Question 1

A country that gives foreign aid to another country can be viewed as

Accepted Answer

A) importing goodwill from the latter. 
B) exporting goodwill to the latter. 
A) importing goodwill from the latter. 
B) exporting goodwill to the latter. A

Question 2

The current account is divided into four finer categories:

Accepted Answer

A) merchandise trade,services,factor income,and statistical discrepancy. 
B) merchandise trade,services,factor income,and unilateral transfers. 
C) merchandise trade,services,portfolio investment,and unilateral transfers. 
D) merchandise trade,services,factor income,and direct investment. 
A) merchandise trade,services,factor income,and statistical discrepancy. 
B) merchandise trade,services,factor income,and unilateral transfers. 
C) merchandise trade,services,portfolio investment,and unilateral transfers. 
D) merchandise trade,services,factor income,and direct investment. B

Question 3

The notation is Y = GNP = national income
C = consumption
I = private investment
G = government spending
X = exports
M = imports
T = taxes
The current account balance is given by

Accepted Answer

A) C + I + G + X + M 
B) X − M 
C) I + X + M 
D) M − X 
A) C + I + G + X + M 
B) X − M 
C) I + X + M 
D) M − X B

Question 4

More important than the absolute size of a country's balance-of-payments disequilibrium

Accepted Answer

A) is the nature and cause of the disequilibrium. 
B) is whether it is a trade surplus or deficit. 
C) is whether the local government is mercantilist or not. 
D) is nothing is more important than the absolute size of a country's balance-of-payments disequilibrium. 
A) is the nature and cause of the disequilibrium. 
B) is whether it is a trade surplus or deficit. 
C) is whether the local government is mercantilist or not. 
D) is nothing is more important than the absolute size of a country's balance-of-payments disequilibrium.

Question 5

The notation is Y = GNP = national income
C = consumption
I = private investment
G = government spending
X = exports
M = imports
T = taxes
Which of the following is a true statement?

Accepted Answer

A) BCA ≡ X − M 
B) BKA ≡ X − M 
C) BKA − BCA ≡ X − M 
D) BKA ≡ M − X 
A) BCA ≡ X − M 
B) BKA ≡ X − M 
C) BKA − BCA ≡ X − M 
D) BKA ≡ M − X

Question 6

The capital account is divided into three subcategories: direct investment,portfolio investment,and other investment."Other" investment involves

Accepted Answer

A) acquisitions of controlling interests in foreign businesses. 
B) investments in foreign stocks and bonds that do not involve acquisitions of control. 
C) bank deposits,currency investment,trade credit,and the like. 
D) all of the options 
A) acquisitions of controlling interests in foreign businesses. 
B) investments in foreign stocks and bonds that do not involve acquisitions of control. 
C) bank deposits,currency investment,trade credit,and the like. 
D) all of the options

Question 7

Balance of payments

Accepted Answer

A) is defined as the statistical record of a country's international transactions over a certain period of time presented in the form of a double-entry bookkeeping. 
B) provides detailed information concerning the demand and supply of a country's currency. 
C) can be used to evaluate the performance of a country in international economic competition. 
D) all of the options 
A) is defined as the statistical record of a country's international transactions over a certain period of time presented in the form of a double-entry bookkeeping. 
B) provides detailed information concerning the demand and supply of a country's currency. 
C) can be used to evaluate the performance of a country in international economic competition. 
D) all of the options

Question 8

A currency depreciation will begin to improve the trade balance immediately

Accepted Answer

A) if the demand for imports and exports are inelastic. 
B) if the demand for imports and exports are elastic. 
C) if imports decrease and exports decrease. 
D) none of the options 
A) if the demand for imports and exports are inelastic. 
B) if the demand for imports and exports are elastic. 
C) if imports decrease and exports decrease. 
D) none of the options

