Question 1

If the United States imports more than it exports,then this means that

Accepted Answer

A) the supply of dollars is likely to exceed the demand in the foreign exchange market,ceteris paribus. 
B) the demand for dollars is likely to exceed the supply in the foreign exchange market,ceteris paribus. 
C) the U.S.dollar would be under pressure to appreciate against other currencies. 
D) the demand for dollars is likely to exceed the supply in the foreign exchange market,ceteris paribus,and the U.S.dollar would be under pressure to appreciate against other currencies. 
A) the supply of dollars is likely to exceed the demand in the foreign exchange market,ceteris paribus. 
B) the demand for dollars is likely to exceed the supply in the foreign exchange market,ceteris paribus. 
C) the U.S.dollar would be under pressure to appreciate against other currencies. 
D) the demand for dollars is likely to exceed the supply in the foreign exchange market,ceteris paribus,and the U.S.dollar would be under pressure to appreciate against other currencies.

Question 2

Foreign direct investment (FDI)occurs

Accepted Answer

A) when an investor acquires a measure of control of a foreign business. 
B) when there is an acquisition,by a foreign entity in the U.S.,of 10 percent or more of the voting shares of a business. 
C) with sales and purchases of foreign stocks and bonds that do not involve a transfer of control. 
D) when an investor acquires a measure of control of a foreign business and when there is an acquisition,by a foreign entity in the U.S.,of 10 percent or more of the voting shares of a business. 
A) when an investor acquires a measure of control of a foreign business. 
B) when there is an acquisition,by a foreign entity in the U.S.,of 10 percent or more of the voting shares of a business. 
C) with sales and purchases of foreign stocks and bonds that do not involve a transfer of control. 
D) when an investor acquires a measure of control of a foreign business and when there is an acquisition,by a foreign entity in the U.S.,of 10 percent or more of the voting shares of a business.

Question 3

If Japan exports more than it imports,then

Accepted Answer

A) the supply of dollars is likely to exceed the demand in the foreign exchange market,ceteris paribus. 
B) one can infer that the yen would be likely to appreciate against other currencies. 
C) the supply of dollars is likely to exceed the demand in the foreign exchange market,ceteris paribus,and one can infer that the yen would be likely to appreciate against other currencies. 
D) none of the options 
A) the supply of dollars is likely to exceed the demand in the foreign exchange market,ceteris paribus. 
B) one can infer that the yen would be likely to appreciate against other currencies. 
C) the supply of dollars is likely to exceed the demand in the foreign exchange market,ceteris paribus,and one can infer that the yen would be likely to appreciate against other currencies. 
D) none of the options

Question 4

If for a particular county an increase in the interest rate is more or less matched by an expected depreciation in the local currency,

Accepted Answer

A) traders will probably be tempted to find another country to invest in. 
B) the interest rate increase per se will not be enough to spark capital flow into the country. 
C) traders will probably be tempted to find another country to invest in and the interest rate increase per se will not be enough to spark capital flow into the country. 
D) capital will glow out of the country as the disgruntled citizens riot and go to war with the neighbors. 
A) traders will probably be tempted to find another country to invest in. 
B) the interest rate increase per se will not be enough to spark capital flow into the country. 
C) traders will probably be tempted to find another country to invest in and the interest rate increase per se will not be enough to spark capital flow into the country. 
D) capital will glow out of the country as the disgruntled citizens riot and go to war with the neighbors.

Question 5

The central bank of the United States is

Accepted Answer

A) the New York Fed. 
B) the Federal Reserve System. 
C) the EXIM bank. 
D) none of the options-the U.S.does not have a central bank. 
A) the New York Fed. 
B) the Federal Reserve System. 
C) the EXIM bank. 
D) none of the options-the U.S.does not have a central bank.

Question 6

Assume that the balance-of-payments accounts for a country are recorded correctly. Balance on the current account = BCA = $130 billion
Balance on the capital account = BKA = −$86 billion
Balance on the reserves account = BRA =?
The balance on the reserves account (BRA),under the fixed exchange regime is

Accepted Answer

A) −$44 billion 
B) $44 billion 
C) $216 billion 
D) none of the options 
A) −$44 billion 
B) $44 billion 
C) $216 billion 
D) none of the options

Question 7

Invisible trade refers to

Accepted Answer

A) services that avoid tax payments. 
B) the underground economy. 
C) legal,consulting,and engineering services. 
D) tourist expenditures only. 
A) services that avoid tax payments. 
B) the underground economy. 
C) legal,consulting,and engineering services. 
D) tourist expenditures only.

