Question 1

Technical analysis employs charts of past trends in currency prices and other factors to forecast exchange rates.

Accepted Answer

A) True 
 B)False

Question 2

Today's international monetary system is considered to be a ________ system.

Accepted Answer

A)  fixed exchange 
B)  free float 
C)  managed float 
D)  linked exchange rate 
A)  fixed exchange 
B)  free float 
C)  managed float 
D)  linked exchange rate

Question 3

The ________ theory seeks to define the relationship between currencies based on relative inflation.

Accepted Answer

A)  inflation growth rate 
B)  revaluation 
C)  purchasing power parity 
D)  interest rate 
A)  inflation growth rate 
B)  revaluation 
C)  purchasing power parity 
D)  interest rate

Question 4

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

Question 5

The international monetary system created by the Bretton Woods Agreement collapsed because ________.

Accepted Answer

A)  of its heavy dependence on the stability of the dollar 
B)  it was not accepted by a majority of the world's nations 
C)  it did not have the funds necessary for its functioning 
D)  it favored only the developed countries and was of no help to struggling nations 
A)  of its heavy dependence on the stability of the dollar 
B)  it was not accepted by a majority of the world's nations 
C)  it did not have the funds necessary for its functioning 
D)  it favored only the developed countries and was of no help to struggling nations

Question 6

The efficient market view holds that ________.

Accepted Answer

A)  companies can search for new pieces of information to improve forecasting 
B)  forward exchange rates provide the least accurate forecasts of future exchange rates 
C)  companies must spend time and money collecting and examining information believed to affect future exchange rates 
D)  prices of financial instruments reflect all publicly available information at any given time 
A)  companies can search for new pieces of information to improve forecasting 
B)  forward exchange rates provide the least accurate forecasts of future exchange rates 
C)  companies must spend time and money collecting and examining information believed to affect future exchange rates 
D)  prices of financial instruments reflect all publicly available information at any given time

Question 7

A market is efficient if the prices of financial instruments quickly reflect new public information made available to traders.

Accepted Answer

A) True 
 B)False

Question 8

The law of one price stipulates that an identical product must have an identical price in all countries when the price is expressed in a common currency.

Accepted Answer

A) True 
 B)False

Question 9

Under the Jamaica Agreement ________.

Accepted Answer

A)  currency values were determined by supply and demand 
B)  countries agreed to buy or sell their paper currencies for gold 
C)  countries were free to adopt any exchange-rate system 
D)  the dollar's value was allowed to fall on currency markets 
A)  currency values were determined by supply and demand 
B)  countries agreed to buy or sell their paper currencies for gold 
C)  countries were free to adopt any exchange-rate system 
D)  the dollar's value was allowed to fall on currency markets

Question 10

Scenario: Color-Me-Green Inc.
Color-Me-Green Inc., a U.S.-based clothing merchant, has started doing business internationally. Having subsidiaries in several countries, the company must integrate financial information from all its subsidiaries with the U.S. home office at the end of the year.
-In Country B,Color-Me-Green is faced with a tight labor market and a low unemployment rate.This low unemployment rate will most likely result in ________.

Accepted Answer

A)  lower interest rates 
B)  lower wages for workers 
C)  higher purchasing power 
D)  higher rate of inflation 
A)  lower interest rates 
B)  lower wages for workers 
C)  higher purchasing power 
D)  higher rate of inflation

Question 11

________ is an activity under the monetary policy of a nation.

Accepted Answer

A)  Increasing taxes 
B)  Lowering taxes 
C)  Increasing government spending 
D)  Selling government securities 
A)  Increasing taxes 
B)  Lowering taxes 
C)  Increasing government spending 
D)  Selling government securities

Question 12

According to the efficient market view,future exchange rates are most accurately forecasted by ________.

Accepted Answer

A)  forward exchange rates 
B)  cross rate 
C)  interbank interest rates 
D)  buy rate 
A)  forward exchange rates 
B)  cross rate 
C)  interbank interest rates 
D)  buy rate

Question 13

It is the nature of arbitrage to even out excessive fluctuation by destroying its own profitability.

Accepted Answer

A) True 
 B)False

Question 14

Translating subsidiary earnings from a strong host currency into a weak home currency increases stated earnings in the home currency.

Accepted Answer

A) True 
 B)False

Question 15

The International Fisher Effect implies that ________.

Accepted Answer

A)  the country with the higher interest rate should have lower inflation 
B)  the currency of the country with the lower interest rate will strengthen in the future 
C)  the currency of the country with the higher interest rate will strengthen in the future 
D)  interest rates and inflation are not linked at all 
A)  the country with the higher interest rate should have lower inflation 
B)  the currency of the country with the lower interest rate will strengthen in the future 
C)  the currency of the country with the higher interest rate will strengthen in the future 
D)  interest rates and inflation are not linked at all

Question 16

The ________ was a 1985 agreement among the G5 nations to act together in forcing down the value of the U.S.dollar.