Question 9

International portfolio investments have boomed in recent years,as a result of

Accepted Answer

A) a depreciating U.S.dollar. 
B) increased gasoline and other commodity prices. 
C) the general relaxation of capital controls and regulation in many countries. 
D) none of the options 
A) a depreciating U.S.dollar. 
B) increased gasoline and other commodity prices. 
C) the general relaxation of capital controls and regulation in many countries. 
D) none of the options

Question 10

A country experiencing a significant balance-of-payments surplus would be likely to

Accepted Answer

A) expand imports,offering marketing opportunities for foreign enterprises. 
B) refrain from imposing foreign exchange restrictions. 
C) expand exports,offering international marketing opportunities for domestic enterprises. 
D) expand imports,offering marketing opportunities for foreign enterprises,and refrain from imposing foreign exchange restrictions. 
A) expand imports,offering marketing opportunities for foreign enterprises. 
B) refrain from imposing foreign exchange restrictions. 
C) expand exports,offering international marketing opportunities for domestic enterprises. 
D) expand imports,offering marketing opportunities for foreign enterprises,and refrain from imposing foreign exchange restrictions.

Question 11

Credit entries in the U.S.balance of payments

Accepted Answer

A) result from foreign sales of U.S.goods and services,goodwill,financial claims,and real assets. 
B) result from U.S.purchases of foreign goods and services,goodwill,financial claims,and real assets. 
C) give rise to the demand for dollars. 
D) give rise to the supply of dollars. 
E) result from foreign sales of U.S.goods and services,goodwill,financial claims,and real assets,and give rise to the demand for dollars. 
A) result from foreign sales of U.S.goods and services,goodwill,financial claims,and real assets. 
B) result from U.S.purchases of foreign goods and services,goodwill,financial claims,and real assets. 
C) give rise to the demand for dollars. 
D) give rise to the supply of dollars. 
E) result from foreign sales of U.S.goods and services,goodwill,financial claims,and real assets,and give rise to the demand for dollars.

Question 12

Over the last several years,the U.S.has run persistent

Accepted Answer

A) balance-of-payments deficits. 
B) balance-of-payments surpluses. 
C) current account deficits. 
D) capital account deficits. 
A) balance-of-payments deficits. 
B) balance-of-payments surpluses. 
C) current account deficits. 
D) capital account deficits.

Question 13

The capital account includes

Accepted Answer

A) the export and import of goods and services. 
B) all purchases and sales of assets such as stocks,bonds,bank accounts,real estate,and businesses. 
C) all purchases and sales of international reserve assets such as dollars,foreign exchanges,gold,and special drawing rights (SDRs). 
D) none of the options 
A) the export and import of goods and services. 
B) all purchases and sales of assets such as stocks,bonds,bank accounts,real estate,and businesses. 
C) all purchases and sales of international reserve assets such as dollars,foreign exchanges,gold,and special drawing rights (SDRs). 
D) none of the options

Question 14

If the central banks of the world chose to diversify their foreign-exchange reserves away from the dollar and into the euro,

Accepted Answer

A) this would have the result of a strengthening of the value of the dollar. 
B) this have the result of a weakening in the value of the dollar. 
C) this would not have much impact,as the information would be lost in the day-to-day volatility of exchange rates. 
D) none of the options 
A) this would have the result of a strengthening of the value of the dollar. 
B) this have the result of a weakening in the value of the dollar. 
C) this would not have much impact,as the information would be lost in the day-to-day volatility of exchange rates. 
D) none of the options

Question 15

If the interest rate rises in the U.S.while other variables remain constant

Accepted Answer

A) capital inflows into the U.S.will increase. 
B) capital inflows into the U.S.may not materialize. 
C) capital will flow out of the U.S. 
D) none of the options 
A) capital inflows into the U.S.will increase. 
B) capital inflows into the U.S.may not materialize. 
C) capital will flow out of the U.S. 
D) none of the options

Question 16

If the difference between tax revenue and government expenditures is negative,it implies that

Accepted Answer

A) tax revenue is insufficient to cover government spending. 
B) a government budget deficit exists. 
C) the government will be issuing new debt securities. 
D) all of the options 
A) tax revenue is insufficient to cover government spending. 
B) a government budget deficit exists. 
C) the government will be issuing new debt securities. 
D) all of the options

