Question 1

Which of the following statements is TRUE of the global financial system?

Accepted Answer

A)  It consists of the institutional frameworks, rules, and procedures that govern how national currencies are exchanged for one another. 
B)  It includes key players such as finance ministries and national stock exchanges but excludes commercial banks and central banks. 
C)  It is built on the activities of firms, banks, and financial institutions engaged in ongoing international financial activity. 
D)  Since the 1960s, the volume and structure of the global financial system has been reducing. 
A)  It consists of the institutional frameworks, rules, and procedures that govern how national currencies are exchanged for one another. 
B)  It includes key players such as finance ministries and national stock exchanges but excludes commercial banks and central banks. 
C)  It is built on the activities of firms, banks, and financial institutions engaged in ongoing international financial activity. 
D)  Since the 1960s, the volume and structure of the global financial system has been reducing.

Question 2

The 2008 global financial crisis began in the subprime mortgage market in the United States and spread to banking systems worldwide.

Accepted Answer

A) True 
 B)False

Question 3

The Indian rupee is one of the currencies upon which the value of the Special Drawing Right (SDR) is based.

Accepted Answer

A) True 
 B)False

Question 4

An increase in a nation's rate of inflation is caused by an oversupply of money and this eventually leads to a decrease in the value of the nation's currency.

Accepted Answer

A) True 
 B)False

Question 5

All else being equal, the greater the demand for a currency, the higher its price; the lower the demand for a currency, the lower its price.

Accepted Answer

A) True 
 B)False

Question 6

In most high-inflation nations, interest rates are increasing while the purchasing power of the national currency is plummeting.

Accepted Answer

A) True 
 B)False

Question 7

A devaluation is an action taken by the central bank.

Accepted Answer

A) True 
 B)False

Question 8

Because the firm either accepting or making the payment assumes the risk for the fluctuation, companies have a tendency to prefer handling international business transactions with their own country's currency rather than with the currency of another country.

Accepted Answer

A) True 
 B)False

Question 9

Explain the belief that a persistent trade deficit is harmful to the national economy. Why was the Bretton Woods Agreement initiated and why was it terminated?

Accepted Answer

Many economists believe a persistent tra

Question 10

Describe the two main types of foreign exchange management used today. Provide examples of nations that use each type of system. What are the benefits of each system?

Accepted Answer

a. Floating Exchange Rate System-Under t

Question 11

The central bank also seeks to ensure the safety and soundness of the national financial system by supervising and regulating the nation's banking system.

Accepted Answer

A) True 
 B)False

Question 12

If last year one dollar equaled one euro, and then the exchange rate shifted so that today one dollar equals two euros, which of the following would most likely NOT occur?

Accepted Answer

A)  European firms would pay more for raw materials imported from the United States. 
B)  European consumers would purchase fewer U.S. products and services. 
C)  Fewer Europeans would travel to the U.S. or study at U.S. universities. 
D)  U.S. exports to Europe would increase. 
A)  European firms would pay more for raw materials imported from the United States. 
B)  European consumers would purchase fewer U.S. products and services. 
C)  Fewer Europeans would travel to the U.S. or study at U.S. universities. 
D)  U.S. exports to Europe would increase.

Question 13

Momentum trading occurs when investors buy stocks whose prices have been falling and sell stocks whose prices have been rising.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is a characteristic of a bond?

Accepted Answer

A)  It is a short-term loan from a commercial bank. 
B)  It refers to capital raised by selling corporate shares. 
C)  It refers to a debt security used to raise capital. 
D)  It is a debt instrument on which dividends are paid. 
A)  It is a short-term loan from a commercial bank. 
B)  It refers to capital raised by selling corporate shares. 
C)  It refers to a debt security used to raise capital. 
D)  It is a debt instrument on which dividends are paid.

Question 15

The French franc is one of the European currencies that was taken out of circulation and replaced by the euro.

Accepted Answer

A) True 
 B)False

Question 16

Describe four principles or organizations brought about by the Bretton Woods Agreement that remain important to international business and trade today. Why does the integration of financial and monetary activity worldwide continue to grow?

Accepted Answer

The following principles or organization

Question 17

Which of the following statements is TRUE when a national currency can be undervalued?

Accepted Answer

A)  They cannot be quantified. 
B)  They remain highly stable. 
C)  They can result in a trade surplus. 
D)  They change occasionally. 
A)  They cannot be quantified. 
B)  They remain highly stable. 
C)  They can result in a trade surplus. 
D)  They change occasionally.

Question 18

Describe the role of commercial banks in the global financial sector. Provide a brief description of the activities performed by three different types of commercial banks.

Accepted Answer

Banks are important players in the globa

Question 19

The purpose of the Bretton Woods Agreement was to ________.

Accepted Answer

A)  enable the U.S. government to monetarily recover after WWII 
B)  control the fluctuating price of gold used for global trading 
C)  oversee the importing and exporting of international traders 
D)  govern the exchange rates of major international currencies 
A)  enable the U.S. government to monetarily recover after WWII 
B)  control the fluctuating price of gold used for global trading 
C)  oversee the importing and exporting of international traders 
D)  govern the exchange rates of major international currencies

Question 20

Which of the following situations often results in a banking crisis?

Accepted Answer

A)  when investors withdraw funds from financial institutions 
B)  when exchange rates fluctuate dramatically 
C)  when governments borrow excessively from banks 
D)  when a nation's currency rapidly depreciates 
A)  when investors withdraw funds from financial institutions 
B)  when exchange rates fluctuate dramatically 
C)  when governments borrow excessively from banks 
D)  when a nation's currency rapidly depreciates

Which of the following statements is TRUE of the global financial system?

The 2008 global financial crisis began in the subprime mortgage market in the United States and spread to banking systems worldwide.

The Indian rupee is one of the currencies upon which the value of the Special Drawing Right (SDR) is based.

An increase in a nation's rate of inflation is caused by an oversupply of money and this eventually leads to a decrease in the value of the nation's currency.

All else being equal, the greater the demand for a currency, the higher its price; the lower the demand for a currency, the lower its price.

In most high-inflation nations, interest rates are increasing while the purchasing power of the national currency is plummeting.

A devaluation is an action taken by the central bank.

Because the firm either accepting or making the payment assumes the risk for the fluctuation, companies have a tendency to prefer handling international business transactions with their own country's currency rather than with the currency of another country.

Explain the belief that a persistent trade deficit is harmful to the national economy. Why was the Bretton Woods Agreement initiated and why was it terminated?

Describe the two main types of foreign exchange management used today. Provide examples of nations that use each type of system. What are the benefits of each system?

The central bank also seeks to ensure the safety and soundness of the national financial system by supervising and regulating the nation's banking system.

If last year one dollar equaled one euro, and then the exchange rate shifted so that today one dollar equals two euros, which of the following would most likely NOT occur?

Momentum trading occurs when investors buy stocks whose prices have been falling and sell stocks whose prices have been rising.

Which of the following is a characteristic of a bond?

The French franc is one of the European currencies that was taken out of circulation and replaced by the euro.

Describe four principles or organizations brought about by the Bretton Woods Agreement that remain important to international business and trade today. Why does the integration of financial and monetary activity worldwide continue to grow?

Which of the following statements is TRUE when a national currency can be undervalued?

Describe the role of commercial banks in the global financial sector. Provide a brief description of the activities performed by three different types of commercial banks.

The purpose of the Bretton Woods Agreement was to ________.

Which of the following situations often results in a banking crisis?

Introduction: What Is International Business

Globalization of Markets and the Internationalization of the Firm

The Cultural Environment of International Business

Ethics, Corporate Social Responsibility, Sustainability and Corporate Governance in International Business

Theories of International Trade and Investment

Political and Legal Systems in National Environments

Government Intervention and Regional Economic Integration

Understanding Emerging Markets

Financial Management and Accounting in the Global Firm

Strategy and Organization in the International Firm

Global Market Opportunity Assessment

Exporting and Global Sourcing

Foreign Direct Investment and Collaborative Ventures

Licensing, Franchising, and Other Contractual Strategies

Marketing in the Global Firm

Human Resource Management in the Global Firm

Filters

Exam 9: The International Monetary and Financial Environment

Which of the following statements is TRUE of the global financial system?

The 2008 global financial crisis began in the subprime mortgage market in the United States and spread to banking systems worldwide.

The Indian rupee is one of the currencies upon which the value of the Special Drawing Right (SDR) is based.

An increase in a nation's rate of inflation is caused by an oversupply of money and this eventually leads to a decrease in the value of the nation's currency.

All else being equal, the greater the demand for a currency, the higher its price; the lower the demand for a currency, the lower its price.

In most high-inflation nations, interest rates are increasing while the purchasing power of the national currency is plummeting.

A devaluation is an action taken by the central bank.

Because the firm either accepting or making the payment assumes the risk for the fluctuation, companies have a tendency to prefer handling international business transactions with their own country's currency rather than with the currency of another country.

Explain the belief that a persistent trade deficit is harmful to the national economy. Why was the Bretton Woods Agreement initiated and why was it terminated?

Describe the two main types of foreign exchange management used today. Provide examples of nations that use each type of system. What are the benefits of each system?

The central bank also seeks to ensure the safety and soundness of the national financial system by supervising and regulating the nation's banking system.

If last year one dollar equaled one euro, and then the exchange rate shifted so that today one dollar equals two euros, which of the following would most likely NOT occur?

Momentum trading occurs when investors buy stocks whose prices have been falling and sell stocks whose prices have been rising.

Which of the following is a characteristic of a bond?

The French franc is one of the European currencies that was taken out of circulation and replaced by the euro.

Describe four principles or organizations brought about by the Bretton Woods Agreement that remain important to international business and trade today. Why does the integration of financial and monetary activity worldwide continue to grow?

Which of the following statements is TRUE when a national currency can be undervalued?

Describe the role of commercial banks in the global financial sector. Provide a brief description of the activities performed by three different types of commercial banks.

The purpose of the Bretton Woods Agreement was to ________.

Which of the following situations often results in a banking crisis?

Introduction: What Is International Business

Globalization of Markets and the Internationalization of the Firm

The Cultural Environment of International Business

Ethics, Corporate Social Responsibility, Sustainability and Corporate Governance in International Business

Theories of International Trade and Investment

Political and Legal Systems in National Environments

Government Intervention and Regional Economic Integration

Understanding Emerging Markets

Financial Management and Accounting in the Global Firm

Strategy and Organization in the International Firm

Global Market Opportunity Assessment

Exporting and Global Sourcing

Foreign Direct Investment and Collaborative Ventures

Licensing, Franchising, and Other Contractual Strategies

Marketing in the Global Firm

Human Resource Management in the Global Firm

Filters