Question 1

Supporters of floating exchange rates claim that trade deficits are determined by the balance between savings and investment in a country.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following arguments strengthen the idea of floating exchange rates?

Accepted Answer

A)  External agencies should not interfere in the monetary policies of a country. 
B)  Trade deficits can be corrected through changes in exchange rates. 
C)  Changes in exchange rates will not impact the trade balance in a country. 
D)  Governments should act in ways to minimize the uncertainty in monetary markets. 
A)  External agencies should not interfere in the monetary policies of a country. 
B)  Trade deficits can be corrected through changes in exchange rates. 
C)  Changes in exchange rates will not impact the trade balance in a country. 
D)  Governments should act in ways to minimize the uncertainty in monetary markets. B

Question 3

Which of the following statements is true of the Gold standard?

Accepted Answer

A)  Gold standard was adopted only by the smaller nations of the world. 
B)  Currencies were pegged to gold under the gold standard. 
C)  Convertibility to gold was not guaranteed under the gold standard. 
D)  Gold standard was not helpful in maintaining balance-of-trade equilibrium. 
A)  Gold standard was adopted only by the smaller nations of the world. 
B)  Currencies were pegged to gold under the gold standard. 
C)  Convertibility to gold was not guaranteed under the gold standard. 
D)  Gold standard was not helpful in maintaining balance-of-trade equilibrium. B

Question 4

A country is said to be in balance-of-trade equilibrium when ____.

Accepted Answer

A)  it has the potential to produce all goods that its residents want without engaging in foreign trade 
B)  the income its residents earn from exports is equal to the money its residents pay for imports 
C)  the country import all goods that its residents want by engaging in foreign trade 
D)  it has the potential to balance the production and procurement of the basic amenities that it needs 
A)  it has the potential to produce all goods that its residents want without engaging in foreign trade 
B)  the income its residents earn from exports is equal to the money its residents pay for imports 
C)  the country import all goods that its residents want by engaging in foreign trade 
D)  it has the potential to balance the production and procurement of the basic amenities that it needs

Question 5

The rise in the value of the dollar gave U.S goods a competitive advantage over others between 1985 and 1988.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

The Asian economic crisis was caused by high inflation rates.

Accepted Answer

A) True 
 B)False

Question 8

The fixed exchange rate system established at Bretton Woods failed due to speculative pressures on the U.S. dollar.

Accepted Answer

A) True 
 B)False

Question 9

Identify the multinational institutions that were established at the Bretton Woods agreement. What were their roles in the international monetary system?

Accepted Answer

At the Bretton Woods meeting in 1944, tw

Question 10

How does a fixed exchange rate system work?

Accepted Answer

In a fixed exchange rate system, the val

Question 11

Which of the following observations is true of the current system of foreign exchange market?

Accepted Answer

A)  Most of the currencies can be converted to gold in the current system of foreign exchange. 
B)  The current system is driven by fixed exchange rates. 
C)  Currencies float freely against others in the current system. 
D)  The current system is a combination of government intervention and speculative activity. 
A)  Most of the currencies can be converted to gold in the current system of foreign exchange. 
B)  The current system is driven by fixed exchange rates. 
C)  Currencies float freely against others in the current system. 
D)  The current system is a combination of government intervention and speculative activity.

Question 12

How can international companies reduce their economic exposure in a world of constantly fluctuating exchange rates?

Accepted Answer

For companies operating in a world of vo

Question 13

After World War II, world's major industrial nations arranged their currencies against each other at a mutually agreed on exchange rate. This is an example of a _____ system.

Accepted Answer

A)  fixed exchange rate 
B)  dirty float exchange 
C)  pegged exchange rate 
D)  floating exchange rate 
A)  fixed exchange rate 
B)  dirty float exchange 
C)  pegged exchange rate 
D)  floating exchange rate

Question 14

The agreement reached at Bretton Woods established the International Monetary Fund (IMF) and the World Bank.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

The Bretton Woods agreement, signed in 1

Question 16

A dirty float occurs when a country uses pegged exchange rates to value its currency.