Accepted Answer

A)  Bretton Woods Agreement 
B)  Smithsonian Agreement 
C)  Plaza Accord 
D)  Louvre Accord 
A)  Bretton Woods Agreement 
B)  Smithsonian Agreement 
C)  Plaza Accord 
D)  Louvre Accord

Question 17

Under the gold standard,if the U.S.dollar was fixed at $30/oz of gold and Japan was fixed at ¥75/oz of gold,what would be the Yen/dollar exchange rate?

Accepted Answer

A)  ¥2.50/$ 
B)  $2.50/¥ 
C)  ¥0.40/$ 
D)  ¥2250/$ 
A)  ¥2.50/$ 
B)  $2.50/¥ 
C)  ¥0.40/$ 
D)  ¥2250/$

Question 18

Explain the concept of devaluation,and explain the effect devaluation has on the price of a country's imports.Discuss how international companies can adjust to a weak currency.

Accepted Answer

The intentional lowering of the value of

Question 19

Under the gold standard,________.

Accepted Answer

A)  currency values were determined by supply and demand 
B)  countries agreed to buy or sell their paper currencies for gold 
C)  countries were free to adopt any nation's exchange-rate system 
D)  the dollar's value was allowed to fall on currency markets 
A)  currency values were determined by supply and demand 
B)  countries agreed to buy or sell their paper currencies for gold 
C)  countries were free to adopt any nation's exchange-rate system 
D)  the dollar's value was allowed to fall on currency markets

Question 20

Which of the following lowers the price of a country's exports on world markets and increases the price of its imports?

Accepted Answer

A)  revaluation 
B)  devaluation 
C)  currency hedging 
D)  currency arbitrage 
A)  revaluation 
B)  devaluation 
C)  currency hedging 
D)  currency arbitrage

Technical analysis employs charts of past trends in currency prices and other factors to forecast exchange rates.

Today's international monetary system is considered to be a ________ system.

The ________ theory seeks to define the relationship between currencies based on relative inflation.

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

The international monetary system created by the Bretton Woods Agreement collapsed because ________.

The efficient market view holds that ________.

A market is efficient if the prices of financial instruments quickly reflect new public information made available to traders.

The law of one price stipulates that an identical product must have an identical price in all countries when the price is expressed in a common currency.

Under the Jamaica Agreement ________.

________ is an activity under the monetary policy of a nation.

According to the efficient market view,future exchange rates are most accurately forecasted by ________.

It is the nature of arbitrage to even out excessive fluctuation by destroying its own profitability.

Translating subsidiary earnings from a strong host currency into a weak home currency increases stated earnings in the home currency.

The International Fisher Effect implies that ________.

The ________ was a 1985 agreement among the G5 nations to act together in forcing down the value of the U.S.dollar.

Under the gold standard,if the U.S.dollar was fixed at $30/oz of gold and Japan was fixed at ¥75/oz of gold,what would be the Yen/dollar exchange rate?

Explain the concept of devaluation,and explain the effect devaluation has on the price of a country's imports.Discuss how international companies can adjust to a weak currency.

Under the gold standard,________.

Which of the following lowers the price of a country's exports on world markets and increases the price of its imports?

Globalization

Cross-Cultural Business

Political Economy and Ethics

Economic Development of Nations

International Trade Theory

Political Economy of Trade

Foreign Direct Investment

Regional Economic Integration

International Financial Markets

International Strategy and Organization

Analyzing International Opportunities

Selecting and Managing Entry Modes

Developing and Marketing Products

Managing International Operations

Hiring and Managing Employees

Filters

Exam 10: International Monetary System

Technical analysis employs charts of past trends in currency prices and other factors to forecast exchange rates.

Today's international monetary system is considered to be a ________ system.

The ________ theory seeks to define the relationship between currencies based on relative inflation.

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

The international monetary system created by the Bretton Woods Agreement collapsed because ________.

The efficient market view holds that ________.

A market is efficient if the prices of financial instruments quickly reflect new public information made available to traders.

The law of one price stipulates that an identical product must have an identical price in all countries when the price is expressed in a common currency.

Under the Jamaica Agreement ________.

________ is an activity under the monetary policy of a nation.

According to the efficient market view,future exchange rates are most accurately forecasted by ________.

It is the nature of arbitrage to even out excessive fluctuation by destroying its own profitability.

Translating subsidiary earnings from a strong host currency into a weak home currency increases stated earnings in the home currency.

The International Fisher Effect implies that ________.

The ________ was a 1985 agreement among the G5 nations to act together in forcing down the value of the U.S.dollar.

Under the gold standard,if the U.S.dollar was fixed at $30/oz of gold and Japan was fixed at ¥75/oz of gold,what would be the Yen/dollar exchange rate?

Explain the concept of devaluation,and explain the effect devaluation has on the price of a country's imports.Discuss how international companies can adjust to a weak currency.

Under the gold standard,________.

Which of the following lowers the price of a country's exports on world markets and increases the price of its imports?

Globalization

Cross-Cultural Business

Political Economy and Ethics

Economic Development of Nations

International Trade Theory

Political Economy of Trade

Foreign Direct Investment

Regional Economic Integration

International Financial Markets

International Strategy and Organization

Analyzing International Opportunities

Selecting and Managing Entry Modes

Developing and Marketing Products

Managing International Operations

Hiring and Managing Employees

Filters