Question 1

China holds a massive amount of foreign exchange reserves.As of 1010 they held nearly $2,500 billion.This huge foreign exchange reserve should allow China to:

Accepted Answer

A) Manage the value of the Chinese yuan to maintain competitiveness in world markets. 
B) Maintain a relatively stable managed fixed exchange rate for the yuan for years to come. 
C) Remain a very important player in world trade for at least the next several years. 
D) All of the above. 
A) Manage the value of the Chinese yuan to maintain competitiveness in world markets. 
B) Maintain a relatively stable managed fixed exchange rate for the yuan for years to come. 
C) Remain a very important player in world trade for at least the next several years. 
D) All of the above. D

Question 2

Which of the following is NOT an item to be considered in BOP calculations?

Accepted Answer

A) A foreign resident purchases a U.S. Treasury Bill. 
B) A U.S.-based firm manages the development of an oil field in Kazakhstan. 
C) A consumer buys a VCR made in Korea from a Wal-Mart store. 
D) A U.S. citizen living in Minnesota travels to Winnipeg, Canada and buys a case of LaBatt's Canadian beer. 
A) A foreign resident purchases a U.S. Treasury Bill. 
B) A U.S.-based firm manages the development of an oil field in Kazakhstan. 
C) A consumer buys a VCR made in Korea from a Wal-Mart store. 
D) A U.S. citizen living in Minnesota travels to Winnipeg, Canada and buys a case of LaBatt's Canadian beer. C

Question 3

The era between 1880 and 1914,when the gold standard was in use,was characterized by increasing capital mobility.

Accepted Answer

A) True 
 B)False  True

Question 4

The balance of payments as applied to a course in international finance may be defined as

Accepted Answer

A) the amount still owed by an exporting firm after making an initial down payment. 
B) the amount still owed by governments to the International Monetary Fund. 
C) the measurement of all international economic transactions between the residents of a country and foreign residents. 
D) the amount of a country's merchandise trade deficit or surplus. 
A) the amount still owed by an exporting firm after making an initial down payment. 
B) the amount still owed by governments to the International Monetary Fund. 
C) the measurement of all international economic transactions between the residents of a country and foreign residents. 
D) the amount of a country's merchandise trade deficit or surplus.

Question 5

The J-curve adjustment path for trade balance adjustments assumes that export products are predominantly priced in the ________ currency and that import products are predominantly priced in the ________ currency.

Accepted Answer

A) domestic; domestic 
B) domestic; foreign 
C) foreign; foreign 
D) foreign; domestic 
A) domestic; domestic 
B) domestic; foreign 
C) foreign; foreign 
D) foreign; domestic

Question 6

The travel services provided to international travelers by United Airlines would be recorded in the current account subcategory of ________.

Accepted Answer

A) services trade 
B) income trade 
C) goods trade 
D) current transfers 
A) services trade 
B) income trade 
C) goods trade 
D) current transfers

Question 7

Construct ,in a static (accounting)form the equation for a nations GDP as presented by the authors.Identify each term (e.g.,r = interest rate).How does a positive BOP account balance affect a country's GDP?

Accepted Answer

GDP = C + I + G + X - M,where: GDP = gro

Question 8

The immediate impact on the balance of trade (BOT)for a country in deficit when there is an immediate devaluation of its currency is likely to be an even larger BOT deficit than prior to devaluation.

Accepted Answer

A) True 
 B)False

Question 9

Assume Anaconda Copper Inc.created a subsidiary in Chile last year to mine copper ore.The proportion of net income paid back to the parent company as a dividend would be recorded in the current account subcategory of ________.

Accepted Answer

A) services trade 
B) income trade 
C) goods trade 
D) current transfers 
A) services trade 
B) income trade 
C) goods trade 
D) current transfers

Question 10

In general,as a country's income increases,so does the demand for imports.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following does NOT represent a possible mechanism by which capital can be moved from country to country?

