Question 1

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

Accepted Answer

A)  To promote cooperation among countries on international monetary issues 
B)  To promote stability in exchange rates 
C)  To enhance a country's long-term economic growth via the extension of structural adjustment loans 
D)  To promote free trade 
E)  To promote free mobility of capital funds across countries 
A)  To promote cooperation among countries on international monetary issues 
B)  To promote stability in exchange rates 
C)  To enhance a country's long-term economic growth via the extension of structural adjustment loans 
D)  To promote free trade 
E)  To promote free mobility of capital funds across countries

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Direct foreign investment into the U.S. represents a ____.

Accepted Answer

A)  capital inflow 
B)  trade inflow 
C)  capital outflow 
D)  trade outflow 
A)  capital inflow 
B)  trade inflow 
C)  capital outflow 
D)  trade outflow

Question 4

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 5

Over the last several years, international trade has generally:

Accepted Answer

A)  increased for most major countries. 
B)  decreased for most major countries. 
C)  stayed about constant for most major countries. 
D)  increased for about half the major countries and decreased for the others. 
A)  increased for most major countries. 
B)  decreased for most major countries. 
C)  stayed about constant for most major countries. 
D)  increased for about half the major countries and decreased for the others.

Question 6

The balance of payments is a measurement of all transactions between domestic and foreign residents over a specified period of time.

Accepted Answer

A) True 
 B)False

Question 7

The ____, an accord among 117 nations, called for lower tariffs around the world.

Accepted Answer

A)  General Agreement on Tariffs and Trade (GATT) 
B)  North American Free Trade Agreement (NAFT
A)  
C)  Single European Act of 1987 
D)  European Union Accord 
E)  None of the above 
A)  General Agreement on Tariffs and Trade (GATT) 
B)  North American Free Trade Agreement (NAFT
A)  
C)  Single European Act of 1987 
D)  European Union Accord 
E)  None of the above

Question 8

The World Bank frequently enters into cofinancing agreements. Under these agreements, financing is provided by the World Bank and/or official aid agencies, export credit agencies, or commercial banks.

Accepted Answer

A) True 
 B)False

Question 9

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 ____.

Accepted Answer

A)  low; small 
B)  high; small 
C)  low; large 
D)  high; large 
A)  low; small 
B)  high; small 
C)  low; large 
D)  high; large

Question 10

The capital account reflects changes in country ownership of long-term (but not short-term) assets.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

A balance of trade surplus indicates an excess of merchandise imports over merchandise exports.

Accepted Answer

A) True 
 B)False

Question 13

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 14

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 15

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

Accepted Answer

A) True 
 B)False

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

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

Direct foreign investment into the U.S. represents a ____.

An increase in the use of quotas is expected to:

Over the last several years, international trade has generally:

The balance of payments is a measurement of all transactions between domestic and foreign residents over a specified period of time.

The ____, an accord among 117 nations, called for lower tariffs around the world.

The World Bank frequently enters into cofinancing agreements. Under these agreements, financing is provided by the World Bank and/or official aid agencies, export credit agencies, or commercial banks.

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 capital account reflects changes in country ownership of long-term (but not short-term) assets.

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 balance of trade surplus indicates an excess of merchandise imports over merchandise exports.

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.

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

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

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

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

Direct foreign investment into the U.S. represents a ____.

An increase in the use of quotas is expected to:

Over the last several years, international trade has generally:

The balance of payments is a measurement of all transactions between domestic and foreign residents over a specified period of time.

The ____, an accord among 117 nations, called for lower tariffs around the world.

The World Bank frequently enters into cofinancing agreements. Under these agreements, financing is provided by the World Bank and/or official aid agencies, export credit agencies, or commercial banks.

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 capital account reflects changes in country ownership of long-term (but not short-term) assets.

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 balance of trade surplus indicates an excess of merchandise imports over merchandise exports.

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.

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

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

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

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 .

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.