Question 1

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 it was 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 it was formalized after the fact in the IMF's Jamaica Agreement.

Question 2

When a business pays in dollars for an import from Turkey, the dollars that leave the United States will eventually show up as a credit on the U.S. capital account.

Accepted Answer

A) True 
 B)False

Question 3

Brazil, India, and the United States are among the highest corporate tax locations.

Accepted Answer

A) True 
 B)False

Question 4

The international Fisher effect says that the interest rate differentials in any two currencies reflect:

Accepted Answer

A)  the ratio of their inflation rates minus COL 
B)  arbitrary differences in the two economies. 
C)  PPP differences in the two economies. 
D)  the expected change in their exchange rates. 
A)  the ratio of their inflation rates minus COL 
B)  arbitrary differences in the two economies. 
C)  PPP differences in the two economies. 
D)  the expected change in their exchange rates.

Question 5

Arbitrage functions to:

Accepted Answer

A)  provide French markets access to other EU markets. 
B)  exploit price differences between markets, so as to profit with no risk. 
C)  create wealth through interest rate swaps. 
D)  create increased trading in commodity markets. 
A)  provide French markets access to other EU markets. 
B)  exploit price differences between markets, so as to profit with no risk. 
C)  create wealth through interest rate swaps. 
D)  create increased trading in commodity markets.

Question 6

The balance-of-payments account is a record of:

Accepted Answer

A)  the total tangible trade flows of a country over a five-year period. 
B)  a country's transactions with the rest of the world. 
C)  a country's total debt service payments during a one-year period. 
D)  the outstanding balance of a country's debt payments for the fiscal year. 
A)  the total tangible trade flows of a country over a five-year period. 
B)  a country's transactions with the rest of the world. 
C)  a country's total debt service payments during a one-year period. 
D)  the outstanding balance of a country's debt payments for the fiscal year.

Question 7

The law of one price is 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 8

In POB accounting, a deficit in the current account is always accompanied by a surplus in the capital account.

Accepted Answer

A) True 
 B)False

Question 9

A central reserve asset is a holding that has value that is held by private banks in case of a liquidity crisis.

Accepted Answer

A) True 
 B)False

Question 10

Global foreign currency exchange transactions total in the area of $4 trillion daily.

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 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 pound 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 pound sterling and the euro, to deflect the focus on dollars.

Question 12

Foreign reserves are used to:

Accepted Answer

A)  help foreigners who need additional funds. 
B)  provide military support to foreign operations, for example, the French legion and UN peacekeepers. 
C)  cover foreign debt, import purchases, and other demands for foreign currency that banks might encounter. 
D)  support foreign operations that are branches but not subsidiaries. 
A)  help foreigners who need additional funds. 
B)  provide military support to foreign operations, for example, the French legion and UN peacekeepers. 
C)  cover foreign debt, import purchases, and other demands for foreign currency that banks might encounter. 
D)  support foreign operations that are branches but not subsidiaries.

Question 13

The inflation rate determines:

Accepted Answer

A)  a currency's strengthening. 
B)  the real price of borrowing in capital markets. 
C)  locations for outsourcing. 
D)  import substitution regimes. 
A)  a currency's strengthening. 
B)  the real price of borrowing in capital markets. 
C)  locations for outsourcing. 
D)  import substitution regimes.

Question 14

The United States in recent years has had a significant deficit in its current account. This means that U.S. citizens are exporting more than they are importing.

Accepted Answer

A) True 
 B)False

Question 15

Inflated currencies tend to weaken.

Accepted Answer

A) True 
 B)False

Question 16

Allied and Axis governments met in Bretton Woods in the final days of World War II.

Accepted Answer

A) True 
 B)False

Question 17

World interest rates tend to vary across a small range because:

Accepted Answer

A)  the IMF has been successful at promoting responsibility in the monetary sector. 
B)  world financial markets are integrated, so we see the law of one price at work. 
C)  bankers have low market appeal, given the financial crisis. 
D)  the BIS has coordinated monetary policy. 
A)  the IMF has been successful at promoting responsibility in the monetary sector. 
B)  world financial markets are integrated, so we see the law of one price at work. 
C)  bankers have low market appeal, given the financial crisis. 
D)  the BIS has coordinated monetary policy.

