Exam 2: International Flow of Funds

The World Bank was established to:

____ represent aid, grants, and gifts from one country to another.

Which of the following is not a goal of the International Monetary Fund (IMF)?

The Central American Trade Agreement (CAFTA) is intended to raise tariffs and regulations between the U.S., the Dominican Republic, and Central American countries.

Which of the following is mentioned in the text as a possible means by which the government may attempt to improve its balance of trade position (increase its exports or reduce its imports).

Intracompany trade makes up approximately ____ percent of all international trade.

Exporting of products by one country to other countries at prices below cost is called elasticity.

The J curve effect is the initial worsening of the U.S. trade balance due to a weakening dollar because of established trade relationships that are not easily changed; as the dollar weakens, the dollar value of imports initially rises before the U.S. trade balance is improved.

Outsourcing allows some MNCs to reduce costs but shifts jobs to other countries.

A U.S. purchase of patent rights from a firm in Mexico reflects a credit to the U.S. balance of payments account.

The North American Free Trade Agreement (NAFTA) increased restrictions on:

A balance of trade deficit indicates an excess of imports over exports.

A high home inflation rate relative to other countries would ____ the home country's current account balance, other things equal. A high growth in the home income level relative to other countries would ____ the home country's current account balance, other things equal.

Portfolio investments represent transactions involving long-term financial assets (such as stocks and bonds) between countries that do not affect the transfer of control.

A weakening of the U.S. dollar with respect to the British pound would likely reduce U.S. exports to the U.K. and increase U.S. imports from the U.K.

The "J curve" effect describes:

Assume the U.S. has a balance of trade surplus with the country of Thor. When individuals in Thor manufacture CDs and DVDs that look almost exactly like the original product produced in the U.S. and other countries, they ____ the U.S. balance of trade surplus with Thor. This activity is called ____.

Like the International Monetary Fund (IMF), the ____ is composed of a collection of nations as members. However, unlike the IMF, it uses the private rather than the government sector to achieve its objectives.

Japan's annual interest rate has been relatively ____ compared to other countries for several years, because the supply of funds in its credit market has been very ____.

The World Bank extends loans only to developed nations, while the International Development Association (IDA) extends loans only to developing nations.