Question 1

Inflation in the United States would cause China's massive dollar reserves to lose value.

Accepted Answer

A) True 
 B)False

Question 2

What is the International Monetary Fund (IMF)? What are its objectives? What occurs when a country joins the IMF today?

Accepted Answer

In 1944,toward the close of World War II

Question 3

Which of the following most accurately describes the economic situation in El Salvador?

Accepted Answer

A)  It is facing significant competition from neighboring countries that are not tied to the dollar. 
B)  It relies exclusively on the United States as a market for its products. 
C)  It now has the same exchange rate as other members of CACM. 
D)  It is putting more resources into industries that have a history of earning profits. 
A)  It is facing significant competition from neighboring countries that are not tied to the dollar. 
B)  It relies exclusively on the United States as a market for its products. 
C)  It now has the same exchange rate as other members of CACM. 
D)  It is putting more resources into industries that have a history of earning profits.

Question 4

A currency that is pegged to another currency is usually changed on a supply-and-demand basis.

Accepted Answer

A) True 
 B)False

Question 5

If inflation in the United States is relatively higher than inflation in Japan,and the Japanese government wants to keep the exchange rate fixed between the yen and the dollar,it should most likely ________.

Accepted Answer

A)  allow its currency to rise against the dollar 
B)  allow its currency to fall against the dollar 
C)  increase the supply of yen in the market 
D)  decrease the supply of yen in the market 
A)  allow its currency to rise against the dollar 
B)  allow its currency to fall against the dollar 
C)  increase the supply of yen in the market 
D)  decrease the supply of yen in the market

Question 6

The major objective of the European Central Bank is to ________.

Accepted Answer

A)  set monetary policy for EU countries that adopt the euro 
B)  ensure that EU interest rates are equal to U.S. rates 
C)  control taxes as a means of monitoring EU debt 
D)  reduce spending by EU countries 
A)  set monetary policy for EU countries that adopt the euro 
B)  ensure that EU interest rates are equal to U.S. rates 
C)  control taxes as a means of monitoring EU debt 
D)  reduce spending by EU countries

Question 7

What is a black market? Under what conditions might one exist?

Accepted Answer

In many countries that control their cur

Question 8

Many economists have predicted that Hong Kong will change its currency system to the ________.

Accepted Answer

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

Question 9

The primary result of the Jamaica Agreement was to ________.

Accepted Answer

A)  allow greater exchange-rate flexibility 
B)  set austerity measures for debt control 
C)  establish a system based on par values 
D)  implement fixed exchange rates 
A)  allow greater exchange-rate flexibility 
B)  set austerity measures for debt control 
C)  establish a system based on par values 
D)  implement fixed exchange rates

Question 10

Which of the following accurately explains how producers are affected by exchange rate changes?

Accepted Answer

A)  To save money, a manufacturer may decide to relocate production to a country with a stronger currency. 
B)  A manufacturing firm relocating to a country with a weak currency can make a cheap initial investment. 
C)  Goods manufactured in a country with a weak currency may be relatively expensive in world markets. 
D)  A manufacturer with high operating expenses would likely relocate production to a country with a currency that is gaining value. 
A)  To save money, a manufacturer may decide to relocate production to a country with a stronger currency. 
B)  A manufacturing firm relocating to a country with a weak currency can make a cheap initial investment. 
C)  Goods manufactured in a country with a weak currency may be relatively expensive in world markets. 
D)  A manufacturer with high operating expenses would likely relocate production to a country with a currency that is gaining value.

Question 11

The Big Mac Index perfectly explains the relative size of economies.

Accepted Answer

A) True 
 B)False

Question 12

What is a Special Drawing Right (SDR)? How is it used?

Accepted Answer

To help increase international reserves,

Question 13

Which of the following problems with the euro most likely worsened the financial crisis in Greece?

Accepted Answer

A)  excessive flexibility with interest rates 
B)  cultural disagreements on labor reform 
C)  lack of uniform fiscal regulation standards 
D)  unclear policies of the European Central Bank 
A)  excessive flexibility with interest rates 
B)  cultural disagreements on labor reform 
C)  lack of uniform fiscal regulation standards 
D)  unclear policies of the European Central Bank

Question 14

El Salvador's hard peg exchange rate arrangement involves the use of both the U.S. dollar and its own separate legal tender.

Accepted Answer

A) True 
 B)False

Question 15

The IMF's primary role is to identify exchange rate regimes.