Accepted Answer

A) True 
 B)False

Question 17

Fixed exchange rates lead to speculation and uncertainty in the value of currencies.

Accepted Answer

A) True 
 B)False

Question 18

Under a currency board system, ____.

Accepted Answer

A)  inflation rates are maintained at high level 
B)  countries issue domestic notes at will 
C)  interest rates remain constant 
D)  government lacks the ability to set interest rates 
A)  inflation rates are maintained at high level 
B)  countries issue domestic notes at will 
C)  interest rates remain constant 
D)  government lacks the ability to set interest rates

Question 19

The IMF's original function was to provide a pool of money from which members could borrow in the short term.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a factor that initiated the collapse of the fixed exchange rate system?

Accepted Answer

A)  Worsening of Great Britain's balance of trade 
B)  Recession in third world countries 
C)  Price inflation in Europe 
D)  Worsening of U.S. foreign trade position 
A)  Worsening of Great Britain's balance of trade 
B)  Recession in third world countries 
C)  Price inflation in Europe 
D)  Worsening of U.S. foreign trade position

Supporters of floating exchange rates claim that trade deficits are determined by the balance between savings and investment in a country.

Which of the following arguments strengthen the idea of floating exchange rates?

Which of the following statements is true of the Gold standard?

A country is said to be in balance-of-trade equilibrium when ____.

The rise in the value of the dollar gave U.S goods a competitive advantage over others between 1985 and 1988.

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

The Asian economic crisis was caused by high inflation rates.

The fixed exchange rate system established at Bretton Woods failed due to speculative pressures on the U.S. dollar.

Identify the multinational institutions that were established at the Bretton Woods agreement. What were their roles in the international monetary system?

How does a fixed exchange rate system work?

Which of the following observations is true of the current system of foreign exchange market?

How can international companies reduce their economic exposure in a world of constantly fluctuating exchange rates?

After World War II, world's major industrial nations arranged their currencies against each other at a mutually agreed on exchange rate. This is an example of a _____ system.

The agreement reached at Bretton Woods established the International Monetary Fund (IMF) and the World Bank.

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

A dirty float occurs when a country uses pegged exchange rates to value its currency.

Fixed exchange rates lead to speculation and uncertainty in the value of currencies.

Under a currency board system, ____.

The IMF's original function was to provide a pool of money from which members could borrow in the short term.

Which of the following is a factor that initiated the collapse of the fixed exchange rate system?

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters

Exam 11: The International Monetary System

Supporters of floating exchange rates claim that trade deficits are determined by the balance between savings and investment in a country.

Which of the following arguments strengthen the idea of floating exchange rates?

Which of the following statements is true of the Gold standard?

A country is said to be in balance-of-trade equilibrium when ____.

The rise in the value of the dollar gave U.S goods a competitive advantage over others between 1985 and 1988.

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

The Asian economic crisis was caused by high inflation rates.

The fixed exchange rate system established at Bretton Woods failed due to speculative pressures on the U.S. dollar.

Identify the multinational institutions that were established at the Bretton Woods agreement. What were their roles in the international monetary system?

How does a fixed exchange rate system work?

Which of the following observations is true of the current system of foreign exchange market?

How can international companies reduce their economic exposure in a world of constantly fluctuating exchange rates?

After World War II, world's major industrial nations arranged their currencies against each other at a mutually agreed on exchange rate. This is an example of a _____ system.

The agreement reached at Bretton Woods established the International Monetary Fund (IMF) and the World Bank.

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

A dirty float occurs when a country uses pegged exchange rates to value its currency.

Fixed exchange rates lead to speculation and uncertainty in the value of currencies.

Under a currency board system, ____.

The IMF's original function was to provide a pool of money from which members could borrow in the short term.

Which of the following is a factor that initiated the collapse of the fixed exchange rate system?

Globalization

National Differences in Political Economy

Political Economy and Economic Development

Differences in Culture

Ethics in International Business

International Trade Theory

The Political Economy of International Trade

Foreign Direct Investment

Regional Economic Integration

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, Outsourcing, and Logistics

Global Marketing and RD

Global Human Resource Management

Accounting and Finance in the International Business

Filters