Question 1

The International Fisher Effect implies that the country with the higher interest rate should have lower inflation.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following links together the central banks of the world and acts as a central banker's bank?

Accepted Answer

A)  the IMF 
B)  the World Bank 
C)  the BIS 
D)  the EMU 
A)  the IMF 
B)  the World Bank 
C)  the BIS 
D)  the EMU

Question 3

A black market exists when ________.

Accepted Answer

A)  a country closely monitors and adjusts the foreign-exchange rate 
B)  people pay more for hard currency than the official rate 
C)  a country is running a budget surplus 
D)  a country is experiencing a recession 
A)  a country closely monitors and adjusts the foreign-exchange rate 
B)  people pay more for hard currency than the official rate 
C)  a country is running a budget surplus 
D)  a country is experiencing a recession

Question 4

The global financial crisis has pushed China closer to ________.

Accepted Answer

A)  operating independently from the central banks of other countries 
B)  discontinuing its relationship with the Bank for International Settlements 
C)  liberalizing its currency 
D)  controlling its currency 
A)  operating independently from the central banks of other countries 
B)  discontinuing its relationship with the Bank for International Settlements 
C)  liberalizing its currency 
D)  controlling its currency

Question 5

The International Fisher Effect ________.

Accepted Answer

A)  links interest rates and inflation 
B)  implies that the currency of the country with the lower interest rate will weaken in the future 
C)  implies that the country with the higher interest rate should have lower inflation 
D)  links interest rates and exchange rates 
A)  links interest rates and inflation 
B)  implies that the currency of the country with the lower interest rate will weaken in the future 
C)  implies that the country with the higher interest rate should have lower inflation 
D)  links interest rates and exchange rates

Question 6

Research has shown that past exchange rates are an accurate predictor of future exchange rates ________.

Accepted Answer

A)  only in the long run 
B)  only in the very short run 
C)  only during times of economic crisis 
D)  only during times of economic calm 
A)  only in the long run 
B)  only in the very short run 
C)  only during times of economic crisis 
D)  only during times of economic calm

Question 7

The value of the SDR is currently based on the ________.

Accepted Answer

A)  euro 
B)  U.S. dollar 
C)  weighted average of four currencies 
D)  weighted average of six currencies 
A)  euro 
B)  U.S. dollar 
C)  weighted average of four currencies 
D)  weighted average of six currencies

Question 8

Fundamental forecasting uses trends in economic variables to predict future rates.

Accepted Answer

A) True 
 B)False

Question 9

If inflation in the United States is relatively higher than inflation in Japan,and the Japanese government wants to keep the exchange rate fixed between the yen and the dollar,it should most likely ________.

Accepted Answer

A)  allow its currency to rise against the dollar 
B)  allow its currency to fall against the dollar 
C)  increase the supply of yen in the market 
D)  decrease the supply of yen in the market 
A)  allow its currency to rise against the dollar 
B)  allow its currency to fall against the dollar 
C)  increase the supply of yen in the market 
D)  decrease the supply of yen in the market

Question 10

The primary result of the Jamaica Agreement was to ________.

Accepted Answer

A)  allow greater exchange-rate flexibility 
B)  set austerity measures for debt control 
C)  establish a system based on par values 
D)  implement fixed exchange rates 
A)  allow greater exchange-rate flexibility 
B)  set austerity measures for debt control 
C)  establish a system based on par values 
D)  implement fixed exchange rates

Question 11

In a short essay,compare the roles of the Federal Reserve Bank of New York and the European Central Bank.

Accepted Answer

The central bank in the United States is

Question 12

Thomas is planning a vacation to Country X.On a tourism Web site,he reads that the government of Country X limits the amount of money a tourist may convert into the country's currency.Country X most likely uses which of the following?

Accepted Answer

A)  import deposit requirements 
B)  multiple exchange rates 
C)  import licensing 
D)  quantity controls 
A)  import deposit requirements 
B)  multiple exchange rates 
C)  import licensing 
D)  quantity controls

Question 13

What is a black market? Under what conditions might one exist?

Accepted Answer

In many countries that control their cur

Question 14

According to purchasing power parity,if the domestic inflation rate is ________ than that in the foreign country,the domestic currency should be ________ than that of the foreign country.

Accepted Answer

A)  lower; weaker 
B)  higher; higher 
C)  lower; stronger 
D)  higher; stronger 
A)  lower; weaker 
B)  higher; higher 
C)  lower; stronger 
D)  higher; stronger

Question 15

The Big Mac Index perfectly explains the relative size of economies.

Accepted Answer

A) True 
 B)False

Question 16

If the real interest rate is 5%,the rate of inflation in the United States is 6%,and the rate of inflation in the United Kingdom is 3%,which of the following statements would NOT be true?

Accepted Answer

A)  The nominal rate of interest in the U.S. would be greater than the nominal interest rate in the U.K. 
B)  The difference between the U.K. and U.S. interest rates is a function of the difference between their inflation rates. 
C)  The nominal rate of interest in the United States and the United Kingdom would be the same because of purchasing power parity. 
D)  Investors would get a higher return on their money in the United States. 
A)  The nominal rate of interest in the U.S. would be greater than the nominal interest rate in the U.K. 
B)  The difference between the U.K. and U.S. interest rates is a function of the difference between their inflation rates. 
C)  The nominal rate of interest in the United States and the United Kingdom would be the same because of purchasing power parity. 
D)  Investors would get a higher return on their money in the United States.

