability and growth pact that was required for countries to be part of the European Monetary Union?

Accepted Answer

A)  The annual government budget must be no greater than 3% of GDP. 
B)  The annual inflation rate must remain within 1.5% of the three best-performing EU countries. 
C)  The annual government budget deficit could be no greater than 60% of GDP. 
D)  The annual inflation rate must remain within 5.5% of the four best-performing EU countries. 
A)  The annual government budget must be no greater than 3% of GDP. 
B)  The annual inflation rate must remain within 1.5% of the three best-performing EU countries. 
C)  The annual government budget deficit could be no greater than 60% of GDP. 
D)  The annual inflation rate must remain within 5.5% of the four best-performing EU countries.

Question 15

Sarah,a manager at Farley Enterprises,an MNE with operations in Asia,Europe,and North America,is using past trends in exchange rate movements to spot future trends. Which type of forecasting approach is Sarah most likely using?

Accepted Answer

A)  fundamental 
B)  technical 
C)  application 
D)  economic 
A)  fundamental 
B)  technical 
C)  application 
D)  economic

Question 16

What are the main arguments for and against Africa developing a common currency like the EU?

Accepted Answer

A major advantage of establishing a cent

Question 17

If a Big Mac costs $3.41 in the United States and $2.67 in Argentina (the price of a Big Mac in Argentine pesos converted into dollars at the spot exchange rate),which of the following is most likely true?

Accepted Answer

A)  The peso is overvalued against the dollar. 
B)  The dollar is overvalued against the peso. 
C)  It should be harder for a U.S. tourist to buy a leather coat in Buenos Aires because the dollar won't go very far. 
D)  It will be cheap for Argentine companies to invest in the United States because the dollar is relatively weak. 
A)  The peso is overvalued against the dollar. 
B)  The dollar is overvalued against the peso. 
C)  It should be harder for a U.S. tourist to buy a leather coat in Buenos Aires because the dollar won't go very far. 
D)  It will be cheap for Argentine companies to invest in the United States because the dollar is relatively weak.

Question 18

An independently floating exchange rate is adjusted periodically at a fixed pronounced rate.

Accepted Answer

A) True 
 B)False

Question 19

The International Fisher Effect ________.

Accepted Answer

A)  links interest rates and inflation 
B)  implies that the currency of the country with the lower interest rate will weaken in the future 
C)  implies that the country with the higher interest rate should have lower inflation 
D)  links interest rates and exchange rates 
A)  links interest rates and inflation 
B)  implies that the currency of the country with the lower interest rate will weaken in the future 
C)  implies that the country with the higher interest rate should have lower inflation 
D)  links interest rates and exchange rates

Question 20

Describe the exchange rate arrangements used in the EU,Hong Kong,China,and the U.S.

Accepted Answer

The EU uses an exchange arrangement with

The global financial crisis has pushed China closer to ________.

Which of the following best describes the special drawing right?

Which type of exchange rate arrangement is based on supply and demand?

Forecasters must predict the magnitude,direction,and ________ of an exchange rate change or movement.

The International Fisher Effect links interest rates and exchange rates.

Thomas is planning a vacation to Country X. On a tourism Web site,he reads that the government of Country X limits the amount of money a tourist may convert into the country's currency. Country X most likely uses which of the following?

What methods are used by managers to forecast exchange rates? What are the main factors that influence exchange rates?

In order to join the IMF,a country must contribute a certain sum of money,called a ________.

None of the new members of the EU has yet been allowed to adopt the euro as its currency.

Which of the following links together the central banks of the world and acts as a central banker's bank?

The SDR is equal in value to the U.S. dollar.

The Bretton Woods Agreement established a system of fixed exchange rates under which each IMF member country set a ________.

Governments use a multiple exchange rate system to ________.

Which of the following was part of the stability and growth pact that was required for countries to be part of the European Monetary Union?

Sarah,a manager at Farley Enterprises,an MNE with operations in Asia,Europe,and North America,is using past trends in exchange rate movements to spot future trends. Which type of forecasting approach is Sarah most likely using?

What are the main arguments for and against Africa developing a common currency like the EU?

If a Big Mac costs $3.41 in the United States and $2.67 in Argentina (the price of a Big Mac in Argentine pesos converted into dollars at the spot exchange rate),which of the following is most likely true?

An independently floating exchange rate is adjusted periodically at a fixed pronounced rate.

The International Fisher Effect ________.

Describe the exchange rate arrangements used in the EU,Hong Kong,China,and the U.S.

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

Globalization and Society

International Trade and Factor Mobility Theory

Governmental Influence on Trade

Cross-National Cooperation and Agreements

Global Foreign-Exchange Markets

The Strategy of International Business

Country Evaluation and Selection

Export and Import

Direct Investment and Collaborative Strategies

The Organization of International Business

Marketing Globally

Global Manufacturing and Supply Chain Management

International Accounting Issues

The Multinational Finance Function

International Human Resources

Filters

Exam 10: The Determination of Exchange Rates

The global financial crisis has pushed China closer to ________.

Which of the following best describes the special drawing right?

Which type of exchange rate arrangement is based on supply and demand?

Forecasters must predict the magnitude,direction,and ________ of an exchange rate change or movement.

The International Fisher Effect links interest rates and exchange rates.

Thomas is planning a vacation to Country X. On a tourism Web site,he reads that the government of Country X limits the amount of money a tourist may convert into the country's currency. Country X most likely uses which of the following?

What methods are used by managers to forecast exchange rates? What are the main factors that influence exchange rates?

In order to join the IMF,a country must contribute a certain sum of money,called a ________.

None of the new members of the EU has yet been allowed to adopt the euro as its currency.

Which of the following links together the central banks of the world and acts as a central banker's bank?

The SDR is equal in value to the U.S. dollar.

The Bretton Woods Agreement established a system of fixed exchange rates under which each IMF member country set a ________.

Governments use a multiple exchange rate system to ________.

Which of the following was part of the stability and growth pact that was required for countries to be part of the European Monetary Union?

Sarah,a manager at Farley Enterprises,an MNE with operations in Asia,Europe,and North America,is using past trends in exchange rate movements to spot future trends. Which type of forecasting approach is Sarah most likely using?

What are the main arguments for and against Africa developing a common currency like the EU?

If a Big Mac costs $3.41 in the United States and $2.67 in Argentina (the price of a Big Mac in Argentine pesos converted into dollars at the spot exchange rate),which of the following is most likely true?

An independently floating exchange rate is adjusted periodically at a fixed pronounced rate.

The International Fisher Effect ________.

Describe the exchange rate arrangements used in the EU,Hong Kong,China,and the U.S.

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

Globalization and Society

International Trade and Factor Mobility Theory

Governmental Influence on Trade

Cross-National Cooperation and Agreements

Global Foreign-Exchange Markets

The Strategy of International Business

Country Evaluation and Selection

Export and Import

Direct Investment and Collaborative Strategies

The Organization of International Business

Marketing Globally

Global Manufacturing and Supply Chain Management

International Accounting Issues

The Multinational Finance Function

International Human Resources

Filters