Question 1

An increase in the use of quotas is expected to:

Accepted Answer

A)  reduce the country's current account balance, if other governments do not retaliate. 
B)  increase the country's current account balance, if other governments do not retaliate. 
C)  have no impact on the country's current account balance unless other governments retaliate. 
D)  increase the volume of a country's trade with other countries. 
A)  reduce the country's current account balance, if other governments do not retaliate. 
B)  increase the country's current account balance, if other governments do not retaliate. 
C)  have no impact on the country's current account balance unless other governments retaliate. 
D)  increase the volume of a country's trade with other countries.

Question 2

The International Financial Corporation was established to:

Accepted Answer

A)  enhance development solely in Asia through grants. 
B)  enhance economic development through non subsidized loans (at market interest rates). 
C)  enhance economic development through low interest rate loans (below market rates). 
D)  enhance economic development of the private sector through investment in stock of corporations. 
A)  enhance development solely in Asia through grants. 
B)  enhance economic development through non subsidized loans (at market interest rates). 
C)  enhance economic development through low interest rate loans (below market rates). 
D)  enhance economic development of the private sector through investment in stock of corporations.

Question 3

The World Bank frequently enters into cofinancing agreements.Under these agreements,financing is provided by the World Bank and/or official aid agencies,export credit agencies,or commercial banks.

Accepted Answer

A) True 
 B)False

Question 4

Intracompany trade represents the exporting of products by one country to other countries below cost.

Accepted Answer

A) True 
 B)False

Question 5

A General Agreement on Tariffs and Trade (GATT)accord in 1993 called for:

Accepted Answer

A)  increased trade restrictions outside of North America. 
B)  lower trade restrictions around the world. 
C)  uniform environmental standards around the world. 
D)  uniform worker health laws. 
A)  increased trade restrictions outside of North America. 
B)  lower trade restrictions around the world. 
C)  uniform environmental standards around the world. 
D)  uniform worker health laws.

Question 6

A tariff is a maximum limit on imports.

Accepted Answer

A) True 
 B)False

Question 7

A weak home currency may not be a perfect solution to correct a balance of trade deficit because:

Accepted Answer

A)  it reduces the prices of imports paid by local companies. 
B)  it increases the prices of exports by local companies. 
C)  it prevents international trade transactions from being prearranged. 
D)  foreign companies may reduce the prices of their products to stay competitive. 
A)  it reduces the prices of imports paid by local companies. 
B)  it increases the prices of exports by local companies. 
C)  it prevents international trade transactions from being prearranged. 
D)  foreign companies may reduce the prices of their products to stay competitive.

Question 8

The J curve effect is the initial worsening of the U.S.trade balance due to a weakening dollar because of established trade relationships that are not easily changed;as the dollar weakens,the dollar value of imports initially rises before the U.S.trade balance is improved.

Accepted Answer

A) True 
 B)False

Question 9

______________ is (are)income received by investors on foreign investments in financial assets (securities).

Accepted Answer

A)  Portfolio income 
B)  Direct foreign income 
C)  Unilateral transfers 
D)  Factor income 
A)  Portfolio income 
B)  Direct foreign income 
C)  Unilateral transfers 
D)  Factor income

Question 10

_________ purchases more U.S.exports than any other country.

Accepted Answer

A)  Japan 
B)  United Kingdom 
C)  Mexico 
D)  Canada 
A)  Japan 
B)  United Kingdom 
C)  Mexico 
D)  Canada

Question 11

A balance-of-trade surplus indicates an excess of merchandise imports over merchandise exports.

Accepted Answer

A) True 
 B)False

Question 12

If a country's government imposes a tariff on imported goods,that country's current account balance will likely __________ (assuming no retaliation by other governments).

Accepted Answer

A)  decrease 
B)  increase 
C)  remain unaffected 
D)  either A or C are possible 
A)  decrease 
B)  increase 
C)  remain unaffected 
D)  either A or C are possible

Question 13

The balance of payments is a measurement of all transactions between domestic and foreign residents over a specified period of time.

Accepted Answer

A) True 
 B)False

Question 14

According to the text,international trade (exports plus imports combined)as a percentage of GDP is:

Accepted Answer

A)  higher in the U.S. than in European countries. 
B)  lower in the U.S. than in European countries. 
C)  higher in the U.S. than in about half the European countries, and lower in the U.S. than the others. 
D)  about the same in the U.S. as in European countries. 
A)  higher in the U.S. than in European countries. 
B)  lower in the U.S. than in European countries. 
C)  higher in the U.S. than in about half the European countries, and lower in the U.S. than the others. 
D)  about the same in the U.S. as in European countries.