Question 8

A country's international transactions can be grouped into the following three main types:

Accepted Answer

A) current account,medium term account,and long term capital account. 
B) current account,long term capital account,and official reserve account. 
C) current account,capital account,and official reserve account. 
D) capital account,official reserve account,trade account. 
A) current account,medium term account,and long term capital account. 
B) current account,long term capital account,and official reserve account. 
C) current account,capital account,and official reserve account. 
D) capital account,official reserve account,trade account.

Question 9

What is the correct label for the vertical axis in the J-curve?

Accepted Answer

A) Time 
B) Change in the Trade Balance 
C) Size of Trade Balance 
D) Size of Merchandise Trade Balance 
A) Time 
B) Change in the Trade Balance 
C) Size of Trade Balance 
D) Size of Merchandise Trade Balance

Question 10

When Honda,a Japanese auto maker,built a factory in Ohio,

Accepted Answer

A) it was engaged in foreign direct investment. 
B) it was engaged in portfolio investment. 
C) it was engaged in a cross-border acquisition. 
D) none of the options. 
A) it was engaged in foreign direct investment. 
B) it was engaged in portfolio investment. 
C) it was engaged in a cross-border acquisition. 
D) none of the options.

Question 11

When the balance-of-payments accounts are recorded correctly,the combined balance of the current account,the capital account,and the reserves account must be

Accepted Answer

A) equal in magnitude to the country's national debt. 
B) zero. 
C) equal in magnitude to the Trade Deficit or Surplus. 
D) none of the options 
A) equal in magnitude to the country's national debt. 
B) zero. 
C) equal in magnitude to the Trade Deficit or Surplus. 
D) none of the options

Question 12

Government controlled investment funds,known as sovereign wealth funds,

Accepted Answer

A) are playing a less-important role in international finance following the end of the fixed exchange rate era. 
B) are mostly domiciled in Asian and Middle Eastern countries. 
C) are usually responsible for converting trade surpluses and oil revenues into foreign exchange reserves. 
D) none of the options 
A) are playing a less-important role in international finance following the end of the fixed exchange rate era. 
B) are mostly domiciled in Asian and Middle Eastern countries. 
C) are usually responsible for converting trade surpluses and oil revenues into foreign exchange reserves. 
D) none of the options

Question 13

Since the balance of payments is presented as a system of double-entry bookkeeping,

Accepted Answer

A) every credit in the account is balanced by a matching debit. 
B) every debit in the account is balanced by a matching credit. 
C) every credit in the account is balanced by a matching debit and every debit in the account is balanced by a matching credit. 
D) none of the options 
A) every credit in the account is balanced by a matching debit. 
B) every debit in the account is balanced by a matching credit. 
C) every credit in the account is balanced by a matching debit and every debit in the account is balanced by a matching credit. 
D) none of the options

Question 14

The difference between Foreign Direct Investment and Portfolio Investment is that

Accepted Answer

A) Portfolio Investment mostly represents the sale and purchase of foreign financial assets such as stocks and bonds that do not involve a transfer of control. 
B) Foreign Direct Investment mostly represents the sale and purchase of foreign financial assets such as stocks whereas Portfolio Investment mostly involves the sales and purchase of foreign bonds. 
C) Foreign Direct Investment is about buying land and building factories,whereas portfolio investment is about buying stocks and bonds. 
D) all of the options 
A) Portfolio Investment mostly represents the sale and purchase of foreign financial assets such as stocks and bonds that do not involve a transfer of control. 
B) Foreign Direct Investment mostly represents the sale and purchase of foreign financial assets such as stocks whereas Portfolio Investment mostly involves the sales and purchase of foreign bonds. 
C) Foreign Direct Investment is about buying land and building factories,whereas portfolio investment is about buying stocks and bonds. 
D) all of the options

Question 15

The most important international reserve asset,comprising 94 percent of the total reserve assets held by IMF member countries is

Accepted Answer

A) gold. 
B) foreign exchanges. 
C) special Drawing Rights (SDRs). 
D) reserve positions in the International Monetary Fund (IMF). 
A) gold. 
B) foreign exchanges. 
C) special Drawing Rights (SDRs). 
D) reserve positions in the International Monetary Fund (IMF).

Question 16

If the United States imports more than it exports,then

Accepted Answer

A) the supply of dollars is likely to exceed the demand in the foreign exchange market,ceteris paribus. 
B) one can infer that the U.S.dollar would be under pressure to depreciate against other currencies. 
C) the supply of dollars is likely to exceed the demand in the foreign exchange market,ceteris paribus,and one can infer that the U.S.dollar would be under pressure to depreciate against other currencies. 
D) none of the options 
A) the supply of dollars is likely to exceed the demand in the foreign exchange market,ceteris paribus. 
B) one can infer that the U.S.dollar would be under pressure to depreciate against other currencies. 
C) the supply of dollars is likely to exceed the demand in the foreign exchange market,ceteris paribus,and one can infer that the U.S.dollar would be under pressure to depreciate against other currencies. 
D) none of the options