Accepted Answer

A) transfers via the usual international payments mechanism such as regular bank transfers 
B) transfers via a physical bearer such as smuggling 
C) the transfer of cash into collectibles 
D) All of the above are mechanisms for moving capital from country to country. 
A) transfers via the usual international payments mechanism such as regular bank transfers 
B) transfers via a physical bearer such as smuggling 
C) the transfer of cash into collectibles 
D) All of the above are mechanisms for moving capital from country to country.

Question 12

According to the authors,the following types of transactions dominate the balance of payments:

Accepted Answer

A) the exchange of guns for butter. 
B) the exchange of stocks and bonds. 
C) the exchange of goods and services. 
D) the exchange of real and financial assets. 
A) the exchange of guns for butter. 
B) the exchange of stocks and bonds. 
C) the exchange of goods and services. 
D) the exchange of real and financial assets.

Question 13

A country experiencing a serious BOP ________ is more likely to ________ exports than otherwise.

Accepted Answer

A) surplus; contract 
B) deficit; contract 
C) deficit; expand 
D) none of the above 
A) surplus; contract 
B) deficit; contract 
C) deficit; expand 
D) none of the above

Question 14

________ has increasingly focused on cost reduction through imports from less costly (lower wage)foreign locations.

Accepted Answer

A) Exchange rate management 
B) Inflation rate management 
C) Supply chain management 
D) Interest rate management 
A) Exchange rate management 
B) Inflation rate management 
C) Supply chain management 
D) Interest rate management

Question 15

What is a country's balance of (merchandise)trade and why is it so widely reported in the financial and popular press?

Accepted Answer

The balance of trade (BOT)is the largest

Question 16

In 2001 the United States posted a current account deficit of -$393 billion.The bulk of the negative value came from

Accepted Answer

A) a net transfer deficit. 
B) an income balance deficit. 
C) a goods trade deficit. 
D) an income trade deficit. 
A) a net transfer deficit. 
B) an income balance deficit. 
C) a goods trade deficit. 
D) an income trade deficit.

Question 17

Because current and financial/capital account balances use double-entry book keeping it is unusual to find serious discrepancies in the debits and credits.

Accepted Answer

A) True 
 B)False

Question 18

International debt security purchases and sales are defined as portfolio investments for financial account purposes because by definition debt securities do not provide the buyer with ownership or control.

Accepted Answer

A) True 
 B)False

Question 19

The ________ of the balance of payments measures all international economic transactions of financial assets.

Accepted Answer

A) current account 
B) merchandise trade account 
C) services account 
D) capital/financial account 
A) current account 
B) merchandise trade account 
C) services account 
D) capital/financial account

Question 20

The financial account consists COMPLETELY of which three components?

Accepted Answer

A) stock investment, bond investment, and mutual fund investment 
B) direct investment, stock investment, and bond investment 
C) direct investment, portfolio investment, and other asset investment 
D) mutual fund investment, portfolio investment, and stock investment 
A) stock investment, bond investment, and mutual fund investment 
B) direct investment, stock investment, and bond investment 
C) direct investment, portfolio investment, and other asset investment 
D) mutual fund investment, portfolio investment, and stock investment

China holds a massive amount of foreign exchange reserves.As of 1010 they held nearly $2,500 billion.This huge foreign exchange reserve should allow China to:

Which of the following is NOT an item to be considered in BOP calculations?

The era between 1880 and 1914,when the gold standard was in use,was characterized by increasing capital mobility.

The balance of payments as applied to a course in international finance may be defined as

The J-curve adjustment path for trade balance adjustments assumes that export products are predominantly priced in the currency and that import products are predominantly priced in the currency.

The travel services provided to international travelers by United Airlines would be recorded in the current account subcategory of ________.

Construct ,in a static (accounting)form the equation for a nations GDP as presented by the authors.Identify each term (e.g.,r = interest rate).How does a positive BOP account balance affect a country's GDP?

The immediate impact on the balance of trade (BOT)for a country in deficit when there is an immediate devaluation of its currency is likely to be an even larger BOT deficit than prior to devaluation.

Assume Anaconda Copper Inc.created a subsidiary in Chile last year to mine copper ore.The proportion of net income paid back to the parent company as a dividend would be recorded in the current account subcategory of ________.

