Question 1

Transactions in currency,bank deposits and so forth

Accepted Answer

A) tend to be insensitive to both changes in relative interest rates and the anticipated change in exchange rate. 
B) tend to be sensitive to both changes in relative interest rates and the anticipated change in exchange rate. 
C) tend to be sensitive to changes in relative interest rates but insensitive to the anticipated change in exchange rate. 
D) tend to be insensitive to changes in relative interest rates but sensitive to the anticipated change in exchange rate. 
A) tend to be insensitive to both changes in relative interest rates and the anticipated change in exchange rate. 
B) tend to be sensitive to both changes in relative interest rates and the anticipated change in exchange rate. 
C) tend to be sensitive to changes in relative interest rates but insensitive to the anticipated change in exchange rate. 
D) tend to be insensitive to changes in relative interest rates but sensitive to the anticipated change in exchange rate.

Question 2

The United States is considered

Accepted Answer

A) a net creditor nation. 
B) a net debtor nation. 
A) a net creditor nation. 
B) a net debtor nation.

Question 3

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.This relationship is given by BCA $\equiv$ X - M $\equiv$ (S - I)+ (T - G).Given this,in order for a country to reduce a BCA deficit,which of the following must occur?

Accepted Answer

A) For a given level of S and I, the government budget deficit (T - G) must be reduced. 
B) For a given level of I and (T - G), S must be increased. 
C) For a given level of S and (T - G), I must fall. 
D) All of the above would work to reduce a BCA deficit. 
A) For a given level of S and I, the government budget deficit (T - G) must be reduced. 
B) For a given level of I and (T - G), S must be increased. 
C) For a given level of S and (T - G), I must fall. 
D) All of the above would work to reduce a BCA deficit.

Question 4

The world's largest debtor nation and creditor nation,respectively,are

Accepted Answer

A) Japan and the U.S. 
B) The U.S.and Japan. 
C) The U.S.and Canada. 
D) Great Britain and Mexico. 
A) Japan and the U.S. 
B) The U.S.and Japan. 
C) The U.S.and Canada. 
D) Great Britain and Mexico.

Question 5

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) both b and c are correct 
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) both b and c are correct

Question 6

The capital account measures

Accepted Answer

A) the sum of U.S.sales of assets to foreigners and U.S.purchases of foreign assets. 
B) the difference between U.S.sales of assets to foreigners and U.S.purchases of foreign assets. 
C) the difference between U.S.sales of manufactured goods to foreigners and U.S.purchases of foreign products. 
D) none of the above 
A) the sum of U.S.sales of assets to foreigners and U.S.purchases of foreign assets. 
B) the difference between U.S.sales of assets to foreigners and U.S.purchases of foreign assets. 
C) the difference between U.S.sales of manufactured goods to foreigners and U.S.purchases of foreign products. 
D) none of the above

Question 7

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.This relationship is given by BCA $\equiv$ X - M $\equiv$ (S - I)+ (T - G).Given this,which of the following is a true statement?

Accepted Answer

A) If (S - I) < 0, it implies that a country's domestic savings is insufficient to finance domestic investment. 
B) If (T - G) < 0, it implies that a country's tax revenue is insufficient to finance government spending. 
C) When BCA is negative, it implies that government budget deficits and/or part of domestic investment are being finance with foreign-controlled capital. 
D) All of the above are true 
A) If (S - I) < 0, it implies that a country's domestic savings is insufficient to finance domestic investment. 
B) If (T - G) < 0, it implies that a country's tax revenue is insufficient to finance government spending. 
C) When BCA is negative, it implies that government budget deficits and/or part of domestic investment are being finance with foreign-controlled capital. 
D) All of the above are true

Question 8

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) both a and b 
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) both a and b

Question 9

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 above 
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 above

Question 10

National income,or Gross National Product is given by

Accepted Answer

A) GNP $\equiv$ Y $\equiv$ C + I + G + X + M 
B) GNP $\equiv$ Y $\equiv$ C + I + G + X - M 
C) GNP $\equiv$ I $\equiv$ C + Y + G + X - M 
D) GNP $\equiv$ Y $\equiv$ C + I + X + M - G 
A) GNP $\equiv$ Y $\equiv$ C + I + G + X + M 
B) GNP $\equiv$ Y $\equiv$ C + I + G + X - M 
C) GNP $\equiv$ I $\equiv$ C + Y + G + X - M 
D) GNP $\equiv$ Y $\equiv$ C + I + X + M - G

Question 11

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.Given this,which of the following is a true statement?

Accepted Answer

A) If (S - I) < 0, it implies that a country's domestic savings is insufficient to finance domestic investment. 
B) If (T - G) < 0, it implies that a country's tax revenue is insufficient to finance government spending. 
C) both a and b are true 
D) none of the above 
A) If (S - I) < 0, it implies that a country's domestic savings is insufficient to finance domestic investment. 
B) If (T - G) < 0, it implies that a country's tax revenue is insufficient to finance government spending. 
C) both a and b are true 
D) none of the above

Question 12

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 above-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 above-the U.S.does not have a central bank.

