Question 1

Many countries with high inflation have pegged their currencies to the yuan in order to restrain domestic inflation.

Accepted Answer

A) True 
 B)False

Question 2

If one country's interest rate is high relative to other countries,the country will attract foreign funds.

Accepted Answer

A) True 
 B)False

Question 3

Hedging protects firms from spot market unpredictability.

Accepted Answer

A) True 
 B)False

Question 4

Proponents of fixed exchange rates argue that fixed exchange rates impose monetary discipline by preventing governments from engaging in inflationary monetary policies.

Accepted Answer

A) True 
 B)False

Question 5

Identify the difference between fixed and floating exchange rates.Provide an example of a situation where the fixed and floating exchange rates were used.

Accepted Answer

There are two major exchange rate polici

Question 6

Basic economic theory suggests that the price of a commodity is most fundamentally determined by its supply and demand.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is an advantage of a strong US dollar?

Accepted Answer

A)  US importers will find it easier to compete with low-cost imports. 
B)  US exporters will find it easier to compete on price abroad. 
C)  US firms will experience less competitive pressure to keep prices low. 
D)  US tourists will find it more expensive when traveling abroad. 
A)  US importers will find it easier to compete with low-cost imports. 
B)  US exporters will find it easier to compete on price abroad. 
C)  US firms will experience less competitive pressure to keep prices low. 
D)  US tourists will find it more expensive when traveling abroad.

Question 8

The fixing of East and West Germany's currencies at a 1:1 ratio to each other during the German unification in 1990 is an example of a _____.

Accepted Answer

A)  managed float rate policy 
B)  floating rate policy 
C)  target exchange rate policy 
D)  fixed exchange rate policy 
A)  managed float rate policy 
B)  floating rate policy 
C)  target exchange rate policy 
D)  fixed exchange rate policy

Question 9

Which of the following is an advantage of a weak US dollar?

Accepted Answer

A)  US consumers benefit from low prices on imports. 
B)  US tourists enjoy lower prices abroad. 
C)  Foreign firms find it harder to acquire US targets. 
D)  Foreign tourists enjoy lower prices in the US. 
A)  US consumers benefit from low prices on imports. 
B)  US tourists enjoy lower prices abroad. 
C)  Foreign firms find it harder to acquire US targets. 
D)  Foreign tourists enjoy lower prices in the US.

Question 10

A currency board is a monetary authority that issues notes and coins convertible into a key foreign currency at a _____ exchange rate.

Accepted Answer

A)  clean floating 
B)  dirty floating 
C)  fixed 
D)  target 
A)  clean floating 
B)  dirty floating 
C)  fixed 
D)  target

Question 11

Which of the following conditions will attract foreign funds into a country?

Accepted Answer

A)  If the country has high trade deficits 
B)  If the country's interest rate is relatively high compared to other countries 
C)  If the country's currency is depreciated 
D)  If the country is experiencing high levels of inflation 
A)  If the country has high trade deficits 
B)  If the country's interest rate is relatively high compared to other countries 
C)  If the country's currency is depreciated 
D)  If the country is experiencing high levels of inflation

Question 12

The rise of a country's productivity is usually accompanied by increased demand for its home currency.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following methods is directly derived from the theory of purchasing power parity (PPP)?

Accepted Answer

A)  The floating exchange rate 
B)  The fixed exchange rate 
C)  The stock market index 
D)  The Big Mac index 
A)  The floating exchange rate 
B)  The fixed exchange rate 
C)  The stock market index 
D)  The Big Mac index

Question 14

Which of the following is one of the major reasons the gold standard was abandoned?

Accepted Answer

A)  The increased flow of gold from the U.S. into foreign central banks. 
B)  The competitive devaluation of currencies during the Great Depression. 
C)  The strengthening of the U.S. dollar due to the rise in productivity levels in the United States. 
D)  The United States unilaterally announced that the dollar would not be convertible to gold. 
A)  The increased flow of gold from the U.S. into foreign central banks. 
B)  The competitive devaluation of currencies during the Great Depression. 
C)  The strengthening of the U.S. dollar due to the rise in productivity levels in the United States. 
D)  The United States unilaterally announced that the dollar would not be convertible to gold.

Question 15

Which of the following types of exchange rate policies is apt for a pure free market economy?

Accepted Answer

A)  Dirty float 
B)  Flexible float 
C)  Clean float 
D)  Target exchange rate 
A)  Dirty float 
B)  Flexible float 
C)  Clean float 
D)  Target exchange rate

Question 16

Majority of the largest US firms practice currency hedging.

Accepted Answer

A) True 
 B)False

Question 17

What determines the success and failure of currency management around the globe?

Accepted Answer

From an institution-based standpoint,the

Question 18

The post-Bretton Woods system is a system of flexible exchange rate regimes with _____.

Accepted Answer

A)  the Japanese yen as its common denominator 
B)  the American dollar as its common denominator 
C)  gold as its common denominator 
D)  no official common denominator 
A)  the Japanese yen as its common denominator 
B)  the American dollar as its common denominator 
C)  gold as its common denominator 
D)  no official common denominator

Question 19

Between 1870 and 1914,the value of most major currencies was maintained by fixing their prices in terms of _____.

