Question 1

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

Accepted Answer

A)   50
B)   70
C)   25
D)   13
E)   5F) A) and C)
G) B) and E)

Question 2

Portfolio investment represents 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 3

Which is not a concern about the North American Free Trade Agreement (NAFTA) ?

Accepted Answer

A)   its impact on U.S. inflation.
B)   its impact on U.S. unemployment.
C)   lower environmental standards in Mexico.
D)   different health laws for workers in Mexico.E) All of the above
F) A) and B)

Question 4

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.E) None of the above
F) All of the above

Question 5

The demand for U.S. exports tends to increase when:

Accepted Answer

A)   economic growth in foreign countries decreases.
B)   the currencies of foreign countries strengthen against the dollar.
C)   U.S. inflation rises.
D)   none of the above.E) B) and C)
F) A) and D)

Question 6

Intracompany trade represents the exporting of products by one country to other countries below cost.

Accepted Answer

A) True 
 B)False

Question 7

The primary component of the capital account is the balance of trade.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

If the home currency begins to appreciate against other currencies, this should ____ the current account balance, other things equal (assume that substitutes are readily available in the countries, and that the prices charged by firms remain the same) .

Accepted Answer

A)   increase
B)   have no impact on
C)   reduce
D)   all of the above are equally possibleE) A) and C)
F) A) and D)

Question 10

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)   deficitE) A) and B)
F) C) and D)

Question 11

Changes in country ownership of long-term and short-term assets are measured in the balance of payments with the capital account.

Accepted Answer

A) True 
 B)False

Question 12

The primary component of the current account is the:

Accepted Answer

A)   balance of trade.
B)   balance of money market flows.
C)   balance of capital market flows.
D)   unilateral transfers.E) B) and C)
F) A) and C)

Question 13

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) .

Accepted Answer

A)   It could attempt to reduce its home currency's value.
B)   The government could require firms to engage in outsourcing.
C)   The government could require that its local firms pursue outsourcing.
D)   All of the above are mentioned.E) B) and C)
F) A) and D)

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

Direct foreign investment by U.S.-based MNCs occurs primarily in the Bahamas and Brazil.

Accepted Answer

A) True 
 B)False

Question 16

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; deficitE) C) and D)
F) All of the above

Question 17

Also known as the "central banks' central bank," the ____ attempts to facilitate cooperation among countries with regard to international transactions and provides assistance to countries experiencing a financial crisis.

Accepted Answer

A)   World Bank
B)   International Financial Corporation (IF
C)  
C)   World Trade Organization
D)   International Development Association (ID
A)  
E)   Bank for International Settlements (BIS) F) A) and D)
G) C) and E)

Question 18

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 19

____ purchases more U.S. exports than the other countries listed here.

Accepted Answer

A)   Italy
B)   Spain
C)   Mexico
D)   CanadaE) A) and C)
F) C) and D)

Question 20

If a country's government imposes a tariff on imported goods, that country's current account balance will likely ____ (assuming no retaliation by other governments) .

Accepted Answer

A)   decrease
B)   increase
C)   remain unaffected
D)   either A or C are possibleE) All of the above
F) None of the above

Exam 2: International Flow of Funds

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

Correct AnswerverifiedShow Answer

____ purchases more U.S. exports than the other countries listed here.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The primary component of the capital account is the balance of trade.

Correct AnswerverifiedShow Answer

The International Development Association was established to:

Correct AnswerverifiedShow Answer

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) .

Correct AnswerverifiedShow Answer

Intracompany trade represents the exporting of products by one country to other countries below cost.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which is not a concern about the North American Free Trade Agreement (NAFTA) ?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If the home currency begins to appreciate against other currencies, this should ____ the current account balance, other things equal (assume that substitutes are readily available in the countries, and that the prices charged by firms remain the same) .

Correct AnswerverifiedShow Answer

The primary component of the current account is the:

Correct AnswerverifiedShow Answer

Also known as the "central banks' central bank," the ____ attempts to facilitate cooperation among countries with regard to international transactions and provides assistance to countries experiencing a financial crisis.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Changes in country ownership of long-term and short-term assets are measured in the balance of payments with the capital account.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Direct foreign investment by U.S.-based MNCs occurs primarily in the Bahamas and Brazil.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

If a country's government imposes a tariff on imported goods, that country's current account balance will likely ____ (assuming no retaliation by other governments) .

Correct AnswerverifiedShow Answer

The demand for U.S. exports tends to increase when:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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

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

Correct Answer
verified

Correct Answer
verified