Question 1

Statement I: The U.S.is the world's largest creditor nation.
Statement II: We became a creditor nation in 1914.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) A) and B)
F) B) and C)

Question 2

Currency appreciation would occur in a nation if

Accepted Answer

A)  the demand for the nation's exports increases.
B)  the demand for the nation's imports increases.
C)  real interest rates in the nation decrease relative to the rest of the world.
D)  the inflation rate is higher within the nation than in the rest of the world.E) B) and C)
F) None of the above

Question 3

According to the 2009 hamburger standard,the country with the most undervalued currency relative to the United States dollar was

Accepted Answer

A)  ChinA.
B)  Norway.
C)  Australia.
D)  Japan.E) A) and D)
F) C) and D)

Question 4

The freely floating exchange rate system has been in effect since

Accepted Answer

A)  1933.
B)  1943.
C)  1953.
D)  1963.
E)  1973.F) All of the above
G) D) and E)

Question 5

If the exchange rate between the U.S.dollar and the Japanese yen is $1 = 200 yen,then the dollar price of yen is

Accepted Answer

A)  $.005.
B)  $.05.
C)  $.50.
D)  $5.E) A) and D)
F) A) and B)

Question 6

Freely floating exchange rates are determined by

Accepted Answer

A)  the forces of supply and demand for currencies.
B)  the government with a trade surplus.
C)  the government with a trade deficit.
D)  the IMF.
E)  the Bretton Woods Agreement.F) B) and E)
G) A) and D)

Question 7

If a nation's exports are $55 billion,while its imports are $50 billion,we can conclude with certainty that this nation is experiencing a

Accepted Answer

A)  balance of trade surplus.
B)  balance of payments surplus.
C)  positive balance on current account.
D)  positive balance on capital account.E) B) and C)
F) A) and D)

Question 8

Statement I: Rising interest rates in the U.S.push up the dollar.
Statement II: The U.S.dollar is backed by gold.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) A) and B)
F) C) and D)

Question 9

The market in which the currency of one country is traded for the currency of another country is called

Accepted Answer

A)  the futures market.
B)  the commodities market.
C)  the foreign exchange market.
D)  the international trade market.E) A) and D)
F) A) and C)

Question 10

In 2009,we ran a ________ on our current account and a _______ on our capital account.

Accepted Answer

A)  deficit;deficit
B)  surplus;surplus
C)  deficit;surplus
D)  surplus;deficitE) A) and B)
F) A) and D)

Question 11

If the dollar fell by 35% relative to the other currencies,our current account deficit would

Accepted Answer

A)  rise sharply.
B)  rise slightly.
C)  not be affected.
D)  fall slightly.
E)  fall sharply.F) A) and C)
G) C) and D)

Question 12

A stronger dollar benefits American

Accepted Answer

A)  workers.
B)  consumers.
C)  businesses.
D)  commodity market speculators.E) C) and D)
F) All of the above

Question 13

The decrease in the value of the dollar relative to the Mexican peso

Accepted Answer

A)  increased the dollar price paid and decreased the peso price received for Mexican goods imported into the U.S.
B)  decreased both the dollar price paid and the peso price received for Mexican goods imported into the U.S.
C)  increased both the dollar price paid and the peso price received for Mexican goods imported into the U.S.
D)  decreased the dollar price paid and increased the peso price received for Mexican goods imported into the U.S.E) A) and C)
F) A) and D)

Question 14

Which of the following summarizes the transactions involving the international exchange of goods and services,investment income,and other miscellaneous transactions?

Accepted Answer

A)  Balance of trade
B)  Statistical discrepancy
C)  Current account
D)  Capital accountE) A) and D)
F) None of the above

Question 15

Which is the most accurate statement?

Accepted Answer

A)  The gold standard does not work in theory or practice.
B)  The euro is the official currency in every European country.
C)  There is virtually no difference between the gold standard and the gold exchange standard.
D)  At one time an ounce of gold was worth $35.E) A) and B)
F) B) and D)

Question 16

The exchange rate between the dollar and the Swiss franc is $1 = 8 francs,and the price of a Swiss army knife is $5.If the exchange rate changes to $1 = 4 francs,the dollar price of the Swiss army knife ____ to _______.

