Question 1

How can capital outflows occur as debits in the BOP accounting system?

Accepted Answer

They can occur as ownership of foreign assets by a country's residents increases and foreign ownership of assets in a country declines.

Question 2

The term ________ means that a currency's value is determined by the forces of supply and demand.

Accepted Answer

A)  pegged 
B)  par value 
C)  float 
D)  market exchange 
A)  pegged 
B)  par value 
C)  float 
D)  market exchange C

Question 3

Why was the international monetary system also called the sterling-based gold standard during the gold standard?

Accepted Answer

The international monetary system was also called the sterling-based gold standard because most firms were willing to accept either British pounds or gold in settlement of transactions. The British pound sterling was the most important currency in international commerce during this time. This was somewhat a reflection of Britain's economic and military power.

Question 4

Dirty float is another term for ________.

Accepted Answer

A)  flexible float 
B)  managed float 
C)  illegal exchange 
D)  convertible currency 
A)  flexible float 
B)  managed float 
C)  illegal exchange 
D)  convertible currency

Question 5

Country X has requested and received a loan from the World Bank. Country X may NOT use the money to finance ________.

Accepted Answer

A)  new railroads 
B)  harbor facilities 
C)  national highways 
D)  trade deficits 
A)  new railroads 
B)  harbor facilities 
C)  national highways 
D)  trade deficits

Question 6

The International Bank for Reconstruction and Development is also known as the ________.

Accepted Answer

A)  World Bank 
B)  International Monetary Fund 
C)  Organization for Economic Cooperation and Development 
D)  Bretton Woods Treaty 
A)  World Bank 
B)  International Monetary Fund 
C)  Organization for Economic Cooperation and Development 
D)  Bretton Woods Treaty

Question 7

What are the four types of assets included in the Official Reserves Account?

Accepted Answer

The assets include g

Question 8

Under a floating exchange rate system, what determines the exchange rate for each currency?

Accepted Answer

A)  par value 
B)  gold standard 
C)  pegged value 
D)  supply and demand 
A)  par value 
B)  gold standard 
C)  pegged value 
D)  supply and demand

Question 9

Dell Computers invests excess cash balances overnight in a London bank to earn a higher interest rate than it could earn in a New York bank. Dell is most likely making a(n) ________.

Accepted Answer

A)  international currency investment 
B)  short-term portfolio investment 
C)  long-term portfolio investment 
D)  foreign direct investment 
A)  international currency investment 
B)  short-term portfolio investment 
C)  long-term portfolio investment 
D)  foreign direct investment

Question 10

What occurred at the Louvre Accord?

Accepted Answer

A)  Central banks allowed the dollar's value to fall. 
B)  The value of the U.S. dollar was stabilized. 
C)  EU members adopted a common currency. 
D)  An exchange rate mechanism was established. 
A)  Central banks allowed the dollar's value to fall. 
B)  The value of the U.S. dollar was stabilized. 
C)  EU members adopted a common currency. 
D)  An exchange rate mechanism was established.

Question 11

The gold standard was a monetary system whereby countries agreed to buy or sell their paper currencies in exchange for gold.

Accepted Answer

A) True 
 B)False

Question 12

What is the official settlements balance?

Accepted Answer

The official settlements balance reflect

Question 13

The ________ records international transactions.

Accepted Answer

A)  balance of payments accounting system 
B)  international accounting standards 
C)  gold standard procedure 
D)  ISO 9000 system 
A)  balance of payments accounting system 
B)  international accounting standards 
C)  gold standard procedure 
D)  ISO 9000 system

Question 14

Why did some countries deliberately devalue their currencies following the end of the gold standard?

Accepted Answer

By deliberately and artificial

Question 15

Why is quota size an important membership issue for the IMF? Do you think this is a fair system? Why or why not?

Accepted Answer

The country's quota determines its votin

Question 16

What is the primary purpose of the Multilateral Investment Guarantee Agency?

Accepted Answer

A)  make soft loans 
B)  make hard loans 
C)  promote FDI in developing countries 
D)  provide investors with political risk insurance 
A)  make soft loans 
B)  make hard loans 
C)  promote FDI in developing countries 
D)  provide investors with political risk insurance

Question 17

Once the gold standard was suspended, it was never considered again for use in the international monetary system.

Accepted Answer

A) True 
 B)False

Question 18

AeroTech, a German firm, deposits a check in a U.S. bank. The deposit will be recorded as a ________.

