Question 1

Endaka,the "high yen," caused financial problems for ________.

Accepted Answer

A)  Japanese foreign-exchange reserves 
B)  American foreign-exchange reserves 
C)  Japanese importers 
D)  Japanese exporters 
A)  Japanese foreign-exchange reserves 
B)  American foreign-exchange reserves 
C)  Japanese importers 
D)  Japanese exporters

Question 2

Demand for a country's independently floating currency is a function of the demand for that country's goods,services,and financial assets.

Accepted Answer

A) True 
 B)False

Question 3

According to purchasing power parity,if the domestic inflation rate is ________ than that in the foreign country,the domestic currency should be ________ than that of the foreign country.

Accepted Answer

A)  lower; weaker 
B)  higher; higher 
C)  lower; stronger 
D)  higher; stronger 
A)  lower; weaker 
B)  higher; higher 
C)  lower; stronger 
D)  higher; stronger

Question 4

Which EU country has NOT adopted the euro?

Accepted Answer

A)  Germany 
B)  France 
C)  Sweden 
D)  Greece 
A)  Germany 
B)  France 
C)  Sweden 
D)  Greece

Question 5

Which of the following is used as an illustration of the PPP theory for estimating exchange rates?

Accepted Answer

A)  the Composition of Official Foreign Exchange Reserves (COFER) 
B)  the black market rate 
C)  the import licensing ratio 
D)  the Big Mac Index 
A)  the Composition of Official Foreign Exchange Reserves (COFER) 
B)  the black market rate 
C)  the import licensing ratio 
D)  the Big Mac Index

Question 6

The primary objective of the International Monetary Fund is to ________.

Accepted Answer

A)  encourage euro adoption 
B)  promote exchange rate stability 
C)  establish a unilateral system of payments 
D)  foster the power of the foreign exchange market 
A)  encourage euro adoption 
B)  promote exchange rate stability 
C)  establish a unilateral system of payments 
D)  foster the power of the foreign exchange market

Question 7

An MNE would most likely benefit from converting local currency into its home-country currency when exchange rates are most favorable so it can maximize its return.

Accepted Answer

A) True 
 B)False

Question 8

In a country with a currency that is not freely floating,the timing of an exchange rate change is often a ________ decision.

Accepted Answer

A)  cultural 
B)  consensus 
C)  political 
D)  market 
A)  cultural 
B)  consensus 
C)  political 
D)  market

Question 9

The International Fisher Effect implies that ________

Accepted Answer

A)  the country with the higher interest rate should have lower inflation 
B)  the currency of the country with the lower interest rate will strengthen in the future 
C)  the currency of the country with the higher interest rate will strengthen in the future 
D)  interest rates and inflation are not linked at all 
A)  the country with the higher interest rate should have lower inflation 
B)  the currency of the country with the lower interest rate will strengthen in the future 
C)  the currency of the country with the higher interest rate will strengthen in the future 
D)  interest rates and inflation are not linked at all

Question 10

In a multiple exchange-rate system,the government determines which kinds of transactions are to be conducted at which exchange rate.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following states that the country with the higher interest rate should have the higher inflation?

Accepted Answer

A)  the Fisher Effect 
B)  the International Fisher Effect 
C)  the Interest Rate Inflation Theory 
D)  the Forward rate theory 
A)  the Fisher Effect 
B)  the International Fisher Effect 
C)  the Interest Rate Inflation Theory 
D)  the Forward rate theory

Question 12

According to the text,which currency is expected to experience the most change in the upcoming years?

Accepted Answer

A)  yen 
B)  yuan 
C)  euro 
D)  U.S. dollar 
A)  yen 
B)  yuan 
C)  euro 
D)  U.S. dollar

Question 13

The major objective of the European Central Bank is to control taxes as a means of deficit spending.

Accepted Answer

A) True 
 B)False

Question 14

The Fed wants to counter downward pressure on the dollar,so it will most likely ________.

Accepted Answer

A)  sell dollars for foreign currency 
B)  sell dollars and buy foreign stocks 
C)  buy Treasury bills with dollars 
D)  buy dollars with foreign currency 
A)  sell dollars for foreign currency 
B)  sell dollars and buy foreign stocks 
C)  buy Treasury bills with dollars 
D)  buy dollars with foreign currency

Question 15

Purchasing power parity (PPP)is a well-known theory that seeks to define relationships between currencies.

Accepted Answer

A) True 
 B)False

Question 16

According to purchasing power parity theory,if Brazilian inflation was 6 percent and inflation in Argentina was 12 percent,the Brazilian real would be expected to ________.

Accepted Answer

A)  rise by the difference in inflation rates 
B)  fall by the difference in inflation rates 
C)  rise by 4.5 percent 
D)  stay the same 
A)  rise by the difference in inflation rates 
B)  fall by the difference in inflation rates 
C)  rise by 4.5 percent 
D)  stay the same

Question 17

What led to the Greek financial crisis of 2010? What have been the roles of the IMF and European Central Bank in the crisis? What challenges with the euro facilitated the crisis?

