Question 1

Efforts to restructure and reduce the external debts of developing countries:

Accepted Answer

A)   have had practically no effect on those countries' external debts.
B)   caused most of those countries' debts to increase, which seriously weakened their political stability.
C)   allowed all of those countries to reduce their external debt as a percentage of Gross National Income.
D)   allowed some of the countries to reduce their debt as a percentage of Gross National Income, but other countries' external debt problems have become worse.

Question 2

Which of the following statements is true?

Accepted Answer

A)   There is an opportunity cost to a borrowing nation and to its lending nation if it pays off its external debt.
B)   There is no opportunity cost to a borrowing nation or to its lending nation if it does not pay off its external debt.
C)   There is an opportunity cost to a borrowing nation if it pays off its external debt, and to its lending nation if it does not.
D)   There is an opportunity cost to a borrowing nation if it does not pay off its external debt, and to its lending nation if it does.

Question 3

Fixed exchange rates are exchange rates between nations' monies:

Accepted Answer

A)   that are adjusted for differences in inflation rates.
B)   that are determined by the forces of supply and demand.
C)   where the values of the monies are defined in terms of gold.
D)   that are set at a fixed percentage of an index of inflation rates in key countries.

Question 4

The current account balance minus the capital account balance equals a positive number when there is a balance of trade surplus.

Accepted Answer

A) True 
 B)False

Question 5

At an exchange rate of 5 Mexican pesos = $1.00, a shirt priced at $48 in New York would cost:

Accepted Answer

A)   9.6 pesos.
B)   43.0 pesos.
C)   96.0 pesos.
D)   240.0 pesos.

Question 6

Which of the following would cause an increase in the U.S. demand for Japanese yen?

Accepted Answer

A)   Inflation in Japan.
B)   Inflation in the United States.
C)   A decrease in the U.S. demand for Japanese goods.
D)   Rising prices on Japanese machinery and equipment.

Question 7

Which of the following would cause the U.S. demand curve for Mexican pesos to shift to the right?

Accepted Answer

A)   Inflation in the United States.
B)   The movement of buyers into the U.S. market for Mexican pesos.
C)   A higher rate of return on investments in Mexico than on investments in the United States.
D)   All of the above.

Question 8

If $1.50 = 1 pound, a good priced at 450 pounds in England could be acquired for $300.

Accepted Answer

A) True 
 B)False

Question 9

Since 1976, the U.S. balance of trade account with the rest of the world has:

Accepted Answer

A)   been balanced.
B)   been in continuous deficit.
C)   been in continuous surplus.
D)   fluctuated between surplus and deficit.

Question 10

If one British pound is worth $1.60, one dollar is worth:

Accepted Answer

A)   1.60 pounds.
B)   6.25 pounds.
C)   0.016 pounds.
D)   0.625 pounds.

Question 11

If a dollar's value were set at 1/30 of an ounce of gold, and if a Danish kroner's value were set at 1/45 of an ounce of gold:

Accepted Answer

A)   a good priced at $60 would cost 40 kroner.
B)   the dollar and the kroner would be on a fixed exchange rate system.
C)   an ounce of gold costs $75 on the world market.
D)   all of the above.

Question 12

Which of the following statements about external debt is true?

Accepted Answer

A)   The external debt problem represents no threat to the political or social stability of borrowing countries.
B)   All external debt issues have finally been solved and all borrowing nations are on repayment schedules that they can meet.
C)   While external debt is serious for the countries involved, it affects only a few small countries and, overall, is not a burden for the world economy.
D)   None of the above.

Question 13

A decrease in the price of the U.S. dollar relative to foreign currencies will result in all of the following EXCEPT:

Accepted Answer

A)   An increase in U.S. imports.
B)   An increase in U.S. exports.
C)   An increase in foreign tourism in the U.S.
D)   An increase in foreign investment in the U.S.

