Question 1

Which of the following will help a company hedge against currency fluctuations?

Accepted Answer

A)  Finding a large supplier to supply all the raw materials 
B)  In-house manufacturing of raw materials 
C)  Basing business in a single country 
D)  Dispersing production to different geographic locations 
A)  Finding a large supplier to supply all the raw materials 
B)  In-house manufacturing of raw materials 
C)  Basing business in a single country 
D)  Dispersing production to different geographic locations

Question 2

A country that introduces a currency board commits itself to converting its domestic currency on demand into:

Accepted Answer

A)  another currency at a fixed exchange rate. 
B)  gold or silver at a fixed exchange rate. 
C)  gold or silver at a floating exchange rate. 
D)  another currency at a floating exchange rate. 
A)  another currency at a fixed exchange rate. 
B)  gold or silver at a fixed exchange rate. 
C)  gold or silver at a floating exchange rate. 
D)  another currency at a floating exchange rate.

Question 3

Adopting a pegged exchange rate regime increases the inflationary pressures in a country.

Accepted Answer

A) True 
 B)False

Question 4

Prior to the introduction of the euro, many EU countries participated in a _____.

Accepted Answer

A)  floating exchange rate system 
B)  currency board system 
C)  fixed exchange rate system 
D)  pegged exchange rate system 
A)  floating exchange rate system 
B)  currency board system 
C)  fixed exchange rate system 
D)  pegged exchange rate system

Question 5

Those in favor of floating exchange rate claim that ____.

Accepted Answer

A)  uncertainty in monetary markets dampens the growth of international trade 
B)  inflation is beneficial to a country if it is controlled closely 
C)  trade imbalances can be adjusted by using floating exchange rates 
D)  governments can have rigid control over monetary markets by using floating rates 
A)  uncertainty in monetary markets dampens the growth of international trade 
B)  inflation is beneficial to a country if it is controlled closely 
C)  trade imbalances can be adjusted by using floating exchange rates 
D)  governments can have rigid control over monetary markets by using floating rates

Question 6

The _____ refers to the institutional arrangements that govern exchange rates.

Accepted Answer

A)  World Bank 
B)  international monetary system 
C)  currency exchange 
D)  gold standard 
A)  World Bank 
B)  international monetary system 
C)  currency exchange 
D)  gold standard

Question 7

In the 1990s, most of the borrowing by the companies who invested in Asian countries had been in _____.

Accepted Answer

A)  Japanese yen 
B)  local currencies 
C)  Chinese yuan 
D)  U.S. dollars 
A)  Japanese yen 
B)  local currencies 
C)  Chinese yuan 
D)  U.S. dollars

Question 8

What is the Bretton Woods agreement? How was it different from the gold standard?

Accepted Answer

The Bretton Woods agreement, signed in 1

Question 9

Which of the following observations is true of the Bretton Woods agreement?

Accepted Answer

A)  All countries agreed to fix the value of their currency in terms of gold under the agreement. 
B)  The system accepted Pound as the official reference currency against gold. 
C)  The agreement established a floating system of monetary exchange. 
D)  Two multinational institutions, World Economic Forum and WTO, were formed under the agreement. 
A)  All countries agreed to fix the value of their currency in terms of gold under the agreement. 
B)  The system accepted Pound as the official reference currency against gold. 
C)  The agreement established a floating system of monetary exchange. 
D)  Two multinational institutions, World Economic Forum and WTO, were formed under the agreement.

Question 10

What is gold standard? What was the major advantage of the system?

Accepted Answer

Pegging currencies to gold and guarantee

Question 11

The International Monetary Fund has been criticized for exacerbating moral hazard:

Accepted Answer

A)  with its rescue programs. 
B)  by increasing the probability of debt default. 
C)  making loans to countries that are trying to reduce national debt by "playing the market." 
D)  by refusing to bail out banks that made loans to overleveraged Asian companies during the 1990s. 
A)  with its rescue programs. 
B)  by increasing the probability of debt default. 
C)  making loans to countries that are trying to reduce national debt by "playing the market." 
D)  by refusing to bail out banks that made loans to overleveraged Asian companies during the 1990s.

Question 12

Discuss the significance of the Jamaica Agreement.

Accepted Answer

The 1976 Jamaica Agreement formalized th

Question 13

The monetary autonomy argument is supported by the advocates of _____.

Accepted Answer

A)  a dirty-float system 
B)  fixed exchange rates 
C)  pegged exchange rates 
D)  floating exchange rates 
A)  a dirty-float system 
B)  fixed exchange rates 
C)  pegged exchange rates 
D)  floating exchange rates

Question 14

Under a pegged exchange rate regime, a country:

Accepted Answer

A)  commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate. 
B)  will peg the value of its currency to that of a major currency. 
C)  valuates its currency without attaching it to a reference currency. 
D)  follows the foreign exchange market to determine the relative value of a currency. 
A)  commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate. 
B)  will peg the value of its currency to that of a major currency. 
C)  valuates its currency without attaching it to a reference currency. 
D)  follows the foreign exchange market to determine the relative value of a currency.

