Multiple Choice Questions

which maker represents a major source of debt financing for the world's governments, international organizations, and larger firms?
  • three-point arbitrage
  • international bond market
  • Education level of workforce
  • Non-convertible currencies
Which of the following is an example of an economy of scale?
  • The personal computer industry has entered the maturing product stage
  • subsidies can never be so large as to affect the normal pattern of international trade
  • The cost of computers decreases as the quantity that is produced increases
  • A advantage that a company gets with factory workers who have experience with a certain product.
Which of the following is FALSE regarding the product life cycle theory?
  • More Canadian consumers are shopping in the US
  • The personal computer industry has entered the maturing product stage
  • subsidies can never be so large as to affect the normal pattern of international trade
  • The cost of computers decreases as the quantity that is produced increases
The balance on services reflects which of the following?
  • More Canadian consumers are shopping in the US
  • The service sector's global competitiveness
  • short term foreign portfolio investments
  • The cost of computers decreases as the quantity that is produced increases
Use the following table to answer the question below: US EUCars 5 5Tractors 10 5_____ has the comparative advantage in producing tractors.
  • specific
  • Thailand
  • neither
  • The US
Which of the following is the best example of a capital outflow from the US?
  • More Canadian consumers are shopping in the US
  • The personal computer industry has entered the maturing product stage
  • the Tommy Hilfiger Company buys a controlling stake in the UK fashion label Temperley London
  • the national differences in expected inflation rates yield differences in the nominal interest rates among countries.
The Philippines restricts foreign ownership in advertising to 30% and in telecommunications to 40%, while foreigners own no more than 49% of local accounting firms in Thailand and 50% of Korean power generators. These are examples of what type of non-quantitiatve NTBs?
  • three-point arbitrage
  • 6 month forward price
  • Opportunity cost
  • investment controls
Which of the following signified the growing fear that the US could not live up to its Bretton Woods obligations?
  • errors and omissions
  • fair trade
  • Triffin paradox
  • United States
Which of the following is known as the primary transaction currency for the foreign exchange market?
  • United States
  • free trade
  • errors and omissions
  • US dollar
The World Bank System is controlled by ____
  • regulatory controls
  • a weighted voting system
  • The service sector's global competitiveness
  • European Monetary System
Which of the following countries was forced to unpeg its currency after investors began to distrust the abilities of its borrowers to repay foreign loans?
  • fair trade
  • Triffin paradox
  • Thailand
  • free trade
Daniel is involved in a transaction that involves buying and selling US dollars simultaneously, but delivery is made at two different points in time. What is this called?
  • swap transaction
  • Opportunity cost
  • fair trade
  • currency controls
which of the following is the name for Us dollars deposited in any bank account outside the US
  • US dollar
  • three-point arbitrage
  • Eurodollar
  • Triffin paradox
Suppose your company has significant assets in pounds. you notice that the pound is selling at a forward premium. you advise your CFO to increase your firms holdings of assets in pounds. is this sound advice?
  • international banking facility
  • usually do not impact businesses that sell inventory
  • Production facilities are moved to low labor cost markets
  • yes. a premium means that assets will increase in value
The theory of absolute advantage suggests which of the following?
  • A country should produce and export those goods and services for which it is relatively more productive than other countries are, and import those goods and services for which other countries are relatively more productive than it is.
  • A country should export those goods and services for which it is more productive than other countries are, and import those goods and services for which other countries are more productive than it is.
  • The cost of computers decreases as the quantity that is produced increases
  • the Tommy Hilfiger Company buys a controlling stake in the UK fashion label Temperley London
currencies that are freely tradeable are called ____
  • To maintain the dollar's value
  • convertible currencies
  • international bond market
  • buyers and sellers of currency
Which of the following is particularly useful in explaining trade in differentiated goods such as automobiles, expensive electronics equipment, and personal care products, for which brand names and product reputations play an important role in consumer decision making?
  • Product life cycle theory
  • Country similarity theory
  • voluntary export restraint
  • three-point arbitrage
Which of the following records international business transactions and supplies vital information about the health of a national economy?
  • To gain access to research in this area
  • United States
  • Eurodollar
  • Balance of payments
which of the following cities is NOT considered to be a major financial center?
  • US dollar
  • fair trade
  • Bangalore
  • free trade
The National Bank of Ethiopia often makes it difficult for importers to obtain scarce foreign exchange, although state-owned enterprises or firms controlled by the ruling party normally have no such problems. These are examples of what type of non-quantitiatve NTBs?