Accepted Answer

A)  falls;$2.50
B)  rises;$10
C)  rises;$20
D)  does not changeE) A) and B)
F) A) and D)

Question 17

Drug trafficking leads to

Accepted Answer

A)  a net outflow of money from the United States.
B)  a net inflow of money into the United States.
C)  no net outflow or net inflow.D) A) and C)
E) None of the above

Question 18

If 1 U.S.dollar exchanges for 0.65 euro,how much would it cost in U.S.dollars and cents to purchase a bottle of Italian wine priced at 40 euro?

Accepted Answer

The answer of If 1 U.S.dollar exchanges for 0.65 euro,how...

Question 19

China has a ______ exchange rate with the United States,while Japan's exchange rate with the U.S.is determined by ___________.

Accepted Answer

fixed;supp...

Question 20

Each of the following is a requirement of a gold standard except

Accepted Answer

A)  a nation defines its currency in terms of gold.
B)  a nation must maintain a fixed ratio between its gold stock and its money supply.
C)  a nation must maintain a constant average price level.
D)  there must be no barriers to the free flow of gold into and out of the country.E) A) and B)
F) B) and C)

Exam 32: International Finance

Each of the following is a requirement of a gold standard except

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The decrease in the value of the dollar relative to the Mexican peso

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China has a ______ exchange rate with the United States,while Japan's exchange rate with the U.S.is determined by ___________.

Correct Answerverifiedfixed;supp...View AnswerShow Answer

Statement I: Rising interest rates in the U.S.push up the dollar. Statement II: The U.S.dollar is backed by gold.

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Currency appreciation would occur in a nation if

Correct AnswerverifiedShow Answer

If the dollar fell by 35% relative to the other currencies,our current account deficit would

Correct AnswerverifiedShow Answer

Statement I: The U.S.is the world's largest creditor nation. Statement II: We became a creditor nation in 1914.

Correct AnswerverifiedShow Answer

Which is the most accurate statement?

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If 1 U.S.dollar exchanges for 0.65 euro,how much would it cost in U.S.dollars and cents to purchase a bottle of Italian wine priced at 40 euro?

Correct AnswerverifiedShow Answer

Freely floating exchange rates are determined by

Correct AnswerverifiedShow Answer

In 2009,we ran a ________ on our current account and a _______ on our capital account.

Correct AnswerverifiedShow Answer

If a nation's exports are $55 billion,while its imports are $50 billion,we can conclude with certainty that this nation is experiencing a

Correct AnswerverifiedShow Answer

The market in which the currency of one country is traded for the currency of another country is called

Correct AnswerverifiedShow Answer

If the exchange rate between the U.S.dollar and the Japanese yen is $1 = 200 yen,then the dollar price of yen is

Correct AnswerverifiedShow Answer

Drug trafficking leads to

Correct AnswerverifiedShow Answer

The freely floating exchange rate system has been in effect since

Correct AnswerverifiedShow Answer

According to the 2009 hamburger standard,the country with the most undervalued currency relative to the United States dollar was

Correct AnswerverifiedShow Answer

Which of the following summarizes the transactions involving the international exchange of goods and services,investment income,and other miscellaneous transactions?

Correct AnswerverifiedShow Answer

A stronger dollar benefits American

Correct AnswerverifiedShow Answer

The exchange rate between the dollar and the Swiss franc is $1 = 8 francs,and the price of a Swiss army knife is $5.If the exchange rate changes to $1 = 4 francs,the dollar price of the Swiss army knife ____ to _______.

Correct AnswerverifiedShow Answer

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China has a exchange rate with the United States,while Japan's exchange rate with the U.S.is determined by _____.

Correct Answer
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fixed;supp...
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In 2009,we ran a __ on our current account and a _ on our capital account.

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The exchange rate between the dollar and the Swiss franc is $1 = 8 francs,and the price of a Swiss army knife is $5.If the exchange rate changes to $1 = 4 francs,the dollar price of the Swiss army knife to ___.

Correct Answer
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