Question 1

Which of the following would contribute to a United States current account surplus?

Accepted Answer

A)  The United States makes a unilateral tariff reduction on imported goods.
B)  General Motors pays a dividend to a Swiss stockholder.
C)  The United States cuts back on American military personnel stationed in Germany.
D)  Russian vodka becomes increasingly popular in the United States.E) B) and C)
F) C) and D)

Question 2

If you were going to go on a vacation to Italy, you would prefer

Accepted Answer

A)  a strong dollar against the euro.
B)  a weak dollar against the euro.
C)  a strong euro against the dollar.
D)  a weak dollar against all currencies.E) All of the above
F) A) and C)

Question 3

Our net investment income from foreign countries is

Accepted Answer

A)  greater than foreign investor's income from U.S.investments.
B)  less than foreign investor's income from U.S.investments.
C)  about the same as foreign investor's income from U.S.investments.
D)  less than half foreign investor's income from U.S.investments.E) None of the above
F) A) and D)

Question 4

A British importer buying American wheat would pay for his purchases in _________.

Accepted Answer

The answer of A British importer buying American wheat would...

Question 5

Statement I: Foreigners have been recycling the dollars they have obtained from our trade deficit by investing them in the United States. Statement II: On an international basis, we have been consuming more than we have been producing.

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 D)
F) B) and D)

Question 6

When a currency depreciates relative to other currencies as a result of government action, it has been _________.

Accepted Answer

The answer of When a currency depreciates relative to other...

Question 7

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

Accepted Answer

fixed; sup...

Question 8

Floating exchange rates

Accepted Answer

A)  float according to the laws of supply and demand.
B)  are fixed by speculators in foreign exchange markets.
C)  are rarely used in foreign exchange transactions.
D)  All of the choices are true characteristics.E) C) and D)
F) A) and D)

Question 9

During the 1980s, foreigners expanded their role in the United States as

Accepted Answer

A)  both creditors and owners.
B)  neither creditors nor owners.
C)  as owners but not as creditors.
D)  as creditors but not as owners.E) B) and C)
F) A) and C)

Question 10

If the U.S. government were to impose a 20% tariff on all foreign imports, this would likely lead to ____ in demand for foreign currencies, causing the dollar to _____.

Accepted Answer

A)  a decrease; depreciate
B)  an increase; depreciate
C)  a decrease; appreciate
D)  an increase; appreciateE) All of the above
F) None of the above

Question 11

If 1 U.S. dollar exchanges for 1.89 Australian dollars, how much would it cost in U.S. dollars and cents to purchase an Australian video priced at 40 Australian dollars?

Accepted Answer

The answer of If 1 U.S. dollar exchanges for 1.89...

Question 12

Which of the following transactions will decrease the U.S. current account deficit?

Accepted Answer

A)  A U.S.corporation builds a new factory in Seoul, South Korea.
B)  Dutch tourists visiting Los Angeles.
C)  U.S.department stores buy shoes from Italy.
D)  American firms invest in Tokyo real estate.
E)  U.S.tourists travel in Canada.F) A) and D)
G) C) and E)

Question 13

If 1 U.S. dollar exchanges for 0.69 British pounds, how much would it cost in U.S. dollars and cents to purchase a British chess set priced at 20 pounds?

Accepted Answer

The answer of If 1 U.S. dollar exchanges for 0.69...

Question 14

If the exchange rate changes such that fewer euros, the French currency, are required to buy one dollar, then

Accepted Answer

A)  Americans will buy fewer goods and services from France.
B)  the French will buy fewer goods and services from the U.S.
C)  the dollar has appreciated in value.
D)  the euro has depreciated in value.
E)  French investments in the U.S.will decline.F) C) and D)
G) A) and B)

Question 15

There must always be a balance of a nation's

Accepted Answer

A)  merchandise exports and gold imports.
B)  total international payments.
C)  imports and exports of goods and services.
D)  merchandise imports and exports.E) All of the above
F) B) and D)

Question 16

The Bretton Woods conference set up the ______ to supervise a system of ______ exchange rates.

Accepted Answer

Internatio...

Question 17

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 B)
F) A) and C)

Question 18

An increase in foreign demand for U.S. exports will _________________ demand for the dollar, causing the dollar to _________________.

Accepted Answer

increase; ...

Question 19

The demise of the gold standard led to

Accepted Answer

A)  more international trade.
B)  greater and greater devaluation.
C)  freely floating exchange rates.D) All of the above
E) A) and B)

Question 20

The capital account of the balance of payments consists of

Accepted Answer

A)  the long-term transactions that we conduct with foreigners.
B)  all the goods and services produced during the current year, which we buy from or sell to foreigners.
C)  the interest, dividends, and profits that the U.S.collected from foreign investments less what U.S.firms paid foreign investors.
D)  None of the choices is true.E) B) and C)
F) A) and D)

Exam 20: International Finance

The capital account of the balance of payments consists of

Correct AnswerverifiedShow Answer

The demise of the gold standard led to

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

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Which of the following would contribute to a United States current account surplus?

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If the exchange rate changes such that fewer euros, the French currency, are required to buy one dollar, then

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Statement I: Foreigners have been recycling the dollars they have obtained from our trade deficit by investing them in the United States. Statement II: On an international basis, we have been consuming more than we have been producing.

Correct AnswerverifiedShow Answer

An increase in foreign demand for U.S. exports will _________________ demand for the dollar, causing the dollar to _________________.

Correct Answerverifiedincrease; ...View AnswerShow Answer

During the 1980s, foreigners expanded their role in the United States as

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Which of the following transactions will decrease the U.S. current account deficit?

Correct AnswerverifiedShow Answer

There must always be a balance of a nation's

Correct AnswerverifiedShow Answer

A British importer buying American wheat would pay for his purchases in _________.

Correct AnswerverifiedShow Answer

If 1 U.S. dollar exchanges for 0.69 British pounds, how much would it cost in U.S. dollars and cents to purchase a British chess set priced at 20 pounds?

Correct AnswerverifiedShow Answer

When a currency depreciates relative to other currencies as a result of government action, it has been _________.

Correct AnswerverifiedShow Answer

If the U.S. government were to impose a 20% tariff on all foreign imports, this would likely lead to ____ in demand for foreign currencies, causing the dollar to _____.

Correct AnswerverifiedShow Answer

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

Correct Answerverifiedfixed; sup...View AnswerShow Answer

Floating exchange rates

Correct AnswerverifiedShow Answer

If you were going to go on a vacation to Italy, you would prefer

Correct AnswerverifiedShow Answer

If 1 U.S. dollar exchanges for 1.89 Australian dollars, how much would it cost in U.S. dollars and cents to purchase an Australian video priced at 40 Australian dollars?

Correct AnswerverifiedShow Answer

The Bretton Woods conference set up the ______ to supervise a system of ______ exchange rates.

Correct AnswerverifiedInternatio...View AnswerShow Answer

Our net investment income from foreign countries is

Correct AnswerverifiedShow Answer

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An increase in foreign demand for U.S. exports will _ demand for the dollar, causing the dollar to _.

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increase; ...
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If the U.S. government were to impose a 20% tariff on all foreign imports, this would likely lead to in demand for foreign currencies, causing the dollar to _.

Correct 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; sup...
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The Bretton Woods conference set up the to supervise a system of exchange rates.

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Internatio...
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