Question 1

The effect of an imbalance in the BOP is the same for countries on a fixed exchange rate regime as for those on a floating exchange rate regime.

Accepted Answer

A) True 
 B)False  False

Question 2

If your company were to import and export textiles, the transactions would be recorded in the current account subcategory of ________.

Accepted Answer

A) services trade 
B) income trade 
C) goods trade 
D) current transfers 
A) services trade 
B) income trade 
C) goods trade 
D) current transfers C

Question 3

A country experiencing a serious BOP ________ is more likely to ________ exports than otherwise.

Accepted Answer

A) surplus; contract 
B) surplus; expand 
C) deficit; expand 
D) none of the above 
A) surplus; contract 
B) surplus; expand 
C) deficit; expand 
D) none of the above A

Question 4

When the world went to a system of floating exchange rates, the Balance of Payments became a relic of a system of fixed exchange rates and is no longer watched by serious economic groups.

Accepted Answer

A) True 
 B)False

Question 5

An increase in GDP should lead to a decrease in imports.

Accepted Answer

A) True 
 B)False

Question 6

Under an international regime of fixed exchange rates, countries with a BOP ________ should consider ________ their currency while countries with a BOP ________ should consider ________ their currency.

Accepted Answer

A) deficit, revaluing; surplus, revaluing 
B) deficit, devaluing; surplus, devaluing 
C) surplus, devaluing; deficit, revaluing 
D) surplus, revaluing; deficit, devaluing 
A) deficit, revaluing; surplus, revaluing 
B) deficit, devaluing; surplus, devaluing 
C) surplus, devaluing; deficit, revaluing 
D) surplus, revaluing; deficit, devaluing

Question 7

The financial account consists COMPLETELY of which three components?

Accepted Answer

A) Stock investment, bond investment, and mutual fund investment. 
B) Direct investment, stock investment, and bond investment. 
C) Direct investment, portfolio investment, and other asset investment. 
D) Mutual fund investment, portfolio investment, and stock investment. 
A) Stock investment, bond investment, and mutual fund investment. 
B) Direct investment, stock investment, and bond investment. 
C) Direct investment, portfolio investment, and other asset investment. 
D) Mutual fund investment, portfolio investment, and stock investment.

Question 8

The authors identify four distinct periods of capital mobility since 1860. Which do they term as a "period of global economic destruction"?

Accepted Answer

A) 1860 - 1914 
B) 1914 - 1945 
C) 1945 - 1971 
D) 1971 - 2007 
A) 1860 - 1914 
B) 1914 - 1945 
C) 1945 - 1971 
D) 1971 - 2007

Question 9

The balance of payments

Accepted Answer

A) determines the eligibility of countries for IMF aid. 
B) adds up the value of all assets and liabilities of a country on a specific date. 
C) records all international transactions for a country over a period of time. 
D) all of the above 
A) determines the eligibility of countries for IMF aid. 
B) adds up the value of all assets and liabilities of a country on a specific date. 
C) records all international transactions for a country over a period of time. 
D) all of the above

Question 10

The largest single component of the United States current account is ________.

Accepted Answer

A) current transfers 
B) income payments and receipts 
C) goods (merchandise)imports and exports 
D) services imports and exports 
A) current transfers 
B) income payments and receipts 
C) goods (merchandise)imports and exports 
D) services imports and exports

Question 11

Under a floating exchange rate system, the government bears the responsibility to ensure that the BOP is near zero.

Accepted Answer

A) True 
 B)False

Question 12

What is a country's balance of (merchandise)trade and why is it so widely reported in the financial and popular press?

Accepted Answer

The balance of trade (BOT)is the largest

Question 13

Which of the following would NOT be considered a typical BOP transaction?

Accepted Answer

A) Toyota U.S.A. is a U.S. distributor of automobiles manufactured in Japan by its parent company. 
B) The U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich. 
C) A U.S. tourist purchases gifts at a museum in London. 
D) All are example of BOP transactions. 
A) Toyota U.S.A. is a U.S. distributor of automobiles manufactured in Japan by its parent company. 
B) The U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich. 
C) A U.S. tourist purchases gifts at a museum in London. 
D) All are example of BOP transactions.

Question 14

The Bretton Woods era realized a great expansion of international trade in goods and services.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements about the balance of payments is NOT true?

Accepted Answer

A) The BOP is the summary statement of all international transactions between one country and all other countries. 
B) The BOP is a flow statement, summarizing all international transactions that occur across the geographic borders over a period of time, typically a year. 
C) Although the BOP must always balance in theory, in practice there are substantial imbalances as a result of statistical errors and misreporting of current account and financial account flows. 
D) All of the above are true. 
A) The BOP is the summary statement of all international transactions between one country and all other countries. 
B) The BOP is a flow statement, summarizing all international transactions that occur across the geographic borders over a period of time, typically a year. 
C) Although the BOP must always balance in theory, in practice there are substantial imbalances as a result of statistical errors and misreporting of current account and financial account flows. 
D) All of the above are true.