  • voluntary export restraint
  • currency controls
  • currency option
  • Opportunity cost
Most FDI is either made by or goes to the world's richest nations
  • True
  • False
use the following payoff matrix to answer this question. numbers are in billions boeing enter mkt boeing doesnt enterairbus enters mkt airbus -5 airbus 15 boeing -5 boeing 0airbus doesnt enter airbus 0 airbus 0 boeing 15 boeing 0which company/companies has/have a dominant strategy?
  • decrease
  • neither
  • investment controls
  • The US
boeing enter mkt boeing doesnt enterairbus enters mkt airbus -5 airbus 15 boeing -5 boeing 0airbus doesnt enter airbus 0 airbus 0 boeing 15 boeing 0if the EU wants to ensure that Airbus will enter the market, what is the best policy for it to adopt?
  • Buy gold/foreign currency
  • a subsidy for airbus of $6 billion
  • restricted access to distribution networks
  • International Monetary Fund (IMF)
You work at a bank that performs services for a British bank in the US. What is this called?
  • three-point arbitrage
  • errors and omissions
  • correspondent relationship
  • short term foreign portfolio investments
Why did the sterling-based gold standard originally unravel?
  • The outbreak of war ceased normal commercial transactions
  • European Monetary System
  • regulatory controls
  • a weighted voting system
which market is used to make foreign-exchange transactions that are to occur sometime in the future?
  • forward market
  • United States
  • Bangalore
  • currency option
The direct exchange rate is $.20/ 1 yen. Then the indirect exchange rate is
  • US dollar
  • 50 yen/ $1
  • Logistics
  • decrease
Suppose we are operating under the Bretton Woods System. If a currency's value rises above the range required by the system, that country's central bank will ___ in the international foreign exchange market.
  • a subsidy for airbus of $6 billion
  • specific
  • monopoly profit
  • Buy gold/foreign currency
Canada has imposed a specific tariff on imports of motorcycle parts from the US. Why did it do this?
  • It is less heavily taxed, providing a greater profit.
  • to create a larger demand for Canadian motorcycle parts
  • Production facilities are moved to low labor cost markets
  • The recognition that countries, not firms, are the agents for international trade
Which of the following is NOT an asset that is included in the official reserves account?
  • three-point arbitrage
  • United States
  • Non-convertible currencies
  • Eurodollar
which of the following terms describes a policy for national governments that exert minimal influence over trade?
  • Triffin paradox
  • free trade
  • three-point arbitrage
  • Eurodollar
Which of the following accounts is used to make the Balance of Trade (BOP) account balance?
  • Eurodollar
  • errors and omissions
  • Economies of scope
  • Education level of workforce
Which of the following is NOT one of the objectives included in the IMFs Articles of Agreement?
  • Production facilities are moved to low labor cost markets
  • There is a higher quantity demanded when the price is lower
  • To lengthen the duration and increase the degree of disequilibrium in the international balance of payments to its members.
  • the Tommy Hilfiger Company buys a controlling stake in the UK fashion label Temperley London
Which of the following statements is FALSE regarding subsidies?
  • The cost of computers decreases as the quantity that is produced increases
  • the Tommy Hilfiger Company buys a controlling stake in the UK fashion label Temperley London
  • subsidies can never be so large as to affect the normal pattern of international trade
  • Education level of workforce
Why do US firms use places like the Bahamas as offshore financial centers?
  • short term foreign portfolio investments
  • It is less heavily taxed, providing a greater profit.
  • to create a larger demand for Canadian motorcycle parts
  • The personal computer industry has entered the maturing product stage
Which of the following factors is considered by Porter to be an "advanced factor"?
  • International Monetary Fund (IMF)
  • differing rates of return
  • To gain access to research in this area
  • Education level of workforce
what is the term used to describe when a national government identifies key domestic industries critical to the country's economic future and then formulates programs that promote their competitiveness?
  • currency option
  • industrial policy
  • European Monetary System
  • a weighted voting system
one country is selling computers for $650 Us dollars locally, but $300 in foreign markets. What is this an example of?
  • decrease
  • specific
  • Thailand
  • dumping
suppose the US government eliminates all tariffs on foreign cars. As a result, the demand for American-made cars will
  • United States
  • differing rates of return
  • decrease
  • fair trade
you would like to market rare earth technologies, yet you are not able to obtain them for a reasonable price. why is this?
