Question 1

The U.S.Trade Deficit

Accepted Answer

A) is a capital account surplus. 
B) is a current account deficit. 
C) is both a capital account surplus and a current account deficit. 
D) none of the above 
A) is a capital account surplus. 
B) is a current account deficit. 
C) is both a capital account surplus and a current account deficit. 
D) none of the above C

Question 2

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) a and b 
D) None of the above 
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) a and b 
D) None of the above C

Question 3

The most popular reserve currency is now the

Accepted Answer

A) U.S.dollar. 
B) Euro. 
C) Japanese Yen. 
A) U.S.dollar. 
B) Euro. 
C) Japanese Yen. A

Question 4

Suppose a country is currently experiencing a trade deficit.In the long run,this could be self correcting if

Accepted Answer

A) the deficit exists because of the import demand for capital goods. 
B) the deficit exists because of the import demand for consumption goods. 
C) the deficit exists because foreigners want to buy the country's currency as an investment. 
D) none of the above 
A) the deficit exists because of the import demand for capital goods. 
B) the deficit exists because of the import demand for consumption goods. 
C) the deficit exists because foreigners want to buy the country's currency as an investment. 
D) none of the above

Question 5

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 above 
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 above

Question 6

If a country is grappling with a major balance-of-payment difficulty,it may not be able to expand imports from the outside world.Instead,the country may be tempted to

Accepted Answer

A) impose measures to restrict imports. 
B) impose measures to discourage capital outflows. 
C) Both a and b 
D) None of the above 
A) impose measures to restrict imports. 
B) impose measures to discourage capital outflows. 
C) Both a and b 
D) None of the above

Question 7

Among IMF member countries,the dollar's dominant position in the world's reserve holdings may decline to a certain extent as the euro becomes a "known quantity" and its external value becomes more stable.In fact,the euro's share has increased

Accepted Answer

A) from zero percent in 1999 to 25.8 percent in 2006. 
B) from 13.5 percent in 1999 to 25.8 percent in 2006. 
C) from 13.5 percent in 1999 to 52.8 percent in 2006. 
D) none of the above 
A) from zero percent in 1999 to 25.8 percent in 2006. 
B) from 13.5 percent in 1999 to 25.8 percent in 2006. 
C) from 13.5 percent in 1999 to 52.8 percent in 2006. 
D) none of the above

Question 8

Capital account includes

Accepted Answer

A) (i), (ii), and (iii) 
B) (ii), (iii), and (vii) 
C) (iv), (v), and (vii) 
D) (i), (v), and (vi) 
A) (i), (ii), and (iii) 
B) (ii), (iii), and (vii) 
C) (iv), (v), and (vii) 
D) (i), (v), and (vi)

Question 9

The capital account may be divided into three categories:

Accepted Answer

A) cross-border mergers and acquisitions, portfolio investment, and other investment. 
B) direct investment, portfolio investment, and Cross-border mergers and acquisitions. 
C) direct investment, mergers and acquisitions, and other investment. 
D) direct investment, portfolio investment, and other investment. 
A) cross-border mergers and acquisitions, portfolio investment, and other investment. 
B) direct investment, portfolio investment, and Cross-border mergers and acquisitions. 
C) direct investment, mergers and acquisitions, and other investment. 
D) direct investment, portfolio investment, and other investment.

Question 10

The current account balance,which is the difference between a country's exports and imports,is a component of the country's GNP.Other components of GNP include

Accepted Answer

A) consumption and investment and government expenditure. 
B) consumption and government expenditure and net exports. 
C) consumption and net exports and government expenditure. 
D) consumption less imports. 
A) consumption and investment and government expenditure. 
B) consumption and government expenditure and net exports. 
C) consumption and net exports and government expenditure. 
D) consumption less imports.

Question 11

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 12

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 above 
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 above

Question 13

Which of the following is most indicative of the pressure that a country's currency faces for depreciation or appreciation?

Accepted Answer

A) The current account 
B) The capital account 
C) The statistical discrepancies 
D) The official settlement balance 
A) The current account 
B) The capital account 
C) The statistical discrepancies 
D) The official settlement balance

Question 14

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 15

Which of the following would not count as a foreign-exchange reserve held by a central bank?

