Question 1

Which of the following statements is not true?

Accepted Answer

A)  Exporters commonly complain that they are being mistreated because the currency of their country is too weak. 
B)  Outsourcing affects the balance of trade because it means that a service is purchased in another country. 
C)  Sometimes, trade policies are used to punish countries for various actions. 
D)  Tariffs imposed by the EU have caused some friction between EU countries that commonly import products and other EU countries. 
E)  All of the above are true. 
A)  Exporters commonly complain that they are being mistreated because the currency of their country is too weak. 
B)  Outsourcing affects the balance of trade because it means that a service is purchased in another country. 
C)  Sometimes, trade policies are used to punish countries for various actions. 
D)  Tariffs imposed by the EU have caused some friction between EU countries that commonly import products and other EU countries. 
E)  All of the above are true.

Question 2

"Dumping" is used in the text to represent the:

Accepted Answer

A)  exporting of goods that do not meet quality standards. 
B)  sales of junk bonds to foreign countries. 
C)  removal of foreign subsidiaries by the host government. 
D)  exporting of goods at prices below cost. 
A)  exporting of goods that do not meet quality standards. 
B)  sales of junk bonds to foreign countries. 
C)  removal of foreign subsidiaries by the host government. 
D)  exporting of goods at prices below cost.

Question 3

Which of the following will probably not result in an increase in a country's current account balance (assuming everything else constant)?

Accepted Answer

A)  A decrease in the country's rate of inflation 
B)  A decrease in the country's national income level 
C)  An increase in government restrictions in the form of tariffs or quotas 
D)  An appreciation of the country's currency 
E)  All of the above will result in an increased current account balance. 
A)  A decrease in the country's rate of inflation 
B)  A decrease in the country's national income level 
C)  An increase in government restrictions in the form of tariffs or quotas 
D)  An appreciation of the country's currency 
E)  All of the above will result in an increased current account balance.

Question 4

Which of the following would increase the current account of Country X? Country Y is Country X's sole trading partner.

Accepted Answer

A)  Inflation increases in countries X and Y by comparable amounts. 
B)  Country X's and Country Y's currencies depreciate by the same amount. 
C)  Country X imposes tariffs on imports from Country Y, and Country Y retaliates by imposing an identical tax on X's exports. 
D)  The central banks of Country X and Country Y reduce the money supply to increase interest rates. 
E)  Country X imposes a quota on imports, and Country Y retaliates by imposing an identical quota on X's exports. 
A)  Inflation increases in countries X and Y by comparable amounts. 
B)  Country X's and Country Y's currencies depreciate by the same amount. 
C)  Country X imposes tariffs on imports from Country Y, and Country Y retaliates by imposing an identical tax on X's exports. 
D)  The central banks of Country X and Country Y reduce the money supply to increase interest rates. 
E)  Country X imposes a quota on imports, and Country Y retaliates by imposing an identical quota on X's exports.

Question 5

As a result of the European Union, restrictions on exports between ____ were reduced or eliminated.

Accepted Answer

A)  member countries and the U.S. 
B)  member countries 
C)  member countries and European non-members 
D)  none of the above 
A)  member countries and the U.S. 
B)  member countries 
C)  member countries and European non-members 
D)  none of the above

Question 6

The current account represents the investment in fixed assets in foreign countries that can be used to conduct business operations.

Accepted Answer

A) True 
 B)False

Question 7

Recently, the U.S. experienced an annual balance of trade representing a ____.

Accepted Answer

A)  large surplus (exceeding $100 billion) 
B)  small surplus 
C)  level of zero 
D)  deficit 
A)  large surplus (exceeding $100 billion) 
B)  small surplus 
C)  level of zero 
D)  deficit

Question 8

In recent years, the U.S. has had a relatively (compared to other countries) ____ balance of trade ____ with China.

Accepted Answer

A)  small; surplus 
B)  large; surplus 
C)  small; deficit 
D)  large; deficit 
A)  small; surplus 
B)  large; surplus 
C)  small; deficit 
D)  large; deficit

Question 9

The International Development Association was established to:

Accepted Answer

A)  enhance development solely in Asia through grants. 
B)  enhance economic development through non-subsidized loans (at market interest rates). 
C)  enhance economic development through low-interest rate loans (below-market rates). 
D)  enhance economic development of the private sector through investment in stock of corporations. 
A)  enhance development solely in Asia through grants. 
B)  enhance economic development through non-subsidized loans (at market interest rates). 
C)  enhance economic development through low-interest rate loans (below-market rates). 
D)  enhance economic development of the private sector through investment in stock of corporations.

Question 10

The International Financial Corporation was established to:

Accepted Answer

A)  enhance development solely in Asia through grants. 
B)  enhance economic development through non-subsidized loans (at market interest rates). 
C)  enhance economic development through low-interest rate loans (below-market rates). 
D)  enhance economic development of the private sector through investment in stock of corporations. 
A)  enhance development solely in Asia through grants. 
B)  enhance economic development through non-subsidized loans (at market interest rates). 
C)  enhance economic development through low-interest rate loans (below-market rates). 
D)  enhance economic development of the private sector through investment in stock of corporations.

Question 11

The World Bank's Multilateral Investment Guarantee Agency (MIGA):

Accepted Answer

A)  offers various forms of export insurance. 
B)  offers various forms of import insurance. 
C)  offers various forms of exchange rate risk insurance. 
D)  provides loans to developing countries. 
E)  offers various forms of political risk insurance. 
A)  offers various forms of export insurance. 
B)  offers various forms of import insurance. 
C)  offers various forms of exchange rate risk insurance. 
D)  provides loans to developing countries. 
E)  offers various forms of political risk insurance.

