Question 1

A purchase of foreign goods from the U.S.(requiring importing)will be recorded in the BOP as

Accepted Answer

A)  an asset in the current account. 
B)  a debit in the current account. 
C)  no record, because the purchase is made in the U.S. 
D)  a liability in the foreign transfer account. 
A)  an asset in the current account. 
B)  a debit in the current account. 
C)  no record, because the purchase is made in the U.S. 
D)  a liability in the foreign transfer account.

Question 2

The Eonomist's Big Mac Index suggests that

Accepted Answer

A)  if currencies are trading fairly, the Big Mac prices will be similar. 
B)  if a currency is undervalued, the Big Mac price in that currency will be up to 50% more expensive than the U.S. dollar price of a Big Mac. 
C)  the dollar price of the Big Mac will always be higher, because it is the home market. 
D)  when the dollar is trading at a historical premium, Big Macs will be cheaper in the U.S. 
A)  if currencies are trading fairly, the Big Mac prices will be similar. 
B)  if a currency is undervalued, the Big Mac price in that currency will be up to 50% more expensive than the U.S. dollar price of a Big Mac. 
C)  the dollar price of the Big Mac will always be higher, because it is the home market. 
D)  when the dollar is trading at a historical premium, Big Macs will be cheaper in the U.S.

Question 3

Sir Isaac Newton established the price of gold in 1717 and de facto put England on the gold standard.

Accepted Answer

A) True 
 B)False

Question 4

The law of one price says that

Accepted Answer

A)  only one price can be charged for an item in a contract deal. 
B)  in an efficient market, one price only is the permissible price. 
C)  in an efficient market, like goods will have like prices. 
D)  even in international markets, bait and switch is illegal. 
A)  only one price can be charged for an item in a contract deal. 
B)  in an efficient market, one price only is the permissible price. 
C)  in an efficient market, like goods will have like prices. 
D)  even in international markets, bait and switch is illegal.

Question 5

The SDR is

Accepted Answer

A)  a special deposit for corporate reimbursement. 
B)  special drawing rights, an international reserve asset. 
C)  a special deficit refund, made to compensate for currency devaluation. 
D)  a paper credit issued by the Bank for International Settlements. 
A)  a special deposit for corporate reimbursement. 
B)  special drawing rights, an international reserve asset. 
C)  a special deficit refund, made to compensate for currency devaluation. 
D)  a paper credit issued by the Bank for International Settlements.

Question 6

In general,with regard to exchange controls,developed countries

Accepted Answer

A)  rarely use them. 
B)  use them only to discourage foreign investment. 
C)  use them when needed to implement monetary policy. 
D)  use them secretly. 
A)  rarely use them. 
B)  use them only to discourage foreign investment. 
C)  use them when needed to implement monetary policy. 
D)  use them secretly.

Question 7

Bretton Woods led to an exchange rate agreement known as the Bretton Woods System or

Accepted Answer

A)  the floating rate system. 
B)  the India Accord system. 
C)  the gold exchange standard. 
D)  the French rate system. 
A)  the floating rate system. 
B)  the India Accord system. 
C)  the gold exchange standard. 
D)  the French rate system.

Question 8

What is appealing about the gold standard is

Accepted Answer

A)  everyone loves gold. 
B)  its simplicity. 
C)  its transportability. 
D)  its carrying costs. 
A)  everyone loves gold. 
B)  its simplicity. 
C)  its transportability. 
D)  its carrying costs.

Question 9

In order to strengthen the U.S.dollar,the Federal Reserve might sell yen and buy dollars,in which case the yen functions as

Accepted Answer

A)  a stronger currency than the dollar. 
B)  an intervention currency. 
C)  an arbitrage currency. 
D)  none of these alternatives. 
A)  a stronger currency than the dollar. 
B)  an intervention currency. 
C)  an arbitrage currency. 
D)  none of these alternatives.

Question 10

Countries put limitations on the convertibility of their currencies when they are concerned that their foreign reserves could be depleted.

Accepted Answer

A) True 
 B)False

Question 11

If the Japanese yen is strengthening against the U.S.dollar,and the Japanese government wanted to boost exports,the Central Bank of Japan (CBJ)might well

Accepted Answer

A)  sell U.S. dollars in large amounts in the currency markets. 
B)  buy massive amounts of Japanese yen in the FX markets. 
C)  sell massive amounts of Japanese yen in the FX markets. 
D)  buy massive amounts of other hard currencies such as the British pounds sterling and the euro, to deflect the focus on dollars. 
A)  sell U.S. dollars in large amounts in the currency markets. 
B)  buy massive amounts of Japanese yen in the FX markets. 
C)  sell massive amounts of Japanese yen in the FX markets. 
D)  buy massive amounts of other hard currencies such as the British pounds sterling and the euro, to deflect the focus on dollars.

Question 12

The Bretton Woods system was a ________-based gold exchange system.

Accepted Answer

The answer of The Bretton Woods system was a ________-based...

Question 13

The forward currency market

Accepted Answer

A)  allows purchasers to lock in purchases of currencies at known rates. 
B)  provides governments a way to manage their currency's value. 
C)  makes trading in several currencies more efficient. 
D)  helps managers manage domestic debt. 
A)  allows purchasers to lock in purchases of currencies at known rates. 
B)  provides governments a way to manage their currency's value. 
C)  makes trading in several currencies more efficient. 
D)  helps managers manage domestic debt.

Question 14

In the Bretton Woods system,par value was based on the U.S.dollar and _______.

Accepted Answer

The answer of In the Bretton Woods system,par value was...

Question 15

_____________ currencies can move against one another quickly and in large swings.

Accepted Answer

The answer of _____________ currencies can move against one another...