Question 15

Contracting out manufacturing allows companies to reduce economic exposure because:

Accepted Answer

A)  having multiple suppliers attracts subsidies from government. 
B)  it reduces the pressure on them to maintain a trade surplus. 
C)  it allows companies to shift suppliers from country to country. 
D)  quality issues are insignificant when manufacturing is contracted to others. 
A)  having multiple suppliers attracts subsidies from government. 
B)  it reduces the pressure on them to maintain a trade surplus. 
C)  it allows companies to shift suppliers from country to country. 
D)  quality issues are insignificant when manufacturing is contracted to others.

Question 16

The great virtue claimed for a _____ is that it imposes monetary discipline on a country and leads to low inflation.

Accepted Answer

A)  fixed exchange rate 
B)  managed-float system 
C)  pegged exchange rate 
D)  floating exchange rate 
A)  fixed exchange rate 
B)  managed-float system 
C)  pegged exchange rate 
D)  floating exchange rate

Question 17

Firms should not utilize the forward exchange market when they are faced with uncertainty about the future value of currencies.

Accepted Answer

A) True 
 B)False

Question 18

When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a _____ regime.

Accepted Answer

A)  currency board exchange 
B)  pegged exchange rate 
C)  fixed exchange rate 
D)  floating exchange rate 
A)  currency board exchange 
B)  pegged exchange rate 
C)  fixed exchange rate 
D)  floating exchange rate

Question 19

What is a currency board? Why do countries choose this type of system? What are the disadvantages of this type of arrangement?

Accepted Answer

A country that introduces a currency boa

Question 20

The United States had large and growing trade deficit between 1980 and 1985. Despite this, the value of U.S. dollar rose during this period. Which of the following is a factor that caused this occurrence?

Accepted Answer

A)  United States attracted heavy inflows of capital from foreign investors during this period. 
B)  Banks in the United States offered low interest rates to investors during this period. 
C)  Markets across the world witnessed strong economies during this period. 
D)  Developed countries in Europe maintained trade equilibrium and supplied goods to underdeveloped countries. 
A)  United States attracted heavy inflows of capital from foreign investors during this period. 
B)  Banks in the United States offered low interest rates to investors during this period. 
C)  Markets across the world witnessed strong economies during this period. 
D)  Developed countries in Europe maintained trade equilibrium and supplied goods to underdeveloped countries.

Which of the following will help a company hedge against currency fluctuations?

A country that introduces a currency board commits itself to converting its domestic currency on demand into:

Adopting a pegged exchange rate regime increases the inflationary pressures in a country.

Prior to the introduction of the euro, many EU countries participated in a _____.

Those in favor of floating exchange rate claim that ____.

The _____ refers to the institutional arrangements that govern exchange rates.

In the 1990s, most of the borrowing by the companies who invested in Asian countries had been in _____.

What is the Bretton Woods agreement? How was it different from the gold standard?

Which of the following observations is true of the Bretton Woods agreement?

What is gold standard? What was the major advantage of the system?

The International Monetary Fund has been criticized for exacerbating moral hazard:

Discuss the significance of the Jamaica Agreement.

The monetary autonomy argument is supported by the advocates of _____.

Under a pegged exchange rate regime, a country:

Contracting out manufacturing allows companies to reduce economic exposure because:

The great virtue claimed for a _____ is that it imposes monetary discipline on a country and leads to low inflation.

Firms should not utilize the forward exchange market when they are faced with uncertainty about the future value of currencies.

When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a _____ regime.

What is a currency board? Why do countries choose this type of system? What are the disadvantages of this type of arrangement?

The United States had large and growing trade deficit between 1980 and 1985. Despite this, the value of U.S. dollar rose during this period. Which of the following is a factor that caused this occurrence?

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The Foreign Exchange Market

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

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Exam 11: The International Monetary System

Which of the following will help a company hedge against currency fluctuations?

A country that introduces a currency board commits itself to converting its domestic currency on demand into:

Adopting a pegged exchange rate regime increases the inflationary pressures in a country.

Prior to the introduction of the euro, many EU countries participated in a _____.

Those in favor of floating exchange rate claim that ____.

The _____ refers to the institutional arrangements that govern exchange rates.

In the 1990s, most of the borrowing by the companies who invested in Asian countries had been in _____.

What is the Bretton Woods agreement? How was it different from the gold standard?

Which of the following observations is true of the Bretton Woods agreement?

What is gold standard? What was the major advantage of the system?

The International Monetary Fund has been criticized for exacerbating moral hazard:

Discuss the significance of the Jamaica Agreement.

The monetary autonomy argument is supported by the advocates of _____.

Under a pegged exchange rate regime, a country:

Contracting out manufacturing allows companies to reduce economic exposure because:

The great virtue claimed for a _____ is that it imposes monetary discipline on a country and leads to low inflation.

Firms should not utilize the forward exchange market when they are faced with uncertainty about the future value of currencies.

When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a _____ regime.

What is a currency board? Why do countries choose this type of system? What are the disadvantages of this type of arrangement?

The United States had large and growing trade deficit between 1980 and 1985. Despite this, the value of U.S. dollar rose during this period. Which of the following is a factor that caused this occurrence?

Globalization

National Differences in Political Economy, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Trade Pacts Give the Mexican Auto Industry an Edge

The Foreign Exchange Market

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters