Question 1

Which of the following accurately explains how producers are affected by exchange rate changes?

Accepted Answer

A) To save money, a manufacturer may decide to relocate production to a country with a stronger currency. 
B) A manufacturing firm relocating to a country with a weak currency can make a cheap initial investment. 
C) Goods manufactured in a country with a weak currency may be relatively expensive in world markets. 
D) A manufacturer with high operating expenses would likely relocate production to a country with a currency that is gaining value. 
A) To save money, a manufacturer may decide to relocate production to a country with a stronger currency. 
B) A manufacturing firm relocating to a country with a weak currency can make a cheap initial investment. 
C) Goods manufactured in a country with a weak currency may be relatively expensive in world markets. 
D) A manufacturer with high operating expenses would likely relocate production to a country with a currency that is gaining value.

Question 2

A form of currency control that often applies to tourism because it limits the amount of currency that someone can get from the bank for foreign travel is known as ________.

Accepted Answer

A) multiple exchange rates 
B) confidence 
C) quantity controls 
D) hard currency 
A) multiple exchange rates 
B) confidence 
C) quantity controls 
D) hard currency

Question 3

The Japanese yen is an example of a soft currency.

Accepted Answer

A) True 
 B)False

Question 4

When forecasting exchange rates, forecasters must predict the magnitude, timing, and direction of change in exchange rates.

Accepted Answer

A) True 
 B)False

Question 5

The primary objective of the International Monetary Fund is to ________.

Accepted Answer

A) encourage euro adoption 
B) promote exchange rate stability 
C) establish a unilateral system of payments 
D) foster the power of the foreign-exchange market 
A) encourage euro adoption 
B) promote exchange rate stability 
C) establish a unilateral system of payments 
D) foster the power of the foreign-exchange market

Question 6

It is easier to predict the ________ of a change than the ________ of a change in exchange rates.

Accepted Answer

A) altitude; magnitude 
B) depth; length 
C) timing; depth 
D) direction; magnitude 
A) altitude; magnitude 
B) depth; length 
C) timing; depth 
D) direction; magnitude

Question 7

Which of the following was NOT a result of the Smithsonian Agreement?

Accepted Answer

A) revaluation of currencies other than the dollar against gold 
B) establishment of par values the quota system 
C) devaluation of the dollar against gold 
D) widening of exchange-rate flexibility 
A) revaluation of currencies other than the dollar against gold 
B) establishment of par values the quota system 
C) devaluation of the dollar against gold 
D) widening of exchange-rate flexibility

Question 8

The major objective of the European Central Bank is to ________.

Accepted Answer

A) set monetary policy for EU countries that adopt the euro 
B) ensure that EU interest rates are equal to U.S. rates 
C) control taxes as a means of monitoring EU debt 
D) reduce spending by EU countries 
A) set monetary policy for EU countries that adopt the euro 
B) ensure that EU interest rates are equal to U.S. rates 
C) control taxes as a means of monitoring EU debt 
D) reduce spending by EU countries

Question 9

All of the following are ways to control currency convertibility EXCEPT ________.

Accepted Answer

A) import licenses 
B) multiple exchange rates 
C) import deposits 
D) purchasing power parity 
A) import licenses 
B) multiple exchange rates 
C) import deposits 
D) purchasing power parity

Question 10

The Bretton Woods Agreement established a system of fixed exchange rates under which each IMF member country set a ________.

Accepted Answer

A) quota 
B) par value 
C) gold standard 
D) nominal interest rate 
A) quota 
B) par value 
C) gold standard 
D) nominal interest rate

Question 11

Fundamental forecasters assume that if current exchange rates reflect all facts in the market, then under similar circumstances, future rates will follow the same patterns.

Accepted Answer

A) True 
 B)False

Question 12

The ________ is the currency most widely used as a reserve asset.

Accepted Answer

A) euro 
B) Japanese yen 
C) U.S. dollar 
D) British pound 
A) euro 
B) Japanese yen 
C) U.S. dollar 
D) British pound

Question 13

Which of the following states that the country with the higher interest rate should have the higher inflation?

Accepted Answer

A) the Fisher Effect 
B) the International Fisher Effect 
C) the Interest Rate Inflation Theory 
D) the Forward Rate Theory 
A) the Fisher Effect 
B) the International Fisher Effect 
C) the Interest Rate Inflation Theory 
D) the Forward Rate Theory

Which of the following accurately explains how producers are affected by exchange rate changes?

A form of currency control that often applies to tourism because it limits the amount of currency that someone can get from the bank for foreign travel is known as ________.

The Japanese yen is an example of a soft currency.

When forecasting exchange rates, forecasters must predict the magnitude, timing, and direction of change in exchange rates.

The primary objective of the International Monetary Fund is to ________.

It is easier to predict the of a change than the of a change in exchange rates.

Which of the following was NOT a result of the Smithsonian Agreement?

The major objective of the European Central Bank is to ________.

All of the following are ways to control currency convertibility EXCEPT ________.

The Bretton Woods Agreement established a system of fixed exchange rates under which each IMF member country set a ________.

Fundamental forecasters assume that if current exchange rates reflect all facts in the market, then under similar circumstances, future rates will follow the same patterns.

The ________ is the currency most widely used as a reserve asset.

Which of the following states that the country with the higher interest rate should have the higher inflation?

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

Globalization and Society

International Trade and Factor-Mobility Theory

Governmental Influence on Trade

Cross-National Cooperation and Agreements

Global Foreign-Exchange Markets

Global Capital Markets

The Strategy of International Business

Country Evaluation and Selection

Export and Import

Direct Investment and Collaborative Strategies

The Organization of International Business

Marketing Globally

Global Manufacturing and Supply Chain Management

International Accounting and Finance Issues

International Human Resource Management

Filters

Exam 10: The Determination of Exchange Rates

Which of the following accurately explains how producers are affected by exchange rate changes?

A form of currency control that often applies to tourism because it limits the amount of currency that someone can get from the bank for foreign travel is known as ________.

The Japanese yen is an example of a soft currency.

When forecasting exchange rates, forecasters must predict the magnitude, timing, and direction of change in exchange rates.

The primary objective of the International Monetary Fund is to ________.

It is easier to predict the ________ of a change than the ________ of a change in exchange rates.

Which of the following was NOT a result of the Smithsonian Agreement?

The major objective of the European Central Bank is to ________.

All of the following are ways to control currency convertibility EXCEPT ________.

The Bretton Woods Agreement established a system of fixed exchange rates under which each IMF member country set a ________.

Fundamental forecasters assume that if current exchange rates reflect all facts in the market, then under similar circumstances, future rates will follow the same patterns.

The ________ is the currency most widely used as a reserve asset.

Which of the following states that the country with the higher interest rate should have the higher inflation?

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

Globalization and Society

International Trade and Factor-Mobility Theory

Governmental Influence on Trade

Cross-National Cooperation and Agreements

Global Foreign-Exchange Markets

Global Capital Markets

The Strategy of International Business

Country Evaluation and Selection

Export and Import

Direct Investment and Collaborative Strategies

The Organization of International Business

Marketing Globally

Global Manufacturing and Supply Chain Management

International Accounting and Finance Issues

International Human Resource Management

Filters

It is easier to predict the of a change than the of a change in exchange rates.