Accepted Answer

A) The local currency 
B) U.S.dollars 
C) SDRs 
D) Euro 
A) The local currency 
B) U.S.dollars 
C) SDRs 
D) Euro

Question 16

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 17

Continued U.S.trade deficits coupled with foreigners' desire to diversify their currency holdings away from U.S.dollars

Accepted Answer

A) could further diminish the position of the dollar as the dominant reserve currency. 
B) could affect the value of U.S.dollar (e.g.through the currency diversification decisions of Asian central banks). 
C) could lend steam to the emergence of the euro as a credible reserve currency. 
D) all of the above 
A) could further diminish the position of the dollar as the dominant reserve currency. 
B) could affect the value of U.S.dollar (e.g.through the currency diversification decisions of Asian central banks). 
C) could lend steam to the emergence of the euro as a credible reserve currency. 
D) all of the above

Question 18

The balance of payments identity is given by BCA + BKA + BRA = 0.Rearrange the identity to solve for the statistical discrepancy.

Accepted Answer

A) The statistical discrepancy = (BCA + BK
A)  - BRA 
B) The statistical discrepancy = BCA - BKA + BRA 
C) The statistical discrepancy = BCA - BKA - BRA 
D) The statistical discrepancy = BCA + BKA + BRA 
A) The statistical discrepancy = (BCA + BK
A)  - BRA 
B) The statistical discrepancy = BCA - BKA + BRA 
C) The statistical discrepancy = BCA - BKA - BRA 
D) The statistical discrepancy = BCA + BKA + BRA

Question 19

The J-curve effect received wide attention when

Accepted Answer

A) the British trade balance worsened after a strengthening of the pound in 1967. 
B) the British trade balance worsened after a devaluation of the pound in 1967. 
C) the British trade balance improved after a devaluation of the pound in 1967. 
D) none of the above 
A) the British trade balance worsened after a strengthening of the pound in 1967. 
B) the British trade balance worsened after a devaluation of the pound in 1967. 
C) the British trade balance improved after a devaluation of the pound in 1967. 
D) none of the above

Question 20

As of 2007 gold accounting for

Accepted Answer

A) 90 percent of the total reserve assets held by IMF member countries. 
B) 70 percent of the total reserve assets held by IMF member countries. 
C) approximately 50 percent of the total reserve assets held by IMF member countries. 
D) less than 2 percent of the total reserve assets held by IMF member countries. 
A) 90 percent of the total reserve assets held by IMF member countries. 
B) 70 percent of the total reserve assets held by IMF member countries. 
C) approximately 50 percent of the total reserve assets held by IMF member countries. 
D) less than 2 percent of the total reserve assets held by IMF member countries.

Exam 3: Balance of Payments

The U.S.Trade Deficit

If the United States imports more than it exports,then

The most popular reserve currency is now the

Suppose a country is currently experiencing a trade deficit.In the long run,this could be self correcting if

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

If a country is grappling with a major balance-of-payment difficulty,it may not be able to expand imports from the outside world.Instead,the country may be tempted to

Among IMF member countries,the dollar's dominant position in the world's reserve holdings may decline to a certain extent as the euro becomes a "known quantity" and its external value becomes more stable.In fact,the euro's share has increased

Capital account includes

The capital account may be divided into three categories:

The current account balance,which is the difference between a country's exports and imports,is a component of the country's GNP.Other components of GNP include

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

Balance of payments

Which of the following is most indicative of the pressure that a country's currency faces for depreciation or appreciation?

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

Which of the following would not count as a foreign-exchange reserve held by a central bank?

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

Continued U.S.trade deficits coupled with foreigners' desire to diversify their currency holdings away from U.S.dollars

The balance of payments identity is given by BCA + BKA + BRA = 0.Rearrange the identity to solve for the statistical discrepancy.

The J-curve effect received wide attention when

As of 2007 gold accounting for

Globalization and the Multinational Firm

International Monetary System

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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