Question 16

A vehicle currency is a currency

Accepted Answer

A)  used to trade in the transportation sector, usually dollar, euro, or yen. 
B)  whose value lies in its function in transfer pricing. 
C)  specifically used in arbitrage deals as a trading medium only. 
D)  used for international trade or investment. 
A)  used to trade in the transportation sector, usually dollar, euro, or yen. 
B)  whose value lies in its function in transfer pricing. 
C)  specifically used in arbitrage deals as a trading medium only. 
D)  used for international trade or investment.

Question 17

Global foreign currency exchanges transactions total over $3.2 trillion daily.

Accepted Answer

A) True 
 B)False

Question 18

_____________ is the amount of adjustment that must be made in the exchange rates for two currencies for them to have equivalent purchasing power.

Accepted Answer

Purchasing

Question 19

The present floating exchange rate system was

Accepted Answer

A)  designed by the IMF and implemented flawlessly in 1973. 
B)  established by the major trading nations in 19721 after Nixon closed the gold window. 
C)  implemented in tandem with a reintroduction of the gold standard. 
D)  established after several trials in which central bankers set rates incorrectly and speculators corrected them in the markets, and formalized after the fact in the IMF's Jamaica Agreement. 
A)  designed by the IMF and implemented flawlessly in 1973. 
B)  established by the major trading nations in 19721 after Nixon closed the gold window. 
C)  implemented in tandem with a reintroduction of the gold standard. 
D)  established after several trials in which central bankers set rates incorrectly and speculators corrected them in the markets, and formalized after the fact in the IMF's Jamaica Agreement.

Question 20

The international monetary systems consists of

Accepted Answer

A)  institutions, rules, procedures, and processes. 
B)  treaties among nations in trade blocks. 
C)  bilateral legal arrangements among nations and then, belief in the system. 
D)  relationships among sellers in the international market. 
A)  institutions, rules, procedures, and processes. 
B)  treaties among nations in trade blocks. 
C)  bilateral legal arrangements among nations and then, belief in the system. 
D)  relationships among sellers in the international market.

A purchase of foreign goods from the U.S.(requiring importing)will be recorded in the BOP as

The Eonomist's Big Mac Index suggests that

Sir Isaac Newton established the price of gold in 1717 and de facto put England on the gold standard.

The law of one price says that

The SDR is

In general,with regard to exchange controls,developed countries

Bretton Woods led to an exchange rate agreement known as the Bretton Woods System or

What is appealing about the gold standard is

In order to strengthen the U.S.dollar,the Federal Reserve might sell yen and buy dollars,in which case the yen functions as

Countries put limitations on the convertibility of their currencies when they are concerned that their foreign reserves could be depleted.

If the Japanese yen is strengthening against the U.S.dollar,and the Japanese government wanted to boost exports,the Central Bank of Japan (CBJ)might well

The Bretton Woods system was a ________-based gold exchange system.

The forward currency market

In the Bretton Woods system,par value was based on the U.S.dollar and _______.

_____________ currencies can move against one another quickly and in large swings.

A vehicle currency is a currency

Global foreign currency exchanges transactions total over $3.2 trillion daily.

_____________ is the amount of adjustment that must be made in the exchange rates for two currencies for them to have equivalent purchasing power.

The present floating exchange rate system was

The international monetary systems consists of

The Challenging Context of International Business

International Trade and Investment

Sociocultural Forces

Sustainability and Natural Resources

Political Forces That Affect Global Trade

Intellectual Property Rights and Other Legal Forces

Economic and Socioeconomic Forces

International Competitive Strategy

Organizational Design and Control

Global Leadership Issues and Practices

International Markets: Assessment and Entry Modes

Marketing Internationally

Managing Human Resources in an International Context

International Accounting and Financial Management

Appendix A: International Institutions From a Business Perspective

Appendix B: Export and Import Practices

Appendix C: Global Operations and Supply Chain Management

Filters

Exam 8: The International Monetary System and Financial Forces

A purchase of foreign goods from the U.S.(requiring importing)will be recorded in the BOP as

The Eonomist's Big Mac Index suggests that

Sir Isaac Newton established the price of gold in 1717 and de facto put England on the gold standard.

The law of one price says that

The SDR is

In general,with regard to exchange controls,developed countries

Bretton Woods led to an exchange rate agreement known as the Bretton Woods System or

What is appealing about the gold standard is

In order to strengthen the U.S.dollar,the Federal Reserve might sell yen and buy dollars,in which case the yen functions as

Countries put limitations on the convertibility of their currencies when they are concerned that their foreign reserves could be depleted.

If the Japanese yen is strengthening against the U.S.dollar,and the Japanese government wanted to boost exports,the Central Bank of Japan (CBJ)might well

The Bretton Woods system was a ________-based gold exchange system.

The forward currency market

In the Bretton Woods system,par value was based on the U.S.dollar and _______.

_____________ currencies can move against one another quickly and in large swings.

A vehicle currency is a currency

Global foreign currency exchanges transactions total over $3.2 trillion daily.

_____________ is the amount of adjustment that must be made in the exchange rates for two currencies for them to have equivalent purchasing power.

The present floating exchange rate system was

The international monetary systems consists of

The Challenging Context of International Business

International Trade and Investment

Sociocultural Forces

Sustainability and Natural Resources

Political Forces That Affect Global Trade

Intellectual Property Rights and Other Legal Forces

Economic and Socioeconomic Forces

International Competitive Strategy

Organizational Design and Control

Global Leadership Issues and Practices

International Markets: Assessment and Entry Modes

Marketing Internationally

Managing Human Resources in an International Context

International Accounting and Financial Management

Appendix A: International Institutions From a Business Perspective

Appendix B: Export and Import Practices

Appendix C: Global Operations and Supply Chain Management

Filters