Question 1

In the EU,there is a

Accepted Answer

A) low degree of fiscal integration among EU countries. 
B) high degree of fiscal integration among EU countries. 
A) low degree of fiscal integration among EU countries. 
B) high degree of fiscal integration among EU countries.

Question 2

Prior to the Argentine Peso Crisis

Accepted Answer

A) Argentina had a "dirty float" where the government allowed the exchange rate to float within wide bands. 
B) Argentina had a currency board arrangement with the peso pegged to the U.S.dollar at parity. 
C) the Argentine government defaulted on its international debts. 
D) weakening of the U.S.dollar led the Argentine government to abandon dollarization. 
A) Argentina had a "dirty float" where the government allowed the exchange rate to float within wide bands. 
B) Argentina had a currency board arrangement with the peso pegged to the U.S.dollar at parity. 
C) the Argentine government defaulted on its international debts. 
D) weakening of the U.S.dollar led the Argentine government to abandon dollarization.

Question 3

Under the gold standard,international imbalances of payment will be corrected automatically under the

Accepted Answer

A) Gresham Exchange Rate regime. 
B) European Monetary System. 
C) Price-specie-flow mechanism. 
D) Bretton Woods Accord. 
A) Gresham Exchange Rate regime. 
B) European Monetary System. 
C) Price-specie-flow mechanism. 
D) Bretton Woods Accord.

Question 4

When money can move freely across borders,policy makers must choose between

Accepted Answer

A) exchange-rate stability and an economic growth. 
B) exchange-rate stability and inflation. 
C) exchange-rate stability and an independent monetary policy. 
D) exchange-rate stability and capital controls. 
A) exchange-rate stability and an economic growth. 
B) exchange-rate stability and inflation. 
C) exchange-rate stability and an independent monetary policy. 
D) exchange-rate stability and capital controls.

Question 5

To pave the way for the European Monetary Union,the member countries of the European Monetary System agreed to achieve a convergence of their economies.Which of the following is NOT a condition of convergence:

Accepted Answer

A) keep the ratio of government budget deficits to GDP below 3 percent. 
B) keep gross public debts below 60 percent of GDP. 
C) achieve a high degree of price stability. 
D) maintain its currency at a fixed exchange rate to the ERM. 
A) keep the ratio of government budget deficits to GDP below 3 percent. 
B) keep gross public debts below 60 percent of GDP. 
C) achieve a high degree of price stability. 
D) maintain its currency at a fixed exchange rate to the ERM.

Question 6

Suppose that country A and country B are both on a bimetallic standard.In country A the ratio is 15 to one (i.e.an ounce of gold is worth 15 times as much as an ounce of silver in that currency),while in country B the ratio is ten to one.If the free flow of capital is allowed between countries A and B is this a sustainable framework?

Accepted Answer

A) Yes 
B) No 
C) There is not enough information to make an informed determination. 
A) Yes 
B) No 
C) There is not enough information to make an informed determination.

Question 7

Corporations today are operating in an environment in which exchange rate changes may adversely affect their competitive positions in the marketplace.This situation,in turn,makes it necessary for many firms to

Accepted Answer

A) carefully manage their exchange risk exposure. 
B) carefully measure their exchange risk exposure. 
C) both a and b 
A) carefully manage their exchange risk exposure. 
B) carefully measure their exchange risk exposure. 
C) both a and b

Question 8

Benefits from adopting a common European currency include

Accepted Answer

A) reduced transaction costs. 
B) elimination of exchange rate risk. 
C) increased price transparency that will promote Europe-wide competition. 
D) all of the above 
A) reduced transaction costs. 
B) elimination of exchange rate risk. 
C) increased price transparency that will promote Europe-wide competition. 
D) all of the above

Question 9

Advantages of a fixed exchange rate include

Accepted Answer

A) reduction in exchange rate risk for businesses. 
B) reduction in transactions costs. 
C) reduction in trading frictions. 
D) all of the above 
A) reduction in exchange rate risk for businesses. 
B) reduction in transactions costs. 
C) reduction in trading frictions. 
D) all of the above

Question 10

Suppose that Britain pegs the pound to gold at the market price of £6 per ounce,and the United States pegs the dollar to gold at the market price of $36 per ounce.If the official exchange rate between pounds and U.S.dollars is $5 = £1.Which of the following trades is profitable?