Question 17

Which of the following has the greatest amount of foreign-exchange reserves in the world?

Accepted Answer

A)  China 
B)  Japan 
C)  Russia 
D)  Taiwan 
A)  China 
B)  Japan 
C)  Russia 
D)  Taiwan

Question 18

El Salvador's hard peg exchange rate arrangement involves the use of both the U.S.dollar and its own separate legal tender.

Accepted Answer

A) True 
 B)False

Question 19

Purchasing power parity (PPP)is a well-known theory that seeks to define relationships between currencies.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following states that the country with the higher interest rate should have the higher inflation?

Accepted Answer

A)  the Fisher Effect 
B)  the International Fisher Effect 
C)  the Interest Rate Inflation Theory 
D)  the Forward rate theory 
A)  the Fisher Effect 
B)  the International Fisher Effect 
C)  the Interest Rate Inflation Theory 
D)  the Forward rate theory

The International Fisher Effect implies that the country with the higher interest rate should have lower inflation.

Which of the following links together the central banks of the world and acts as a central banker's bank?

A black market exists when ________.

The global financial crisis has pushed China closer to ________.

The International Fisher Effect ________.

Research has shown that past exchange rates are an accurate predictor of future exchange rates ________.

The value of the SDR is currently based on the ________.

Fundamental forecasting uses trends in economic variables to predict future rates.

If inflation in the United States is relatively higher than inflation in Japan,and the Japanese government wants to keep the exchange rate fixed between the yen and the dollar,it should most likely ________.

The primary result of the Jamaica Agreement was to ________.

In a short essay,compare the roles of the Federal Reserve Bank of New York and the European Central Bank.

Thomas is planning a vacation to Country X.On a tourism Web site,he reads that the government of Country X limits the amount of money a tourist may convert into the country's currency.Country X most likely uses which of the following?

What is a black market? Under what conditions might one exist?

According to purchasing power parity,if the domestic inflation rate is than that in the foreign country,the domestic currency should be than that of the foreign country.

The Big Mac Index perfectly explains the relative size of economies.

If the real interest rate is 5%,the rate of inflation in the United States is 6%,and the rate of inflation in the United Kingdom is 3%,which of the following statements would NOT be true?

Which of the following has the greatest amount of foreign-exchange reserves in the world?

El Salvador's hard peg exchange rate arrangement involves the use of both the U.S.dollar and its own separate legal tender.

Purchasing power parity (PPP)is a well-known theory that seeks to define relationships between currencies.

Which of the following states that the country with the higher interest rate should have the higher inflation?

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

International Trade and Factor-Mobility Theory

Governmental Influence on Trade

Cross-National Cooperation and Agreements

Global Foreign-Exchange Markets

Global Capital Markets

Globalization and Society

The Strategy of International Business

Country Evaluation and Selection

Export and Import

Direct Investment and Collaborative Strategies

The Organization of International Business

Marketing Globally

Global Manufacturing and Supply-Chain Management

International Accounting and Finance Issues

International Human Resource Management

Filters

Exam 9: The Determination of Exchange Rates

The International Fisher Effect implies that the country with the higher interest rate should have lower inflation.

Which of the following links together the central banks of the world and acts as a central banker's bank?

A black market exists when ________.

The global financial crisis has pushed China closer to ________.

The International Fisher Effect ________.

Research has shown that past exchange rates are an accurate predictor of future exchange rates ________.

The value of the SDR is currently based on the ________.

Fundamental forecasting uses trends in economic variables to predict future rates.

If inflation in the United States is relatively higher than inflation in Japan,and the Japanese government wants to keep the exchange rate fixed between the yen and the dollar,it should most likely ________.

The primary result of the Jamaica Agreement was to ________.

In a short essay,compare the roles of the Federal Reserve Bank of New York and the European Central Bank.

Thomas is planning a vacation to Country X.On a tourism Web site,he reads that the government of Country X limits the amount of money a tourist may convert into the country's currency.Country X most likely uses which of the following?

What is a black market? Under what conditions might one exist?

According to purchasing power parity,if the domestic inflation rate is ________ than that in the foreign country,the domestic currency should be ________ than that of the foreign country.

The Big Mac Index perfectly explains the relative size of economies.

If the real interest rate is 5%,the rate of inflation in the United States is 6%,and the rate of inflation in the United Kingdom is 3%,which of the following statements would NOT be true?

Which of the following has the greatest amount of foreign-exchange reserves in the world?

El Salvador's hard peg exchange rate arrangement involves the use of both the U.S.dollar and its own separate legal tender.

Purchasing power parity (PPP)is a well-known theory that seeks to define relationships between currencies.

Which of the following states that the country with the higher interest rate should have the higher inflation?

Globalization and International Business

The Cultural Environments Facing Business

The Political and Legal Environments Facing Business

The Economic Environments Facing Businesses

International Trade and Factor-Mobility Theory

Governmental Influence on Trade

Cross-National Cooperation and Agreements

Global Foreign-Exchange Markets

Global Capital Markets

Globalization and Society

The Strategy of International Business

Country Evaluation and Selection

Export and Import

Direct Investment and Collaborative Strategies

The Organization of International Business

Marketing Globally

Global Manufacturing and Supply-Chain Management

International Accounting and Finance Issues

International Human Resource Management

Filters

According to purchasing power parity,if the domestic inflation rate is than that in the foreign country,the domestic currency should be than that of the foreign country.