Accepted Answer

A) True 
 B)False

Question 16

In a short essay,discuss purchasing power parity and the short-run problems that affect PPP.

Accepted Answer

Purchasing power parity (PPP)is a well-k

Question 17

Ted,a manager at Global Manufacturing,is analyzing trends in economic variables to predict future exchange rates that might affect the MNEs international operations. Which of the following is Ted most likely doing?

Accepted Answer

A)  fundamental forecasting 
B)  technical forecasting 
C)  resource forecasting 
D)  economic forecasting 
A)  fundamental forecasting 
B)  technical forecasting 
C)  resource forecasting 
D)  economic forecasting

Question 18

The value of the SDR is currently based on the ________.

Accepted Answer

A)  euro 
B)  U.S. dollar 
C)  weighted average of four currencies 
D)  weighted average of six currencies 
A)  euro 
B)  U.S. dollar 
C)  weighted average of four currencies 
D)  weighted average of six currencies

Question 19

Which of the following countries has a soft peg currency?

Accepted Answer

A)  China 
B)  Brazil 
C)  Japan 
D)  India 
A)  China 
B)  Brazil 
C)  Japan 
D)  India

Question 20

Which of the following has the greatest amount of foreign-exchange reserves in the world?

Accepted Answer

A)  China 
B)  Japan 
C)  Russia 
D)  Taiwan 
A)  China 
B)  Japan 
C)  Russia 
D)  Taiwan

Inflation in the United States would cause China's massive dollar reserves to lose value.

What is the International Monetary Fund (IMF)? What are its objectives? What occurs when a country joins the IMF today?

Which of the following most accurately describes the economic situation in El Salvador?

A currency that is pegged to another currency is usually changed on a supply-and-demand basis.

If inflation in the United States is relatively higher than inflation in Japan,and the Japanese government wants to keep the exchange rate fixed between the yen and the dollar,it should most likely ________.

The major objective of the European Central Bank is to ________.

What is a black market? Under what conditions might one exist?

Many economists have predicted that Hong Kong will change its currency system to the ________.

The primary result of the Jamaica Agreement was to ________.

Which of the following accurately explains how producers are affected by exchange rate changes?

The Big Mac Index perfectly explains the relative size of economies.

What is a Special Drawing Right (SDR)? How is it used?

Which of the following problems with the euro most likely worsened the financial crisis in Greece?

El Salvador's hard peg exchange rate arrangement involves the use of both the U.S. dollar and its own separate legal tender.

The IMF's primary role is to identify exchange rate regimes.

In a short essay,discuss purchasing power parity and the short-run problems that affect PPP.

Ted,a manager at Global Manufacturing,is analyzing trends in economic variables to predict future exchange rates that might affect the MNEs international operations. Which of the following is Ted most likely doing?

The value of the SDR is currently based on the ________.

Which of the following countries has a soft peg currency?

Which of the following has the greatest amount of foreign-exchange reserves in the world?

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

Inflation in the United States would cause China's massive dollar reserves to lose value.

What is the International Monetary Fund (IMF)? What are its objectives? What occurs when a country joins the IMF today?

Which of the following most accurately describes the economic situation in El Salvador?

A currency that is pegged to another currency is usually changed on a supply-and-demand basis.

If inflation in the United States is relatively higher than inflation in Japan,and the Japanese government wants to keep the exchange rate fixed between the yen and the dollar,it should most likely ________.

The major objective of the European Central Bank is to ________.

What is a black market? Under what conditions might one exist?

Many economists have predicted that Hong Kong will change its currency system to the ________.

The primary result of the Jamaica Agreement was to ________.

Which of the following accurately explains how producers are affected by exchange rate changes?

The Big Mac Index perfectly explains the relative size of economies.

What is a Special Drawing Right (SDR)? How is it used?

Which of the following problems with the euro most likely worsened the financial crisis in Greece?

El Salvador's hard peg exchange rate arrangement involves the use of both the U.S. dollar and its own separate legal tender.

The IMF's primary role is to identify exchange rate regimes.

In a short essay,discuss purchasing power parity and the short-run problems that affect PPP.

Ted,a manager at Global Manufacturing,is analyzing trends in economic variables to predict future exchange rates that might affect the MNEs international operations. Which of the following is Ted most likely doing?

The value of the SDR is currently based on the ________.

Which of the following countries has a soft peg currency?

Which of the following has the greatest amount of foreign-exchange reserves in the world?

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