Question 18

The three major taxes governments use to generate revenue are:

Accepted Answer

A)  VAT, income tax, and withholding tax. 
B)  sales tax, VAT, and income tax. 
C)  property tax, VAT, and sales tax. 
D)  income tax, property tax, and sales tax. 
A)  VAT, income tax, and withholding tax. 
B)  sales tax, VAT, and income tax. 
C)  property tax, VAT, and sales tax. 
D)  income tax, property tax, and sales tax.

Question 19

With increasing inflation, borrowing becomes:

Accepted Answer

A)  more attractive because repayment can be made with cheaper money. 
B)  less attractive because repayment is made with dearer money. 
C)  impossible because money has lost its value. 
D)  a mute issue because of liquidity issues. 
A)  more attractive because repayment can be made with cheaper money. 
B)  less attractive because repayment is made with dearer money. 
C)  impossible because money has lost its value. 
D)  a mute issue because of liquidity issues.

Question 20

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.

The present floating exchange rate system was:

When a business pays in dollars for an import from Turkey, the dollars that leave the United States will eventually show up as a credit on the U.S. capital account.

Brazil, India, and the United States are among the highest corporate tax locations.

The international Fisher effect says that the interest rate differentials in any two currencies reflect:

Arbitrage functions to:

The balance-of-payments account is a record of:

The law of one price is that:

In POB accounting, a deficit in the current account is always accompanied by a surplus in the capital account.

A central reserve asset is a holding that has value that is held by private banks in case of a liquidity crisis.

Global foreign currency exchange transactions total in the area of $4 trillion daily.

If the Japanese yen is strengthening against the U.S. dollar, and the Japanese government wanted to boost exports, the central bank of Japan might well:

Foreign reserves are used to:

The inflation rate determines:

The United States in recent years has had a significant deficit in its current account. This means that U.S. citizens are exporting more than they are importing.

Inflated currencies tend to weaken.

Allied and Axis governments met in Bretton Woods in the final days of World War II.

World interest rates tend to vary across a small range because:

The three major taxes governments use to generate revenue are:

With increasing inflation, borrowing becomes:

In general, with regard to exchange controls, developed countries:

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Political and Trade Forces

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Exam 8: The International Monetary System and Financial Forces

The present floating exchange rate system was:

When a business pays in dollars for an import from Turkey, the dollars that leave the United States will eventually show up as a credit on the U.S. capital account.

Brazil, India, and the United States are among the highest corporate tax locations.

The international Fisher effect says that the interest rate differentials in any two currencies reflect:

Arbitrage functions to:

The balance-of-payments account is a record of:

The law of one price is that:

In POB accounting, a deficit in the current account is always accompanied by a surplus in the capital account.

A central reserve asset is a holding that has value that is held by private banks in case of a liquidity crisis.

Global foreign currency exchange transactions total in the area of $4 trillion daily.

If the Japanese yen is strengthening against the U.S. dollar, and the Japanese government wanted to boost exports, the central bank of Japan might well:

Foreign reserves are used to:

The inflation rate determines:

The United States in recent years has had a significant deficit in its current account. This means that U.S. citizens are exporting more than they are importing.

Inflated currencies tend to weaken.

Allied and Axis governments met in Bretton Woods in the final days of World War II.

World interest rates tend to vary across a small range because:

The three major taxes governments use to generate revenue are:

With increasing inflation, borrowing becomes:

In general, with regard to exchange controls, developed countries:

The Challenging World of International Business

International Trade and Foreign Direct Investment

International Institutions From an International Business Perspective

Sociocultural Forces

Natural Resources and Environmental Sustainability

Political and Trade Forces

Intellectual Property and Other Legal Forces

International Competitive Strategy

Organizational Design and Control

Global Leadership Issues and Practices

Assessing International Markets

Entry Modes

Export and Import Practices

Marketing Internationally

Global Operations and Supply Chain Management

Managing Human Resources in an International Context

International Accounting and Financial Management

Filters