Question 1

Describe the exchange rate arrangements used in the EU,Hong Kong,China,and the U.S.

Accepted Answer

The EU uses an exchange arrangement with

Question 2

If a Big Mac costs $3.41 in the United States and $2.67 in Argentina (the price of a Big Mac in Argentine pesos converted into dollars at the spot exchange rate),which of the following is most likely true?

Accepted Answer

A)  The peso is overvalued against the dollar. 
B)  The dollar is overvalued against the peso. 
C)  It should be harder for a U.S. tourist to buy a leather coat in Buenos Aires because the dollar won't go very far. 
D)  It will be cheap for Argentine companies to invest in the United States because the dollar is relatively weak. 
A)  The peso is overvalued against the dollar. 
B)  The dollar is overvalued against the peso. 
C)  It should be harder for a U.S. tourist to buy a leather coat in Buenos Aires because the dollar won't go very far. 
D)  It will be cheap for Argentine companies to invest in the United States because the dollar is relatively weak.

Question 3

Sarah,a manager at Farley Enterprises,an MNE with operations in Asia,Europe,and North America,is using past trends in exchange rate movements to spot future trends.Which type of forecasting approach is Sarah most likely using?

Accepted Answer

A)  fundamental 
B)  technical 
C)  application 
D)  economic 
A)  fundamental 
B)  technical 
C)  application 
D)  economic

Question 4

Technical forecasting relies on trends in economic variables to predict future exchange rates.

Accepted Answer

A) True 
 B)False

Question 5

A country's central bank is responsible for ________.

Accepted Answer

A)  distributing money to foreign countries that are in a debt crisis 
B)  encouraging disorderly conditions in foreign-exchange markets 
C)  the policies affecting the value of its country's currency 
D)  establishing foreign-exchange markets 
A)  distributing money to foreign countries that are in a debt crisis 
B)  encouraging disorderly conditions in foreign-exchange markets 
C)  the policies affecting the value of its country's currency 
D)  establishing foreign-exchange markets

Question 6

None of the new members of the EU has yet been allowed to adopt the euro as its currency.

Accepted Answer

A) True 
 B)False

Question 7

Producers are affected by exchange rate changes because goods manufactured in a country with a weak currency will be relatively cheap in world markets.

Accepted Answer

A) True 
 B)False

Question 8

What is the International Monetary Fund (IMF)? What are its objectives? What occurs when a country joins the IMF today?

Accepted Answer

In 1944,toward the close of World War II

Question 9

In order to join the IMF,a country must contribute a certain sum of money,called a ________.

Accepted Answer

A)  special drawing right 
B)  trade balance 
C)  monetary reserve 
D)  quota 
A)  special drawing right 
B)  trade balance 
C)  monetary reserve 
D)  quota

Question 10

Tanya is a manager at a global firm that has operations located in Brazil,India,and Japan.Tanya is in the process of making a fundamental analysis in order to forecast exchange rates in each country.Which of the following is a confidence factor that Tanya should consider in trying to predict exchange rate movements in each country?

Accepted Answer

A)  What are the expectations of the market with respect to the political environment? 
B)  Have there been significant national events that have appeared in the news lately? 
C)  At what rates do there appear to be buy and sell orders? 
D)  What trends do the charts show? 
A)  What are the expectations of the market with respect to the political environment? 
B)  Have there been significant national events that have appeared in the news lately? 
C)  At what rates do there appear to be buy and sell orders? 
D)  What trends do the charts show?

Question 11

Tanya is a manager at a global firm that has operations located in Brazil,India,and Japan.Tanya is in the process of making a fundamental analysis in order to forecast exchange rates in each country.Which of the following questions is most relevant to Tanya?

Accepted Answer

A)  What is the cyclical situation in terms of employment and inflation? 
B)  Are the government's intervention practices sustainable? 
C)  What level of credibility does the government have? 
D)  What is the possibility of a national crisis? 
A)  What is the cyclical situation in terms of employment and inflation? 
B)  Are the government's intervention practices sustainable? 
C)  What level of credibility does the government have? 
D)  What is the possibility of a national crisis?

Question 12

An independently floating exchange rate is adjusted periodically at a fixed pronounced rate.

Accepted Answer

A) True 
 B)False

Question 13

Ray,a marketer at a global firm,monitors the exchange rate of countries in which the firm sells its products.Ray is most likely concerned about changes in ________.

Accepted Answer

A)  operating expenses 
B)  exporting policies 
C)  product demand 
D)  quality control 
A)  operating expenses 
B)  exporting policies 
C)  product demand 
D)  quality control

Question 14

Which of the following was NOT a result of the Smithsonian Agreement?

Accepted Answer

A)  revaluation of currencies other than the dollar against gold 
B)  establishment of par values the quota system 
C)  devaluation of the dollar against gold 
D)  widening of exchange-rate flexibility 
A)  revaluation of currencies other than the dollar against gold 
B)  establishment of par values the quota system 
C)  devaluation of the dollar against gold 
D)  widening of exchange-rate flexibility

Question 15

Which of the following best describes the special drawing right?

Accepted Answer

A)  an international reserve asset created to supplement members' existing reserve assets 
B)  the official currency for international trade established by the World Bank 
C)  a substitute for the fixed value of gold as determined by currency rates 
D)  a contribution made by countries to join the IMF 
A)  an international reserve asset created to supplement members' existing reserve assets 
B)  the official currency for international trade established by the World Bank 
C)  a substitute for the fixed value of gold as determined by currency rates 
D)  a contribution made by countries to join the IMF

Question 16

The IMF's primary role is to identify exchange rate regimes.