Question 12

According to the "J curve effect," a weakening of the U.S. dollar relative to its trading partners' currencies would result in an initial ____ in the current account balance, followed by a subsequent ____ in the current account balance.

Accepted Answer

A)  decrease; increase 
B)  increase; decrease 
C)  decrease; decrease 
D)  increase; increase 
A)  decrease; increase 
B)  increase; decrease 
C)  decrease; decrease 
D)  increase; increase

Question 13

An increase in the use of quotas is expected to:

Accepted Answer

A)  reduce the country's current account balance, if other governments do not retaliate. 
B)  increase the country's current account balance, if other governments do not retaliate. 
C)  have no impact on the country's current account balance unless other governments retaliate. 
D)  increase the volume of a country's trade with other countries. 
A)  reduce the country's current account balance, if other governments do not retaliate. 
B)  increase the country's current account balance, if other governments do not retaliate. 
C)  have no impact on the country's current account balance unless other governments retaliate. 
D)  increase the volume of a country's trade with other countries.

Question 14

A General Agreement on Tariffs and Trade (GATT) accord in 1993 called for:

Accepted Answer

A)  increased trade restrictions outside of North America. 
B)  lower trade restrictions around the world. 
C)  uniform environmental standards around the world. 
D)  uniform worker health laws. 
A)  increased trade restrictions outside of North America. 
B)  lower trade restrictions around the world. 
C)  uniform environmental standards around the world. 
D)  uniform worker health laws.

Question 15

The direct foreign investment positions by U.S. firms have generally ____ over time. Restrictions by governments on direct foreign investment have generally ___ over time.

Accepted Answer

A)  increased; increased 
B)  increased; decreased 
C)  decreased; decreased 
D)  decreased; increased 
A)  increased; increased 
B)  increased; decreased 
C)  decreased; decreased 
D)  decreased; increased

Which of the following statements is not true?

"Dumping" is used in the text to represent the:

Which of the following will probably not result in an increase in a country's current account balance (assuming everything else constant)?

Which of the following would increase the current account of Country X? Country Y is Country X's sole trading partner.

As a result of the European Union, restrictions on exports between ____ were reduced or eliminated.

The current account represents the investment in fixed assets in foreign countries that can be used to conduct business operations.

Recently, the U.S. experienced an annual balance of trade representing a ____.

In recent years, the U.S. has had a relatively (compared to other countries) balance of trade with China.

The International Development Association was established to:

The International Financial Corporation was established to:

The World Bank's Multilateral Investment Guarantee Agency (MIGA):

According to the "J curve effect," a weakening of the U.S. dollar relative to its trading partners' currencies would result in an initial in the current account balance, followed by a subsequent in the current account balance.

An increase in the use of quotas is expected to:

A General Agreement on Tariffs and Trade (GATT) accord in 1993 called for:

The direct foreign investment positions by U.S. firms have generally __ over time. Restrictions by governments on direct foreign investment have generally _ over time.

Multinational Financial Management: An Overview

International Financial Markets

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships among Inflation, Interest Rates, and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Direct Foreign Investment

Multinational Capital Budgeting

International Corporate Governance and Control

Country Risk Analysis

Multinational Cost of Capital and Capital Structure

Long-Term Debt Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

Exam 2: International Flow of Funds

Which of the following statements is not true?

"Dumping" is used in the text to represent the:

Which of the following will probably not result in an increase in a country's current account balance (assuming everything else constant)?

Which of the following would increase the current account of Country X? Country Y is Country X's sole trading partner.

As a result of the European Union, restrictions on exports between ____ were reduced or eliminated.

The current account represents the investment in fixed assets in foreign countries that can be used to conduct business operations.

Recently, the U.S. experienced an annual balance of trade representing a ____.

In recent years, the U.S. has had a relatively (compared to other countries) ____ balance of trade ____ with China.

The International Development Association was established to:

The International Financial Corporation was established to:

The World Bank's Multilateral Investment Guarantee Agency (MIGA):

According to the "J curve effect," a weakening of the U.S. dollar relative to its trading partners' currencies would result in an initial ____ in the current account balance, followed by a subsequent ____ in the current account balance.

An increase in the use of quotas is expected to:

A General Agreement on Tariffs and Trade (GATT) accord in 1993 called for:

The direct foreign investment positions by U.S. firms have generally ____ over time. Restrictions by governments on direct foreign investment have generally ___ over time.

Multinational Financial Management: An Overview

International Financial Markets

Exchange Rate Determination

Currency Derivatives

Government Influence on Exchange Rates

International Arbitrage and Interest Rate Parity

Relationships among Inflation, Interest Rates, and Exchange Rates

Forecasting Exchange Rates

Measuring Exposure to Exchange Rate Fluctuations

Managing Transaction Exposure

Managing Economic Exposure and Translation Exposure

Direct Foreign Investment

Multinational Capital Budgeting

International Corporate Governance and Control

Country Risk Analysis

Multinational Cost of Capital and Capital Structure

Long-Term Debt Financing

Financing International Trade

Short-Term Financing

International Cash Management

Filters

In recent years, the U.S. has had a relatively (compared to other countries) balance of trade with China.

According to the "J curve effect," a weakening of the U.S. dollar relative to its trading partners' currencies would result in an initial in the current account balance, followed by a subsequent in the current account balance.

The direct foreign investment positions by U.S. firms have generally __ over time. Restrictions by governments on direct foreign investment have generally _ over time.