Question 14

The number that results when merchandise imports are subtracted from merchandise exports is:

Accepted Answer

A)   the balance of trade.
B)   always less than zero.
C)   always greater than zero.
D)   the official reserve account balance.

Question 15

The opportunity cost to a country of NOT repaying its external debt is:

Accepted Answer

A)   recession.
B)   reduced consumption.
C)   reduced access to foreign capital.
D)   all of the above.

Question 16

How are exchange rates established in a fixed exchange rate system?

Accepted Answer

Currencies are estab...

Question 17

Exchange rates that are set through the forces of supply and demand are called:

Accepted Answer

A)   fixed exchange rates.
B)   flexible exchange rates.
C)   variable exchange rates.
D)   convertible exchange rates.

Question 18

If the rate at which one nation's money exchanges for one unit of another nation's money is determined by the forces of supply and demand, the two nations are on a:

Accepted Answer

A)   fixed exchange rate system.
B)   relative exchange rate system.
C)   flexible, or floating, exchange rate system.
D)   world-average-of-countries exchange rate system.

Question 19

The 1991 agreement that called for a common currency and central bank to oversee a single monetary policy for all member European Union nations was the:

Accepted Answer

A)   Paris Pact.
B)   Maastricht Treaty.
C)   Bretton Woods Agreement.
D)   Monetary Integration Accord.

Question 20

An increase in the price of the dollar compared to a foreign currency would:

Accepted Answer

A)   have no impact on the quantity of dollars supplied.
B)   reduce the quantity of dollars demanded.
C)   increase the quantity of dollars demanded.
D)   have no impact on the quantity of dollars demanded.

Exam 17: International Finance

If $1.50 = 1 pound, a good priced at 450 pounds in England could be acquired for $300.

Correct AnswerverifiedShow Answer

Exchange rates that are set through the forces of supply and demand are called:

Correct AnswerverifiedShow Answer

If the rate at which one nation's money exchanges for one unit of another nation's money is determined by the forces of supply and demand, the two nations are on a:

Correct AnswerverifiedShow Answer

The opportunity cost to a country of NOT repaying its external debt is:

Correct AnswerverifiedShow Answer

If a dollar's value were set at 1/30 of an ounce of gold, and if a Danish kroner's value were set at 1/45 of an ounce of gold:

Correct AnswerverifiedShow Answer

At an exchange rate of 5 Mexican pesos = $1.00, a shirt priced at $48 in New York would cost:

Correct AnswerverifiedShow Answer

A decrease in the price of the U.S. dollar relative to foreign currencies will result in all of the following EXCEPT:

Correct AnswerverifiedShow Answer

Efforts to restructure and reduce the external debts of developing countries:

Correct AnswerverifiedShow Answer

How are exchange rates established in a fixed exchange rate system?

Correct AnswerverifiedCurrencies are estab...View AnswerShow Answer

The number that results when merchandise imports are subtracted from merchandise exports is:

Correct AnswerverifiedShow Answer

Which of the following would cause the U.S. demand curve for Mexican pesos to shift to the right?

Correct AnswerverifiedShow Answer

Which of the following would cause an increase in the U.S. demand for Japanese yen?

Correct AnswerverifiedShow Answer

Which of the following statements about external debt is true?

Correct AnswerverifiedShow Answer

Since 1976, the U.S. balance of trade account with the rest of the world has:

Correct AnswerverifiedShow Answer

If one British pound is worth $1.60, one dollar is worth:

Correct AnswerverifiedShow Answer

An increase in the price of the dollar compared to a foreign currency would:

Correct AnswerverifiedShow Answer

The current account balance minus the capital account balance equals a positive number when there is a balance of trade surplus.

Correct AnswerverifiedShow Answer

Fixed exchange rates are exchange rates between nations' monies:

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

The 1991 agreement that called for a common currency and central bank to oversee a single monetary policy for all member European Union nations was the:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Currencies are estab...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified