Question 1

Capital flight from a country hinders its ability to service debt and pay for imports.

Accepted Answer

A) True 
 B)False

Question 2

If the currency of Country A is depreciating against a currency of Country B, exports from Country A to Country B should increase.

Accepted Answer

A) True 
 B)False

Question 3

The global financial system is the collective of financial institutions that facilitate and regulate investment and capital flows and make possible massive trading of currencies and financial assets. It reflects the activities of companies, banks, and financial institutions, all engaged in ongoing financial activity.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  Switch trading 
B)  Dumping 
C)  Momentum trading 
D)  Herding 
A)  Switch trading 
B)  Dumping 
C)  Momentum trading 
D)  Herding

Question 5

Merchant banks provide capital to firms in the form of shares rather than loans.

Accepted Answer

A) True 
 B)False

Question 6

The International Monetary Fund stands ready to provide financial assistance in the form of loans and grants to support policy programs intended to correct macroeconomic problems.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following statements is TRUE of a dirty float?

Accepted Answer

A)  Exchange rates fluctuate with occasional central bank intervention. 
B)  Beneficial exchange rates are offered in trade with certain nations. 
C)  Fixed exchange rates are set and maintained by the World Bank. 
D)  Currency values rise and fall according to the U.S. dollar. 
A)  Exchange rates fluctuate with occasional central bank intervention. 
B)  Beneficial exchange rates are offered in trade with certain nations. 
C)  Fixed exchange rates are set and maintained by the World Bank. 
D)  Currency values rise and fall according to the U.S. dollar.

Question 8

Which of the following is the most likely underlying reason for the demise of the Bretton Woods system?

Accepted Answer

A)  U.S. trade deficits 
B)  creation of the EU 
C)  gold depreciation 
D)  WTO restrictions 
A)  U.S. trade deficits 
B)  creation of the EU 
C)  gold depreciation 
D)  WTO restrictions

Question 9

A pegged exchange rate system is one in which the value of a currency is set relative to the value of another (or to the value of a basket of currencies) at a specified rate.

Accepted Answer

A) True 
 B)False

Question 10

The IMF and the World Bank seldom work together.

Accepted Answer

A) True 
 B)False

Question 11

All else being equal, the greater the supply of a currency, the higher its price; the lower the supply of a currency, the lower its price.

Accepted Answer

A) True 
 B)False

Question 12

A French company sells goods to a foreign customer whose currency is depreciating against the euro. Which of the following will the company most likely experience when completing the sale?

Accepted Answer

A)  The company will receive fewer euros if the sales price was expressed in the buyer's currency. 
B)  The company will receive more euros if the sales price was expressed in the buyer's currency. 
C)  The company will receive fewer euros if the sales price was expressed in euros originally. 
D)  The company will receive more euros if the sales price was expressed in euros originally. 
A)  The company will receive fewer euros if the sales price was expressed in the buyer's currency. 
B)  The company will receive more euros if the sales price was expressed in the buyer's currency. 
C)  The company will receive fewer euros if the sales price was expressed in euros originally. 
D)  The company will receive more euros if the sales price was expressed in euros originally.

Question 13

What is the value of one country's currency expressed in relation to the currency of another country?

Accepted Answer

A)  countertrade 
B)  monetization 
C)  credit derivative 
D)  exchange rate 
A)  countertrade 
B)  monetization 
C)  credit derivative 
D)  exchange rate

Question 14

A U.S. company buys from a supplier whose currency is increasing against the dollar. Which of the following will the company most likely have to do if the purchasing price is expressed in the supplier's currency?

Accepted Answer

A)  pay less in dollars than originally expected 
B)  pay more in dollars than originally expected 
C)  pay the same amount of dollars as originally expected 
D)  pay part of the transaction in the supplier's currency 
A)  pay less in dollars than originally expected 
B)  pay more in dollars than originally expected 
C)  pay the same amount of dollars as originally expected 
D)  pay part of the transaction in the supplier's currency

Question 15

The U.S. dollar is an example of ________.

Accepted Answer

A)  soft currency 
B)  convertible currency 
C)  nonconvertible currency 
D)  private currency 
A)  soft currency 
B)  convertible currency 
C)  nonconvertible currency 
D)  private currency

Question 16

Which of the following would a firm considering a corporate merger consult for issues related to the merger?

Accepted Answer

A)  private bank 
B)  offshore bank 
C)  commercial bank 
D)  investment bank 
A)  private bank 
B)  offshore bank 
C)  commercial bank 
D)  investment bank

Question 17

Which of the following statements is TRUE of the global debt crisis?

Accepted Answer

A)  Fiscal imbalances are the least important source of risk and uncertainty in the global business environment. 
B)  The smallest proportion of government debt results from national pension and healthcare programs. 
C)  Debt has substantially decreased in major advanced economies mainly due to excessive government spending. 
D)  When a government tries to pay down its debt, money is drawn out of the national money supply, which hinders economic activity and reduces tax revenues. 
A)  Fiscal imbalances are the least important source of risk and uncertainty in the global business environment. 
B)  The smallest proportion of government debt results from national pension and healthcare programs. 
C)  Debt has substantially decreased in major advanced economies mainly due to excessive government spending. 
D)  When a government tries to pay down its debt, money is drawn out of the national money supply, which hinders economic activity and reduces tax revenues.

Question 18

Which of the following resolves the problem of making international payments and facilitates international investment and borrowing among firms, banks, and governments?

Accepted Answer

A)  foreign exchange 
B)  barter 
C)  capital flight 
D)  buyback 
A)  foreign exchange 
B)  barter 
C)  capital flight 
D)  buyback

Question 19

Which of the following is an effect caused by capital flight?

Accepted Answer

A)  It increases the need for domestic investment holdings. 
B)  It decreases the ability of the nation to service debt and pay for imports. 
C)  It reduces harmful currency restrictions. 
D)  It decreases the nation's supply of hard currencies. 
A)  It increases the need for domestic investment holdings. 
B)  It decreases the ability of the nation to service debt and pay for imports. 
C)  It reduces harmful currency restrictions. 
D)  It decreases the nation's supply of hard currencies.

Question 20

Which of the following statements is TRUE of trade surplus?

Accepted Answer

A)  It is a negative balance of trade. 
B)  It occurs when there is a net outflow of domestic currency to foreign markets. 
C)  It occurs when a nation's imports are greater than its exports. 
D)  It occurs when a nation's exports are greater than its imports. 
A)  It is a negative balance of trade. 
B)  It occurs when there is a net outflow of domestic currency to foreign markets. 
C)  It occurs when a nation's imports are greater than its exports. 
D)  It occurs when a nation's exports are greater than its imports.

Capital flight from a country hinders its ability to service debt and pay for imports.

If the currency of Country A is depreciating against a currency of Country B, exports from Country A to Country B should increase.

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

Merchant banks provide capital to firms in the form of shares rather than loans.

The International Monetary Fund stands ready to provide financial assistance in the form of loans and grants to support policy programs intended to correct macroeconomic problems.

Which of the following statements is TRUE of a dirty float?

Which of the following is the most likely underlying reason for the demise of the Bretton Woods system?

A pegged exchange rate system is one in which the value of a currency is set relative to the value of another (or to the value of a basket of currencies) at a specified rate.

The IMF and the World Bank seldom work together.

All else being equal, the greater the supply of a currency, the higher its price; the lower the supply of a currency, the lower its price.

A French company sells goods to a foreign customer whose currency is depreciating against the euro. Which of the following will the company most likely experience when completing the sale?

What is the value of one country's currency expressed in relation to the currency of another country?

A U.S. company buys from a supplier whose currency is increasing against the dollar. Which of the following will the company most likely have to do if the purchasing price is expressed in the supplier's currency?

The U.S. dollar is an example of ________.

Which of the following would a firm considering a corporate merger consult for issues related to the merger?

Which of the following statements is TRUE of the global debt crisis?

Which of the following resolves the problem of making international payments and facilitates international investment and borrowing among firms, banks, and governments?

Which of the following is an effect caused by capital flight?

Which of the following statements is TRUE of trade surplus?

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

Capital flight from a country hinders its ability to service debt and pay for imports.

If the currency of Country A is depreciating against a currency of Country B, exports from Country A to Country B should increase.

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

Merchant banks provide capital to firms in the form of shares rather than loans.

The International Monetary Fund stands ready to provide financial assistance in the form of loans and grants to support policy programs intended to correct macroeconomic problems.

Which of the following statements is TRUE of a dirty float?

Which of the following is the most likely underlying reason for the demise of the Bretton Woods system?

A pegged exchange rate system is one in which the value of a currency is set relative to the value of another (or to the value of a basket of currencies) at a specified rate.

The IMF and the World Bank seldom work together.

All else being equal, the greater the supply of a currency, the higher its price; the lower the supply of a currency, the lower its price.

A French company sells goods to a foreign customer whose currency is depreciating against the euro. Which of the following will the company most likely experience when completing the sale?

What is the value of one country's currency expressed in relation to the currency of another country?

A U.S. company buys from a supplier whose currency is increasing against the dollar. Which of the following will the company most likely have to do if the purchasing price is expressed in the supplier's currency?

The U.S. dollar is an example of ________.

Which of the following would a firm considering a corporate merger consult for issues related to the merger?

Which of the following statements is TRUE of the global debt crisis?

Which of the following resolves the problem of making international payments and facilitates international investment and borrowing among firms, banks, and governments?

Which of the following is an effect caused by capital flight?

Which of the following statements is TRUE of trade surplus?

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