Accepted Answer

A) Start with £100 and trade for $500 at the official exchange rate.Redeem the $500 for 13.89 ounces of gold.Trade the gold for £83.33. 
B) Start with $100 and buy gold.Sell the gold for £16.67.Sell the pounds at the official exchange rate. 
C) Start with £100 and buy gold.Sell the gold for $600. 
D) Start with $500 and trade for £100 at the official exchange rate.Redeem the £100 for 16 2/3 ounces of gold.Trade the gold for $600. 
A) Start with £100 and trade for $500 at the official exchange rate.Redeem the $500 for 13.89 ounces of gold.Trade the gold for £83.33. 
B) Start with $100 and buy gold.Sell the gold for £16.67.Sell the pounds at the official exchange rate. 
C) Start with £100 and buy gold.Sell the gold for $600. 
D) Start with $500 and trade for £100 at the official exchange rate.Redeem the £100 for 16 2/3 ounces of gold.Trade the gold for $600.

Question 11

In the United States,bimetallism was adopted by the Coinage Act of 1792 and remained a legal standard until 1873,

Accepted Answer

A) when Congress dropped the silver dollar from the list of coins to be minted. 
B) when Congress dropped the twenty-dollar gold piece from the list of coins to be minted. 
C) when gold from the California gold rush drove silver out of circulation. 
D) when gold from the California gold rush drove gold out of circulation. 
A) when Congress dropped the silver dollar from the list of coins to be minted. 
B) when Congress dropped the twenty-dollar gold piece from the list of coins to be minted. 
C) when gold from the California gold rush drove silver out of circulation. 
D) when gold from the California gold rush drove gold out of circulation.

Question 12

With regard to the current exchange rate arrangement between the U.S.and the U.K.,it is best characterized as

Accepted Answer

A) independent floating (market determined). 
B) managed float. 
C) currency board. 
D) pegged exchange rate within a horizontal band. 
A) independent floating (market determined). 
B) managed float. 
C) currency board. 
D) pegged exchange rate within a horizontal band.

Question 13

The European Monetary System (EMS)has the chief objective(s)

Accepted Answer

A) to establish a "zone of monetary stability" in Europe. 
B) to coordinate exchange rate policies vis-à-vis the non-EMS currencies. 
C) to pave the way for the eventual European monetary union. 
D) all of the above 
A) to establish a "zone of monetary stability" in Europe. 
B) to coordinate exchange rate policies vis-à-vis the non-EMS currencies. 
C) to pave the way for the eventual European monetary union. 
D) all of the above

Question 14

Which country is NOT using the euro?

Accepted Answer

A) Greece 
B) Italy 
C) Sweden 
D) Portugal 
A) Greece 
B) Italy 
C) Sweden 
D) Portugal

Question 15

The advent of the euro marks the first time that sovereign countries have voluntarily given up their

Accepted Answer

A) national borders to foster economic integration. 
B) monetary independence to foster economic integration. 
C) fiscal policy independence to foster economic integration. 
D) national debt to foster economic integration. 
A) national borders to foster economic integration. 
B) monetary independence to foster economic integration. 
C) fiscal policy independence to foster economic integration. 
D) national debt to foster economic integration.

Question 16

Under a flexible exchange rate regime,governments can retain monetary policy independence because the external balance will be achieved by

Accepted Answer

A) the exchange rate adjustments. 
B) the price-specie flow mechanism. 
C) the Triffin paradox. 
D) none of the above 
A) the exchange rate adjustments. 
B) the price-specie flow mechanism. 
C) the Triffin paradox. 
D) none of the above

Question 17

According to the "Trilemma" a country can attain only two of the following three conditions: 1)A fixed exchange rate,(2)Free international flows of capital,(3)An independent monetary policy.This difficulty is also known as

Accepted Answer

A) the incompatible trinity. 
B) the Trilemma. 
C) the Tobin tax. 
D) all three can be had at the same time 
A) the incompatible trinity. 
B) the Trilemma. 
C) the Tobin tax. 
D) all three can be had at the same time

Question 18

Another name for the incompatible trinity is the

Accepted Answer

A) Tobin Tax. 
B) Triffin Paradox. 
C) Trilemma. 
D) None of the above 
A) Tobin Tax. 
B) Triffin Paradox. 
C) Trilemma. 
D) None of the above