Question 13

If a country must make a net payment to foreigners because of a balance-of-payments deficit,the country should

Accepted Answer

A) either increase its official reserve assets or borrow anew from foreigners. 
B) either run down its official reserve assets or borrow anew from foreigners. 
C) either run down its official reserve assets or lend more foreigners. 
D) none of the above 
A) either increase its official reserve assets or borrow anew from foreigners. 
B) either run down its official reserve assets or borrow anew from foreigners. 
C) either run down its official reserve assets or lend more foreigners. 
D) none of the above

Question 14

Suppose the McDonalds Corporation imports Canadian beef,paying for it by transferring the funds to a New York bank account kept by the Canadian Beef producer.

Accepted Answer

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

Question 15

BCA stands for

Accepted Answer

A) the balance on the current account. 
B) the balance on the capital account. 
C) the balance on the official reserves. 
D) net imports. 
A) the balance on the current account. 
B) the balance on the capital account. 
C) the balance on the official reserves. 
D) net imports.

Question 16

Regarding the statistical discrepancy in the balance-of-payments accounts

Accepted Answer

A) there is some evidence that financial transactions may be mainly responsible for the discrepancy. 
B) the sum of the balance on the capital account and the statistical discrepancy is very close to the balance of the current account in magnitude. 
C) it tends to be positive one year and negative in others, so it's safe to ignore it. 
D) a and b 
A) there is some evidence that financial transactions may be mainly responsible for the discrepancy. 
B) the sum of the balance on the capital account and the statistical discrepancy is very close to the balance of the current account in magnitude. 
C) it tends to be positive one year and negative in others, so it's safe to ignore it. 
D) a and b

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

Over half of all dollar bills in circulation are held outside American's borders.

Accepted Answer

A) True 
 B)False

Question 19

In the long run,both exports and imports tend to be

Accepted Answer

A) unresponsive to changes in exchange rates. 
B) responsive to changes in exchange rates. 
C) both a and b 
D) none of the above 
A) unresponsive to changes in exchange rates. 
B) responsive to changes in exchange rates. 
C) both a and b 
D) none of the above

Question 20

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.Given this,in order for a country to reduce a BCA deficit,which of the following must occur?

Accepted Answer

A) For a given level of S and I, the government budget deficit (T - G) must be reduced. 
B) For a given level of I and (T - G), S must be increased. 
C) For a given level of S and (T - G), I must fall. 
D) All of the above would work to reduce a BCA deficit. 
A) For a given level of S and I, the government budget deficit (T - G) must be reduced. 
B) For a given level of I and (T - G), S must be increased. 
C) For a given level of S and (T - G), I must fall. 
D) All of the above would work to reduce a BCA deficit.

Transactions in currency,bank deposits and so forth

The United States is considered

The world's largest debtor nation and creditor nation,respectively,are

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

The capital account measures

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.This relationship is given by BCA $\equiv$ X - M $\equiv$ (S - I)+ (T - G).Given this,which of the following is a true statement?

Foreign direct investment (FDI)occurs

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

National income,or Gross National Product is given by

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.Given this,which of the following is a true statement?

The central bank of the United States is

If a country must make a net payment to foreigners because of a balance-of-payments deficit,the country should

Suppose the McDonalds Corporation imports Canadian beef,paying for it by transferring the funds to a New York bank account kept by the Canadian Beef producer.

BCA stands for

Regarding the statistical discrepancy in the balance-of-payments accounts

Currently,international reserve assets are comprised of

Over half of all dollar bills in circulation are held outside American's borders.

In the long run,both exports and imports tend to be

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.Given this,in order for a country to reduce a BCA deficit,which of the following must occur?

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

Filters

Exam 3: Balance of Payments

Transactions in currency,bank deposits and so forth

The United States is considered

The world's largest debtor nation and creditor nation,respectively,are

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

The capital account measures

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.This relationship is given by BCA ≡\equiv≡ X - M ≡\equiv≡ (S - I)+ (T - G).Given this,which of the following is a true statement?

Foreign direct investment (FDI)occurs

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

National income,or Gross National Product is given by

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.Given this,which of the following is a true statement?

The central bank of the United States is

If a country must make a net payment to foreigners because of a balance-of-payments deficit,the country should

Suppose the McDonalds Corporation imports Canadian beef,paying for it by transferring the funds to a New York bank account kept by the Canadian Beef producer.

BCA stands for

Regarding the statistical discrepancy in the balance-of-payments accounts

Currently,international reserve assets are comprised of

Over half of all dollar bills in circulation are held outside American's borders.

In the long run,both exports and imports tend to be

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.Given this,in order for a country to reduce a BCA deficit,which of the following must occur?

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

Filters

There is an intimate relationship between a country's BCA and how the country finances its domestic investment and pays for government expenditures.This relationship is given by BCA $\equiv$ X - M $\equiv$ (S - I)+ (T - G).Given this,which of the following is a true statement?