Accepted Answer

A)  dollar 
B)  yuan 
C)  gold 
D)  diamonds 
A)  dollar 
B)  yuan 
C)  gold 
D)  diamonds

Question 20

Forward discount is a condition under which the forward rate of one currency relative to another currency is lower than the spot rate.

Accepted Answer

A) True 
 B)False

Many countries with high inflation have pegged their currencies to the yuan in order to restrain domestic inflation.

If one country's interest rate is high relative to other countries,the country will attract foreign funds.

Hedging protects firms from spot market unpredictability.

Proponents of fixed exchange rates argue that fixed exchange rates impose monetary discipline by preventing governments from engaging in inflationary monetary policies.

Identify the difference between fixed and floating exchange rates.Provide an example of a situation where the fixed and floating exchange rates were used.

Basic economic theory suggests that the price of a commodity is most fundamentally determined by its supply and demand.

Which of the following is an advantage of a strong US dollar?

The fixing of East and West Germany's currencies at a 1:1 ratio to each other during the German unification in 1990 is an example of a _____.

Which of the following is an advantage of a weak US dollar?

A currency board is a monetary authority that issues notes and coins convertible into a key foreign currency at a _____ exchange rate.

Which of the following conditions will attract foreign funds into a country?

The rise of a country's productivity is usually accompanied by increased demand for its home currency.

Which of the following methods is directly derived from the theory of purchasing power parity (PPP)?

Which of the following is one of the major reasons the gold standard was abandoned?

Which of the following types of exchange rate policies is apt for a pure free market economy?

Majority of the largest US firms practice currency hedging.

What determines the success and failure of currency management around the globe?

The post-Bretton Woods system is a system of flexible exchange rate regimes with _____.

Between 1870 and 1914,the value of most major currencies was maintained by fixing their prices in terms of _____.

Forward discount is a condition under which the forward rate of one currency relative to another currency is lower than the spot rate.

Globalizing Business

Understanding Formal Institutions: Politics, laws, and Economics

Emphasizing Informal Institutions: Cultures, ethics, and Norms

Leveraging Resources and Capabilities

Trading Internationally

Investing Abroad Directly

Capitalizing on Global and Regional Integration

Growing and Internationalizing the Entrepreneurial Firm

Entering Foreign Markets

Managing Global Competitive Dynamics

Making Alliances and Acquisitions Work

Strategizing,structuring,and Learning Around the World

Competing on Marketing and Supply Chain Management

Managing Human Resources Globally

Financing and Governing the Corporation Globally

Managing Corporate Social Responsibility Globally

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Exam 7: Dealing With Foreign Exchange

Many countries with high inflation have pegged their currencies to the yuan in order to restrain domestic inflation.

If one country's interest rate is high relative to other countries,the country will attract foreign funds.

Hedging protects firms from spot market unpredictability.

Proponents of fixed exchange rates argue that fixed exchange rates impose monetary discipline by preventing governments from engaging in inflationary monetary policies.

Identify the difference between fixed and floating exchange rates.Provide an example of a situation where the fixed and floating exchange rates were used.

Basic economic theory suggests that the price of a commodity is most fundamentally determined by its supply and demand.

Which of the following is an advantage of a strong US dollar?

The fixing of East and West Germany's currencies at a 1:1 ratio to each other during the German unification in 1990 is an example of a _____.

Which of the following is an advantage of a weak US dollar?

A currency board is a monetary authority that issues notes and coins convertible into a key foreign currency at a _____ exchange rate.

Which of the following conditions will attract foreign funds into a country?

The rise of a country's productivity is usually accompanied by increased demand for its home currency.

Which of the following methods is directly derived from the theory of purchasing power parity (PPP)?

Which of the following is one of the major reasons the gold standard was abandoned?

Which of the following types of exchange rate policies is apt for a pure free market economy?

Majority of the largest US firms practice currency hedging.

What determines the success and failure of currency management around the globe?

The post-Bretton Woods system is a system of flexible exchange rate regimes with _____.

Between 1870 and 1914,the value of most major currencies was maintained by fixing their prices in terms of _____.

Forward discount is a condition under which the forward rate of one currency relative to another currency is lower than the spot rate.

Globalizing Business

Understanding Formal Institutions: Politics, laws, and Economics

Emphasizing Informal Institutions: Cultures, ethics, and Norms

Leveraging Resources and Capabilities

Trading Internationally

Investing Abroad Directly

Capitalizing on Global and Regional Integration

Growing and Internationalizing the Entrepreneurial Firm

Entering Foreign Markets

Managing Global Competitive Dynamics

Making Alliances and Acquisitions Work

Strategizing,structuring,and Learning Around the World

Competing on Marketing and Supply Chain Management

Managing Human Resources Globally

Financing and Governing the Corporation Globally

Managing Corporate Social Responsibility Globally

Filters