Question 15

A weakening of the U.S.dollar with respect to the British pound would likely reduce the U.S.exports to Britain and increase U.S.imports from Britain.

Accepted Answer

A) True 
 B)False

Question 16

Direct foreign investment by U.S.-based MNCs occurs primarily in the Bahamas and Brazil.

Accepted Answer

A) True 
 B)False

Question 17

The primary component of the current account is the:

Accepted Answer

A)  balance of trade. 
B)  balance of money market flows. 
C)  balance of capital market flows. 
D)  unilateral transfers. 
A)  balance of trade. 
B)  balance of money market flows. 
C)  balance of capital market flows. 
D)  unilateral transfers.

Question 18

Over time,international trade (exports plus imports)as a percentage of GDP has:

Accepted Answer

A)  increased for most major countries. 
B)  decreased for most major countries. 
C)  stayed about constant for most major countries. 
D)  increased for about half the major countries and decreased for the others. 
A)  increased for most major countries. 
B)  decreased for most major countries. 
C)  stayed about constant for most major countries. 
D)  increased for about half the major countries and decreased for the others.

Question 19

The current account represents the investment in fixed assets in foreign countries that can be used to conduct business operations.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not a commonly occurring subtle trade restriction

Accepted Answer

A)  Firms based in one country are not subject to certain restrictions and can produce products at a lower cost than firms in other countries. 
B)  Firms based in a country receive subsidies from their government, produce products, and then export those products at a cheap price. 
C)  Firms based in one country are allowed by their government to offer bribes to large customers when pursuing business deals in a particular industry. 
D)  All of the above describe commonly occurring subtle trade restrictions. 
A)  Firms based in one country are not subject to certain restrictions and can produce products at a lower cost than firms in other countries. 
B)  Firms based in a country receive subsidies from their government, produce products, and then export those products at a cheap price. 
C)  Firms based in one country are allowed by their government to offer bribes to large customers when pursuing business deals in a particular industry. 
D)  All of the above describe commonly occurring subtle trade restrictions.

Exam 2: International Flow of Funds

An increase in the use of quotas is expected to:

The International Financial Corporation was established to:

The World Bank frequently enters into cofinancing agreements.Under these agreements,financing is provided by the World Bank and/or official aid agencies,export credit agencies,or commercial banks.

Intracompany trade represents the exporting of products by one country to other countries below cost.

A General Agreement on Tariffs and Trade (GATT)accord in 1993 called for:

A tariff is a maximum limit on imports.

A weak home currency may not be a perfect solution to correct a balance of trade deficit because:

The J curve effect is the initial worsening of the U.S.trade balance due to a weakening dollar because of established trade relationships that are not easily changed;as the dollar weakens,the dollar value of imports initially rises before the U.S.trade balance is improved.

______________ is (are)income received by investors on foreign investments in financial assets (securities).

_________ purchases more U.S.exports than any other country.

A balance-of-trade surplus indicates an excess of merchandise imports over merchandise exports.

If a country's government imposes a tariff on imported goods,that country's current account balance will likely __________ (assuming no retaliation by other governments).

The balance of payments is a measurement of all transactions between domestic and foreign residents over a specified period of time.

According to the text,international trade (exports plus imports combined)as a percentage of GDP is:

A weakening of the U.S.dollar with respect to the British pound would likely reduce the U.S.exports to Britain and increase U.S.imports from Britain.

Direct foreign investment by U.S.-based MNCs occurs primarily in the Bahamas and Brazil.

The primary component of the current account is the:

Over time,international trade (exports plus imports)as a percentage of GDP has:

The current account represents the investment in fixed assets in foreign countries that can be used to conduct business operations.

Which of the following is not a commonly occurring subtle trade restriction

Multinational Financial Management: An Overview

International Financial Markets

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships among Inflation,Interest Rates,and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Direct Foreign Investment

Multinational Capital Budgeting

Multinational Restructuring

Country Risk Analysis

Multinational Cost of Capital and Capital Structure

Long-Term Financing

Financing International Trade

Short-Term Financing

International Cash Management

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