Accepted Answer

The IMF has played an important role in

Question 18

Which of the following was NOT a result of the Smithsonian Agreement?

Accepted Answer

A)  revaluation of currencies other than the dollar against gold 
B)  establishment of par values the quota system 
C)  devaluation of the dollar against gold 
D)  widening of exchange-rate flexibility 
A)  revaluation of currencies other than the dollar against gold 
B)  establishment of par values the quota system 
C)  devaluation of the dollar against gold 
D)  widening of exchange-rate flexibility

Question 19

Tanya is a manager at a global firm that has operations located in Brazil,India,and Japan. Tanya is in the process of making a fundamental analysis in order to forecast exchange rates in each country. Which of the following is a confidence factor that Tanya should consider in trying to predict exchange rate movements in each country?

Accepted Answer

A)  What are the expectations of the market with respect to the political environment? 
B)  Have there been significant national events that have appeared in the news lately? 
C)  At what rates do there appear to be buy and sell orders? 
D)  What trends do the charts show? 
A)  What are the expectations of the market with respect to the political environment? 
B)  Have there been significant national events that have appeared in the news lately? 
C)  At what rates do there appear to be buy and sell orders? 
D)  What trends do the charts show?

Question 20

What role has the IMF played in the Greek financial crisis of 2010-2011?

Accepted Answer

A)  setting the value of the drachma 
B)  releasing funds for debt payments 
C)  demanding the sale of state-owned assets 
D)  lowering interest rates for international investors 
A)  setting the value of the drachma 
B)  releasing funds for debt payments 
C)  demanding the sale of state-owned assets 
D)  lowering interest rates for international investors

Endaka,the "high yen," caused financial problems for ________.

Demand for a country's independently floating currency is a function of the demand for that country's goods,services,and financial assets.

According to purchasing power parity,if the domestic inflation rate is than that in the foreign country,the domestic currency should be than that of the foreign country.

Which EU country has NOT adopted the euro?

Which of the following is used as an illustration of the PPP theory for estimating exchange rates?

The primary objective of the International Monetary Fund is to ________.

An MNE would most likely benefit from converting local currency into its home-country currency when exchange rates are most favorable so it can maximize its return.

In a country with a currency that is not freely floating,the timing of an exchange rate change is often a ________ decision.

The International Fisher Effect implies that ________

In a multiple exchange-rate system,the government determines which kinds of transactions are to be conducted at which exchange rate.

Which of the following states that the country with the higher interest rate should have the higher inflation?

According to the text,which currency is expected to experience the most change in the upcoming years?

The major objective of the European Central Bank is to control taxes as a means of deficit spending.

The Fed wants to counter downward pressure on the dollar,so it will most likely ________.

Purchasing power parity (PPP)is a well-known theory that seeks to define relationships between currencies.

According to purchasing power parity theory,if Brazilian inflation was 6 percent and inflation in Argentina was 12 percent,the Brazilian real would be expected to ________.

What led to the Greek financial crisis of 2010? What have been the roles of the IMF and European Central Bank in the crisis? What challenges with the euro facilitated the crisis?

Which of the following was NOT a result of the Smithsonian Agreement?

What role has the IMF played in the Greek financial crisis of 2010-2011?

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

Endaka,the "high yen," caused financial problems for ________.

Demand for a country's independently floating currency is a function of the demand for that country's goods,services,and financial assets.

According to purchasing power parity,if the domestic inflation rate is ________ than that in the foreign country,the domestic currency should be ________ than that of the foreign country.

Which EU country has NOT adopted the euro?

Which of the following is used as an illustration of the PPP theory for estimating exchange rates?

The primary objective of the International Monetary Fund is to ________.

An MNE would most likely benefit from converting local currency into its home-country currency when exchange rates are most favorable so it can maximize its return.

In a country with a currency that is not freely floating,the timing of an exchange rate change is often a ________ decision.

The International Fisher Effect implies that ________

In a multiple exchange-rate system,the government determines which kinds of transactions are to be conducted at which exchange rate.

Which of the following states that the country with the higher interest rate should have the higher inflation?

According to the text,which currency is expected to experience the most change in the upcoming years?

The major objective of the European Central Bank is to control taxes as a means of deficit spending.

The Fed wants to counter downward pressure on the dollar,so it will most likely ________.

Purchasing power parity (PPP)is a well-known theory that seeks to define relationships between currencies.

According to purchasing power parity theory,if Brazilian inflation was 6 percent and inflation in Argentina was 12 percent,the Brazilian real would be expected to ________.

What led to the Greek financial crisis of 2010? What have been the roles of the IMF and European Central Bank in the crisis? What challenges with the euro facilitated the crisis?

Which of the following was NOT a result of the Smithsonian Agreement?

What role has the IMF played in the Greek financial crisis of 2010-2011?

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

According to purchasing power parity,if the domestic inflation rate is than that in the foreign country,the domestic currency should be than that of the foreign country.