Accepted Answer

A)  capital outflow in the U.S. BOP 
B)  capital inflow in the U.S. BOP 
C)  unilateral debit in the U.S. 
D)  credit to Germany's BOP 
A)  capital outflow in the U.S. BOP 
B)  capital inflow in the U.S. BOP 
C)  unilateral debit in the U.S. 
D)  credit to Germany's BOP

Question 19

A managed float differs from a dirty float because under a managed float exchange rates move as a result of central bank intervention and supply and demand, while a dirty float involves black market intervention.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not one of the major accounts in the BOP accounting system?

Accepted Answer

A)  capital account 
B)  debt account 
C)  official reserves account 
D)  errors and omissions 
A)  capital account 
B)  debt account 
C)  official reserves account 
D)  errors and omissions

How can capital outflows occur as debits in the BOP accounting system?

The term ________ means that a currency's value is determined by the forces of supply and demand.

Why was the international monetary system also called the sterling-based gold standard during the gold standard?

Dirty float is another term for ________.

Country X has requested and received a loan from the World Bank. Country X may NOT use the money to finance ________.

The International Bank for Reconstruction and Development is also known as the ________.

What are the four types of assets included in the Official Reserves Account?

Under a floating exchange rate system, what determines the exchange rate for each currency?

Dell Computers invests excess cash balances overnight in a London bank to earn a higher interest rate than it could earn in a New York bank. Dell is most likely making a(n) ________.

What occurred at the Louvre Accord?

The gold standard was a monetary system whereby countries agreed to buy or sell their paper currencies in exchange for gold.

What is the official settlements balance?

The ________ records international transactions.

Why did some countries deliberately devalue their currencies following the end of the gold standard?

Why is quota size an important membership issue for the IMF? Do you think this is a fair system? Why or why not?

What is the primary purpose of the Multilateral Investment Guarantee Agency?

Once the gold standard was suspended, it was never considered again for use in the international monetary system.

AeroTech, a German firm, deposits a check in a U.S. bank. The deposit will be recorded as a ________.

A managed float differs from a dirty float because under a managed float exchange rates move as a result of central bank intervention and supply and demand, while a dirty float involves black market intervention.

Which of the following is not one of the major accounts in the BOP accounting system?

An Overview of International Business

Global Marketplaces and Business Centers

Legal, Technological, Accounting, and Political Environments

The Role of Culture

Ethics and Social Responsibility in International Business

International Trade and Investment

Foreign Exchange and International Financial Markets

Formulation of National Trade Policies

International Cooperation Among Nations

International Strategic Management

Strategies for Analyzing and Entering Foreign Markets

International Strategic Alliances

International Organization Design and Control

Leadership and Employee Behavior in International Business

International Marketing

International Operations Management

International Financial Management

International Human Resource Management and Labor Relations

Filters

Exam 7: The International Monetary System and the Balance of Payments

How can capital outflows occur as debits in the BOP accounting system?

The term ________ means that a currency's value is determined by the forces of supply and demand.

Why was the international monetary system also called the sterling-based gold standard during the gold standard?

Dirty float is another term for ________.

Country X has requested and received a loan from the World Bank. Country X may NOT use the money to finance ________.

The International Bank for Reconstruction and Development is also known as the ________.

What are the four types of assets included in the Official Reserves Account?

Under a floating exchange rate system, what determines the exchange rate for each currency?

Dell Computers invests excess cash balances overnight in a London bank to earn a higher interest rate than it could earn in a New York bank. Dell is most likely making a(n) ________.

What occurred at the Louvre Accord?

The gold standard was a monetary system whereby countries agreed to buy or sell their paper currencies in exchange for gold.

What is the official settlements balance?

The ________ records international transactions.

Why did some countries deliberately devalue their currencies following the end of the gold standard?

Why is quota size an important membership issue for the IMF? Do you think this is a fair system? Why or why not?

What is the primary purpose of the Multilateral Investment Guarantee Agency?

Once the gold standard was suspended, it was never considered again for use in the international monetary system.

AeroTech, a German firm, deposits a check in a U.S. bank. The deposit will be recorded as a ________.

A managed float differs from a dirty float because under a managed float exchange rates move as a result of central bank intervention and supply and demand, while a dirty float involves black market intervention.

Which of the following is not one of the major accounts in the BOP accounting system?

An Overview of International Business

Global Marketplaces and Business Centers

Legal, Technological, Accounting, and Political Environments

The Role of Culture

Ethics and Social Responsibility in International Business

International Trade and Investment

Foreign Exchange and International Financial Markets

Formulation of National Trade Policies

International Cooperation Among Nations

International Strategic Management

Strategies for Analyzing and Entering Foreign Markets

International Strategic Alliances

International Organization Design and Control

Leadership and Employee Behavior in International Business

International Marketing

International Operations Management

International Financial Management

International Human Resource Management and Labor Relations

Filters