Question 16

The travel services provided to international travelers by United Airlines would be recorded in the current account subcategory of ________.

Accepted Answer

A) services trade 
B) income trade 
C) goods trade 
D) current transfers 
A) services trade 
B) income trade 
C) goods trade 
D) current transfers

Question 17

The balance of payments as applied to a course in international finance may be defined as:

Accepted Answer

A) the amount still owed by an exporting firm after making an initial down payment. 
B) the amount still owed by governments to the International Monetary Fund. 
C) the measurement of all international economic transactions between the residents of a country and foreign residents. 
D) the amount of a country's merchandise trade deficit or surplus. 
A) the amount still owed by an exporting firm after making an initial down payment. 
B) the amount still owed by governments to the International Monetary Fund. 
C) the measurement of all international economic transactions between the residents of a country and foreign residents. 
D) the amount of a country's merchandise trade deficit or surplus.

Question 18

Significant amounts of United States Treasury issues are purchased by foreign investors, therefore the U.S. must earn foreign currency to repay this debt.

Accepted Answer

A) True 
B) False 
A) True 
B) False

Question 19

Which of the following is NOT an item to be considered in BOP calculations?

Accepted Answer

A) Purchase of a U.S. Treasury Bill by a foreign resident. 
B) A U.S.-based firm manages the development of an oil field in Kazakhstan. 
C) A consumer buys a VCR made in Korea from a Florida Wal-Mart store. 
D) A U.S. citizen living in Minnesota travels to Winnipeg, Canada and buys a case of LaBatt's Canadian beer. 
A) Purchase of a U.S. Treasury Bill by a foreign resident. 
B) A U.S.-based firm manages the development of an oil field in Kazakhstan. 
C) A consumer buys a VCR made in Korea from a Florida Wal-Mart store. 
D) A U.S. citizen living in Minnesota travels to Winnipeg, Canada and buys a case of LaBatt's Canadian beer.

Question 20

Which of the following is NOT a major subaccount of the Balance of Payments?

Accepted Answer

A) The financial account. 
B) The accounts payable. 
C) The capital account. 
D) The current account. 
A) The financial account. 
B) The accounts payable. 
C) The capital account. 
D) The current account.

Exam 4: The Balance of Payments

The effect of an imbalance in the BOP is the same for countries on a fixed exchange rate regime as for those on a floating exchange rate regime.

If your company were to import and export textiles, the transactions would be recorded in the current account subcategory of ________.

A country experiencing a serious BOP ________ is more likely to ________ exports than otherwise.

When the world went to a system of floating exchange rates, the Balance of Payments became a relic of a system of fixed exchange rates and is no longer watched by serious economic groups.

An increase in GDP should lead to a decrease in imports.

Under an international regime of fixed exchange rates, countries with a BOP ________ should consider ________ their currency while countries with a BOP ________ should consider ________ their currency.

The financial account consists COMPLETELY of which three components?

The authors identify four distinct periods of capital mobility since 1860. Which do they term as a "period of global economic destruction"?

The balance of payments

The largest single component of the United States current account is ________.

Under a floating exchange rate system, the government bears the responsibility to ensure that the BOP is near zero.

What is a country's balance of (merchandise)trade and why is it so widely reported in the financial and popular press?

Which of the following would NOT be considered a typical BOP transaction?

The Bretton Woods era realized a great expansion of international trade in goods and services.

Which of the following statements about the balance of payments is NOT true?

The travel services provided to international travelers by United Airlines would be recorded in the current account subcategory of ________.

The balance of payments as applied to a course in international finance may be defined as:

Significant amounts of United States Treasury issues are purchased by foreign investors, therefore the U.S. must earn foreign currency to repay this debt.

Which of the following is NOT an item to be considered in BOP calculations?

Which of the following is NOT a major subaccount of the Balance of Payments?

Globalization and the Multinational Enterprise

Financial Goals and Corporate Governance

The International Monetary System

Current Multinational Financial Challenges: the Credit Crisis of 2007-2009

The Foreign Exchange Market

International Parity Conditions

Foreign Currency Derivatives

Interest Rate and Currency Swaps

Foreign Exchange Rate Determination and Forecasting

Transaction Exposure

Operating Exposure

Translation Exposure

The Global Cost and Availability of Capital

Sourcing Equity Globally

Sourcing Debt Globally

International Portfolio Theory and Diversification

Foreign Direct Investment Theory and Political Risk

Multinational Capital Budgeting

Multinational Tax Management

Working Capital Management

International Trade Finance

Filters

A country experiencing a serious BOP is more likely to exports than otherwise.

Under an international regime of fixed exchange rates, countries with a BOP should consider their currency while countries with a BOP should consider their currency.