Question 17

Currently,international reserve assets are comprised of

Accepted Answer

A) gold,platinum,foreign exchanges,and special drawing rights (SDRs). 
B) gold,foreign exchanges,special drawing rights (SDRs),and reserve positions in the International Monetary Fund (IMF). 
C) gold,diamonds,foreign exchanges,and special drawing rights (SDRs). 
D) reserve positions in the International Monetary Fund (IMF),only. 
A) gold,platinum,foreign exchanges,and special drawing rights (SDRs). 
B) gold,foreign exchanges,special drawing rights (SDRs),and reserve positions in the International Monetary Fund (IMF). 
C) gold,diamonds,foreign exchanges,and special drawing rights (SDRs). 
D) reserve positions in the International Monetary Fund (IMF),only.

Question 18

In the latter half of the 1980s,with a strong yen,Japanese firms

Accepted Answer

A) faced difficulty exporting. 
B) could better afford to acquire U.S.assets that had become less expensive in terms of yen. 
C) financed a sharp increase in Japanese FDI in the United States. 
D) all of the options 
A) faced difficulty exporting. 
B) could better afford to acquire U.S.assets that had become less expensive in terms of yen. 
C) financed a sharp increase in Japanese FDI in the United States. 
D) all of the options

Question 19

The balance of payments identity is given by BCA + BKA + BRA = 0.Rearrange the identity for a country with a pure flexible exchange rate regime.

Accepted Answer

A) BCA + BKA + BRA = 0 
B) BCA = −BKA 
C) BCA + BKA = −BRA 
D) BRA = −BCA 
A) BCA + BKA + BRA = 0 
B) BCA = −BKA 
C) BCA + BKA = −BRA 
D) BRA = −BCA

Question 20

Under the pure flexible exchange rate regime,

Accepted Answer

A) the combined balance on the current and capital accounts will be equal in size,but opposite in sign,to the change in the official reserves. 
B) the balance on the current and capital accounts will be equal in size,but opposite in sign. 
C) a current account surplus or deficit must be matched by an official reserves deficit or surplus. 
D) a capital account surplus or deficit must be matched by an official reserves deficit or surplus. 
A) the combined balance on the current and capital accounts will be equal in size,but opposite in sign,to the change in the official reserves. 
B) the balance on the current and capital accounts will be equal in size,but opposite in sign. 
C) a current account surplus or deficit must be matched by an official reserves deficit or surplus. 
D) a capital account surplus or deficit must be matched by an official reserves deficit or surplus.

Exam 3: Balance of Payments

A country that gives foreign aid to another country can be viewed as

The current account is divided into four finer categories:

The notation is Y = GNP = national income C = consumption I = private investment G = government spending X = exports M = imports T = taxes The current account balance is given by

More important than the absolute size of a country's balance-of-payments disequilibrium

The notation is Y = GNP = national income C = consumption I = private investment G = government spending X = exports M = imports T = taxes Which of the following is a true statement?

The capital account is divided into three subcategories: direct investment,portfolio investment,and other investment."Other" investment involves

Balance of payments

A currency depreciation will begin to improve the trade balance immediately

International portfolio investments have boomed in recent years,as a result of

A country experiencing a significant balance-of-payments surplus would be likely to

Credit entries in the U.S.balance of payments

Over the last several years,the U.S.has run persistent

The capital account includes

If the central banks of the world chose to diversify their foreign-exchange reserves away from the dollar and into the euro,

If the interest rate rises in the U.S.while other variables remain constant

If the difference between tax revenue and government expenditures is negative,it implies that

Currently,international reserve assets are comprised of

In the latter half of the 1980s,with a strong yen,Japanese firms

The balance of payments identity is given by BCA + BKA + BRA = 0.Rearrange the identity for a country with a pure flexible exchange rate regime.

Under the pure flexible exchange rate regime,

International Monetary System

Globalization and the Multinational Firm

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

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