Accepted Answer

A) True 
 B)False

Question 17

What role has the IMF played in the Greek financial crisis of 2010-2011?

Accepted Answer

A)  setting the value of the drachma 
B)  releasing funds for debt payments 
C)  demanding the sale of state-owned assets 
D)  lowering interest rates for international investors 
A)  setting the value of the drachma 
B)  releasing funds for debt payments 
C)  demanding the sale of state-owned assets 
D)  lowering interest rates for international investors

Question 18

Craig,a manager at a global firm,is studying the cyclical nature of growth and employment as a part of the process to forecast exchange rates.Which factor is Craig most likely monitoring?

Accepted Answer

A)  the institutional setting 
B)  fundamental analyses 
C)  cultural analyses 
D)  circumstances 
A)  the institutional setting 
B)  fundamental analyses 
C)  cultural analyses 
D)  circumstances

Question 19

A currency that is pegged to another currency is usually changed on a supply-and-demand basis.

Accepted Answer

A) True 
 B)False

Question 20

If the euro continues to remain strong against the U.S.dollar,which of the following strategies would make the most sense for BMW?

Accepted Answer

A)  It might be advantageous for them to consider exporting from Germany to the U.S. to take advantage of cheaper costs. 
B)  It might increase its manufacturing capacity in the United States to take advantage of the cheaper dollar. 
C)  It might consider raising prices in the United States to earn more profits for BMW. 
D)  It really doesn't make any difference to BMW since consumers will buy the cars no matter what they cost. 
A)  It might be advantageous for them to consider exporting from Germany to the U.S. to take advantage of cheaper costs. 
B)  It might increase its manufacturing capacity in the United States to take advantage of the cheaper dollar. 
C)  It might consider raising prices in the United States to earn more profits for BMW. 
D)  It really doesn't make any difference to BMW since consumers will buy the cars no matter what they cost.

Describe the exchange rate arrangements used in the EU,Hong Kong,China,and the U.S.

If a Big Mac costs $3.41 in the United States and $2.67 in Argentina (the price of a Big Mac in Argentine pesos converted into dollars at the spot exchange rate),which of the following is most likely true?

Sarah,a manager at Farley Enterprises,an MNE with operations in Asia,Europe,and North America,is using past trends in exchange rate movements to spot future trends.Which type of forecasting approach is Sarah most likely using?

Technical forecasting relies on trends in economic variables to predict future exchange rates.

A country's central bank is responsible for ________.

None of the new members of the EU has yet been allowed to adopt the euro as its currency.

Producers are affected by exchange rate changes because goods manufactured in a country with a weak currency will be relatively cheap in world markets.

What is the International Monetary Fund (IMF)? What are its objectives? What occurs when a country joins the IMF today?

In order to join the IMF,a country must contribute a certain sum of money,called a ________.

Tanya is a manager at a global firm that has operations located in Brazil,India,and Japan.Tanya is in the process of making a fundamental analysis in order to forecast exchange rates in each country.Which of the following questions is most relevant to Tanya?

An independently floating exchange rate is adjusted periodically at a fixed pronounced rate.

Ray,a marketer at a global firm,monitors the exchange rate of countries in which the firm sells its products.Ray is most likely concerned about changes in ________.

Which of the following was NOT a result of the Smithsonian Agreement?

Which of the following best describes the special drawing right?

The IMF's primary role is to identify exchange rate regimes.

What role has the IMF played in the Greek financial crisis of 2010-2011?

Craig,a manager at a global firm,is studying the cyclical nature of growth and employment as a part of the process to forecast exchange rates.Which factor is Craig most likely monitoring?

A currency that is pegged to another currency is usually changed on a supply-and-demand basis.

If the euro continues to remain strong against the U.S.dollar,which of the following strategies would make the most sense for BMW?

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

Describe the exchange rate arrangements used in the EU,Hong Kong,China,and the U.S.

If a Big Mac costs $3.41 in the United States and $2.67 in Argentina (the price of a Big Mac in Argentine pesos converted into dollars at the spot exchange rate),which of the following is most likely true?

Sarah,a manager at Farley Enterprises,an MNE with operations in Asia,Europe,and North America,is using past trends in exchange rate movements to spot future trends.Which type of forecasting approach is Sarah most likely using?

Technical forecasting relies on trends in economic variables to predict future exchange rates.

A country's central bank is responsible for ________.

None of the new members of the EU has yet been allowed to adopt the euro as its currency.

Producers are affected by exchange rate changes because goods manufactured in a country with a weak currency will be relatively cheap in world markets.

What is the International Monetary Fund (IMF)? What are its objectives? What occurs when a country joins the IMF today?

In order to join the IMF,a country must contribute a certain sum of money,called a ________.

Tanya is a manager at a global firm that has operations located in Brazil,India,and Japan.Tanya is in the process of making a fundamental analysis in order to forecast exchange rates in each country.Which of the following questions is most relevant to Tanya?

An independently floating exchange rate is adjusted periodically at a fixed pronounced rate.

Ray,a marketer at a global firm,monitors the exchange rate of countries in which the firm sells its products.Ray is most likely concerned about changes in ________.

Which of the following was NOT a result of the Smithsonian Agreement?

Which of the following best describes the special drawing right?

The IMF's primary role is to identify exchange rate regimes.

What role has the IMF played in the Greek financial crisis of 2010-2011?

Craig,a manager at a global firm,is studying the cyclical nature of growth and employment as a part of the process to forecast exchange rates.Which factor is Craig most likely monitoring?

A currency that is pegged to another currency is usually changed on a supply-and-demand basis.

If the euro continues to remain strong against the U.S.dollar,which of the following strategies would make the most sense for BMW?

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