  • subsidies can never be so large as to affect the normal pattern of international trade
  • The recognition that countries, not firms, are the agents for international trade
  • Neither would gain an advantage because each currency's value relative to the other would remain the same.
  • china has created a situation where it controls the export of this product
The value of a good equals the value of what is given up to have that good. The previous statement describes which of the following?
  • international bond market
  • Opportunity cost
  • Triffin paradox
  • three-point arbitrage
suppose: 1 pound buys $3 in NY, Tokyo, and London $1 buys 150 yen in NY, Tokyo, and London 1 pound buys 175 yen in NY, Tokyo, and Londonthen
  • The personal computer industry has entered the maturing product stage
  • specific
  • usually do not impact businesses that sell inventory
  • An opportunity for three-point arbitrage exists, but not for two-point arbitrage
Which of the following has been a result of the higher loonie value?
  • More Canadian consumers are shopping in the US
  • The personal computer industry has entered the maturing product stage
  • A advantage that a company gets with factory workers who have experience with a certain product.
  • The recognition that countries, not firms, are the agents for international trade
Which of the following is NOT a reason for the development of modern firm-based trade theories?
  • The cost of computers decreases as the quantity that is produced increases
  • The personal computer industry has entered the maturing product stage
  • the Tommy Hilfiger Company buys a controlling stake in the UK fashion label Temperley London
  • The recognition that countries, not firms, are the agents for international trade
How did the Marshall Plan assist the World Bank?
  • To maintain the dollar's value
  • The outbreak of war ceased normal commercial transactions
  • It established the IBRD
  • European Monetary System
Which of the following is NOT a demand factor that affects the FDI decision?
  • Logistics
  • Thailand
  • Non-convertible currencies
  • currency option
Which theory traces the roles of innovation, market expansion, comparative advantage, and strategic responses of global rivals in international production, trade, and investment decisions?
  • Product life cycle theory
  • A country should produce and export those goods and services for which it is relatively more productive than other countries are, and import those goods and services for which other countries are relatively more productive than it is.
  • Theory of national competitive advantage.
  • Balance of payments
Assume we are comparing the pound and the $. Suppose the annualized forward discount on the pound is 40%. the forward price of the pound is $1.00, and the spot rate of the pound is $1.Then we know this AFD was calculated based on the
  • 6 month forward price
  • monopoly profit
  • currency controls
  • voluntary export restraint
Which of the following terms describes when a firm's average cost decreases as the number of different products it sells increases?
  • Economies of scope
  • currency option
  • Balance of payments
  • Triffin paradox
The current account records all of the following types of transactions EXCEPT____
  • short term foreign portfolio investments
  • 50 yen/ $1
  • to create a larger demand for Canadian motorcycle parts
  • Education level of workforce
If two countries each devalue their currency by 20 percent, which of the following would happen?
  • A advantage that a company gets with factory workers who have experience with a certain product.
  • The recognition that countries, not firms, are the agents for international trade
  • subsidies can never be so large as to affect the normal pattern of international trade
  • Neither would gain an advantage because each currency's value relative to the other would remain the same.
The theory of comparative advantage suggests which of the following?
  • A country should produce and export those goods and services for which it is relatively more productive than other countries are, and import those goods and services for which other countries are relatively more productive than it is.
  • short term foreign portfolio investments
  • To lengthen the duration and increase the degree of disequilibrium in the international balance of payments to its members.
  • A country should export those goods and services for which it is more productive than other countries are, and import those goods and services for which other countries are more productive than it is.
Which of the following best accounts for the reason why Swiss pharmaceutical companies are choosing to invest in smaller US biogenetic companies?
  • To gain access to research in this area
  • fair trade
  • Economies of scope
  • Triffin paradox
Which of the following would occur in stage 3 in the international product life cycle in an innovating firm's country?
  • To gain access to research in this area
  • Economies of scope
  • To lengthen the duration and increase the degree of disequilibrium in the international balance of payments to its members.
  • Production facilities are moved to low labor cost markets
What makes up the foreign exchange market?
  • To maintain the dollar's value
  • errors and omissions
  • buyers and sellers of currency
  • convertible currencies
suppose you import products into the US that weigh very little but that are extremely valuable (high tech microchips). if you must pay a tariff , you would prefer the tariff to be
  • Buy gold/foreign currency
  • Thailand
  • specific
  • The US
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Multiple Choice Questions
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