Question 17

With regard to the capital account,

Accepted Answer

A) the capital account balance measures the difference between U.S.sales of assets to foreigners and U.S.purchases of foreign assets. 
B) U.S.sales (or exports)of assets are recorded as credits,as they result in capital inflow. 
C) U.S.purchases (imports)of foreign assets are recorded as debits,as they lead to capital outflow. 
D) all of the options 
A) the capital account balance measures the difference between U.S.sales of assets to foreigners and U.S.purchases of foreign assets. 
B) U.S.sales (or exports)of assets are recorded as credits,as they result in capital inflow. 
C) U.S.purchases (imports)of foreign assets are recorded as debits,as they lead to capital outflow. 
D) all of the options

Question 18

Generally speaking,any transaction that results in a receipt from foreigners

Accepted Answer

A) will be recorded as a debit,with a negative sign,in the U.S.balance of payments. 
B) will be recorded as a debit,with a positive sign,in the U.S.balance of payments. 
C) will be recorded as a credit,with a negative sign,in the U.S.balance of payments. 
D) will be recorded as a credit,with a positive sign,in the U.S.balance of payments. 
A) will be recorded as a debit,with a negative sign,in the U.S.balance of payments. 
B) will be recorded as a debit,with a positive sign,in the U.S.balance of payments. 
C) will be recorded as a credit,with a negative sign,in the U.S.balance of payments. 
D) will be recorded as a credit,with a positive sign,in the U.S.balance of payments.

Question 19

Suppose the InBev Corporation (a non-U.S.MNC)buys the Anheuser-Busch Corporation,paying the U.S.shareholders cash.

Accepted Answer

A) Payment by InBev will be recorded as a debit. 
B) The deposit of the funds by the sellers will be recorded as a debit. 
C) Payment by InBev will be recorded as a credit. 
D) The deposit of the funds by the buyer will be credit. 
A) Payment by InBev will be recorded as a debit. 
B) The deposit of the funds by the sellers will be recorded as a debit. 
C) Payment by InBev will be recorded as a credit. 
D) The deposit of the funds by the buyer will be credit.

Question 20

The "one word that haunts the dollar" is

Accepted Answer

A) (Central bank)diversification. 
B) Reunification (Korean). 
C) Euro. 
D) (Current account)deficit. 
A) (Central bank)diversification. 
B) Reunification (Korean). 
C) Euro. 
D) (Current account)deficit.

If the United States imports more than it exports,then this means that

Foreign direct investment (FDI)occurs

If Japan exports more than it imports,then

If for a particular county an increase in the interest rate is more or less matched by an expected depreciation in the local currency,

The central bank of the United States is

Invisible trade refers to

A country's international transactions can be grouped into the following three main types:

What is the correct label for the vertical axis in the J-curve?

When Honda,a Japanese auto maker,built a factory in Ohio,

When the balance-of-payments accounts are recorded correctly,the combined balance of the current account,the capital account,and the reserves account must be

Government controlled investment funds,known as sovereign wealth funds,

Since the balance of payments is presented as a system of double-entry bookkeeping,

The difference between Foreign Direct Investment and Portfolio Investment is that

The most important international reserve asset,comprising 94 percent of the total reserve assets held by IMF member countries is

If the United States imports more than it exports,then

With regard to the capital account,

Generally speaking,any transaction that results in a receipt from foreigners

Suppose the InBev Corporation (a non-U.S.MNC)buys the Anheuser-Busch Corporation,paying the U.S.shareholders cash.

The "one word that haunts the dollar" is

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

Filters

Exam 3: Balance of Payments

If the United States imports more than it exports,then this means that

Foreign direct investment (FDI)occurs

If Japan exports more than it imports,then

If for a particular county an increase in the interest rate is more or less matched by an expected depreciation in the local currency,

The central bank of the United States is

Invisible trade refers to

A country's international transactions can be grouped into the following three main types:

What is the correct label for the vertical axis in the J-curve?

When Honda,a Japanese auto maker,built a factory in Ohio,

When the balance-of-payments accounts are recorded correctly,the combined balance of the current account,the capital account,and the reserves account must be

Government controlled investment funds,known as sovereign wealth funds,

Since the balance of payments is presented as a system of double-entry bookkeeping,

The difference between Foreign Direct Investment and Portfolio Investment is that

The most important international reserve asset,comprising 94 percent of the total reserve assets held by IMF member countries is

If the United States imports more than it exports,then

With regard to the capital account,

Generally speaking,any transaction that results in a receipt from foreigners

Suppose the InBev Corporation (a non-U.S.MNC)buys the Anheuser-Busch Corporation,paying the U.S.shareholders cash.

The "one word that haunts the dollar" is

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

Filters