In general,as a country's income increases,so does the demand for imports.

Which of the following does NOT represent a possible mechanism by which capital can be moved from country to country?

According to the authors,the following types of transactions dominate the balance of payments:

A country experiencing a serious BOP is more likely to exports than otherwise.

________ has increasingly focused on cost reduction through imports from less costly (lower wage)foreign locations.

What is a country's balance of (merchandise)trade and why is it so widely reported in the financial and popular press?

In 2001 the United States posted a current account deficit of -$393 billion.The bulk of the negative value came from

Because current and financial/capital account balances use double-entry book keeping it is unusual to find serious discrepancies in the debits and credits.

International debt security purchases and sales are defined as portfolio investments for financial account purposes because by definition debt securities do not provide the buyer with ownership or control.

The ________ of the balance of payments measures all international economic transactions of financial assets.

The financial account consists COMPLETELY of which three components?

Current Multinational Challenges and the Global Economy

Financial Goals and Corporate Governance

The International Monetary System

Current Multinational Financial Challenges: the Credit Crisis of 2007 - 2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction and Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Sourcing Equity and Debt Globally

Multinational Tax Management

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

International Portfolio Theory and Diversification

Working Capital Management

International Trade Finance

Filters

Exam 4: The Balance of Payments

China holds a massive amount of foreign exchange reserves.As of 1010 they held nearly $2,500 billion.This huge foreign exchange reserve should allow China to:

Which of the following is NOT an item to be considered in BOP calculations?

The era between 1880 and 1914,when the gold standard was in use,was characterized by increasing capital mobility.

The balance of payments as applied to a course in international finance may be defined as

The J-curve adjustment path for trade balance adjustments assumes that export products are predominantly priced in the ________ currency and that import products are predominantly priced in the ________ currency.

The travel services provided to international travelers by United Airlines would be recorded in the current account subcategory of ________.

Construct ,in a static (accounting)form the equation for a nations GDP as presented by the authors.Identify each term (e.g.,r = interest rate).How does a positive BOP account balance affect a country's GDP?

The immediate impact on the balance of trade (BOT)for a country in deficit when there is an immediate devaluation of its currency is likely to be an even larger BOT deficit than prior to devaluation.

Assume Anaconda Copper Inc.created a subsidiary in Chile last year to mine copper ore.The proportion of net income paid back to the parent company as a dividend would be recorded in the current account subcategory of ________.

In general,as a country's income increases,so does the demand for imports.

Which of the following does NOT represent a possible mechanism by which capital can be moved from country to country?

According to the authors,the following types of transactions dominate the balance of payments:

A country experiencing a serious BOP ________ is more likely to ________ exports than otherwise.

________ has increasingly focused on cost reduction through imports from less costly (lower wage)foreign locations.

What is a country's balance of (merchandise)trade and why is it so widely reported in the financial and popular press?

In 2001 the United States posted a current account deficit of -$393 billion.The bulk of the negative value came from

Because current and financial/capital account balances use double-entry book keeping it is unusual to find serious discrepancies in the debits and credits.

International debt security purchases and sales are defined as portfolio investments for financial account purposes because by definition debt securities do not provide the buyer with ownership or control.

The ________ of the balance of payments measures all international economic transactions of financial assets.

The financial account consists COMPLETELY of which three components?

Current Multinational Challenges and the Global Economy

Financial Goals and Corporate Governance

The International Monetary System

Current Multinational Financial Challenges: the Credit Crisis of 2007 - 2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives and Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction and Translation Exposure

Operating Exposure

The Global Cost and Availability of Capital

Sourcing Equity and Debt Globally

Multinational Tax Management

Foreign Direct Investment and Political Risk

Multinational Capital Budgeting and Cross-Border Acquisitions

International Portfolio Theory and Diversification

Working Capital Management

International Trade Finance

Filters

The J-curve adjustment path for trade balance adjustments assumes that export products are predominantly priced in the currency and that import products are predominantly priced in the currency.

A country experiencing a serious BOP is more likely to exports than otherwise.