Question 19

Robert A.Mundell won the Nobel Memorial Prize in Economic Science.He was

Accepted Answer

A) one of the intellectual fathers of both the new European common currency and Reagan-era supply-side economics. 
B) one of the intellectual fathers of both the new European common currency and Reagan-era Keynesian economics. 
C) one of the intellectual fathers of both the Bretton Woods currency agreement and Keynesian economics. 
D) none of the above 
A) one of the intellectual fathers of both the new European common currency and Reagan-era supply-side economics. 
B) one of the intellectual fathers of both the new European common currency and Reagan-era Keynesian economics. 
C) one of the intellectual fathers of both the Bretton Woods currency agreement and Keynesian economics. 
D) none of the above

Question 20

Since the SDR is a "portfolio" of currencies

Accepted Answer

A) its value tends to be more stable than the value of any of the individual currencies included in the SDR. 
B) its value tends to be less stable than the value of any of the individual currencies included in the SDR. 
C) its value tends to be as stable as the average of the individual currencies included in the SDR. 
D) none of the above 
A) its value tends to be more stable than the value of any of the individual currencies included in the SDR. 
B) its value tends to be less stable than the value of any of the individual currencies included in the SDR. 
C) its value tends to be as stable as the average of the individual currencies included in the SDR. 
D) none of the above

In the EU,there is a

Prior to the Argentine Peso Crisis

Under the gold standard,international imbalances of payment will be corrected automatically under the

When money can move freely across borders,policy makers must choose between

To pave the way for the European Monetary Union,the member countries of the European Monetary System agreed to achieve a convergence of their economies.Which of the following is NOT a condition of convergence:

Corporations today are operating in an environment in which exchange rate changes may adversely affect their competitive positions in the marketplace.This situation,in turn,makes it necessary for many firms to

Benefits from adopting a common European currency include

Advantages of a fixed exchange rate include

Suppose that Britain pegs the pound to gold at the market price of £6 per ounce,and the United States pegs the dollar to gold at the market price of $36 per ounce.If the official exchange rate between pounds and U.S.dollars is $5 = £1.Which of the following trades is profitable?

In the United States,bimetallism was adopted by the Coinage Act of 1792 and remained a legal standard until 1873,

With regard to the current exchange rate arrangement between the U.S.and the U.K.,it is best characterized as

The European Monetary System (EMS)has the chief objective(s)

Which country is NOT using the euro?

The advent of the euro marks the first time that sovereign countries have voluntarily given up their

Under a flexible exchange rate regime,governments can retain monetary policy independence because the external balance will be achieved by

According to the "Trilemma" a country can attain only two of the following three conditions: 1)A fixed exchange rate,(2)Free international flows of capital,(3)An independent monetary policy.This difficulty is also known as

Another name for the incompatible trinity is the

Robert A.Mundell won the Nobel Memorial Prize in Economic Science.He was

Since the SDR is a "portfolio" of currencies

Globalization and the Multinational Firm

Balance of Payments

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 2: International Monetary System

In the EU,there is a

Prior to the Argentine Peso Crisis

Under the gold standard,international imbalances of payment will be corrected automatically under the

When money can move freely across borders,policy makers must choose between

To pave the way for the European Monetary Union,the member countries of the European Monetary System agreed to achieve a convergence of their economies.Which of the following is NOT a condition of convergence:

Corporations today are operating in an environment in which exchange rate changes may adversely affect their competitive positions in the marketplace.This situation,in turn,makes it necessary for many firms to

Benefits from adopting a common European currency include

Advantages of a fixed exchange rate include

Suppose that Britain pegs the pound to gold at the market price of £6 per ounce,and the United States pegs the dollar to gold at the market price of $36 per ounce.If the official exchange rate between pounds and U.S.dollars is $5 = £1.Which of the following trades is profitable?

In the United States,bimetallism was adopted by the Coinage Act of 1792 and remained a legal standard until 1873,

With regard to the current exchange rate arrangement between the U.S.and the U.K.,it is best characterized as

The European Monetary System (EMS)has the chief objective(s)

Which country is NOT using the euro?

The advent of the euro marks the first time that sovereign countries have voluntarily given up their

Under a flexible exchange rate regime,governments can retain monetary policy independence because the external balance will be achieved by

According to the "Trilemma" a country can attain only two of the following three conditions: 1)A fixed exchange rate,(2)Free international flows of capital,(3)An independent monetary policy.This difficulty is also known as

Another name for the incompatible trinity is the

Robert A.Mundell won the Nobel Memorial Prize in Economic Science.He was

Since the SDR is a "portfolio" of currencies

Globalization and the Multinational Firm

Balance of Payments

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