Question 1

Also known as the "central banks' central bank," the ____ attempts to facilitate cooperation among countries with regard to international transactions.

Accepted Answer

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

Question 2

U.S. government officials would likely prefer that China devalue the yuan against the dollar.

Accepted Answer

A) True 
 B)False

Question 3

A balance-of-trade surplus indicates an excess of merchandise imports over merchandise exports.

Accepted Answer

A) True 
 B)False  False

Question 4

Which of the following will probably not result in an increase in a country's current account balance (assuming everything else remains constant) ?

Accepted Answer

A)  a decrease in the country's rate of inflation
B)  a decrease in the country's national income level
C)  an increase in government restrictions in the form of tariffs or quotas
D)  an appreciation of the country's currency
E)  All of the above will result in an increased current account balance.F) D) and E)
G) B) and E)

Question 5

The term "dumping" refers to the:

Accepted Answer

A)  exporting of goods that do not meet quality standards.
B)  sale of junk bonds to foreign countries.
C)  removal of foreign subsidiaries by the host government.
D)  exporting of goods at prices below cost.E) All of the above
F) C) and D)

Question 6

The balance of payments is a summary of all transactions between domestic and foreign residents for a specific country over a specified period of time.

Accepted Answer

A) True 
 B)False

Question 7

The General Agreement on Tariffs and Trade (GATT)  accord of 1993 called for:

Accepted Answer

A)  increased trade restrictions outside North America.
B)  lower trade restrictions around the world.
C)  uniform environmental standards around the world.
D)  uniform worker health laws.E) None of the above
F) B) and D)

Question 8

A country's net outflow of funds ____ its interest rates, and ____ its economic conditions.

Accepted Answer

A)  affects; affects
B)  affects; does not affect
C)  does not affect; does not affect
D)  does not affect; affectsE) B) and D)
F) B) and C)

Question 9

Which of the following countries purchases the largest amount of exports by U.S. firms?

Accepted Answer

A)  Mexico
B)  Japan
C)  Canada
D)  FranceE) C) and D)
F) B) and C)

Question 10

Assume the United States has a balance-of-trade surplus with the country of Thor. When individuals in Thor without permission manufacture video games and DVDs that look almost exactly like the original products produced in the United States and other countries, they ____ the U.S. balance-of-trade surplus with Thor. This activity is called ____.

Accepted Answer

A)  reduce; flipping
B)  reduce; piracy
C)  increase; piracy
D)  increase; flippingE) B) and C)
F) None of the above

Question 11

The primary component of the current account is the:

Accepted Answer

A)  balance of trade.
B)  balance of giFts.
C)  balance of aid payments.
D)  balance of grant payments.E) C) and D)
F) B) and C) A

Question 12

Direct foreign investment into the United States represents a ____.

Accepted Answer

A)  capital inflow
B)  trade inflow
C)  capital outflow
D)  trade outflowE) B) and C)
F) A) and B)

Question 13

The World Bank was established to reduce poverty and promote economic development:

Accepted Answer

A)  in Asia through grants to businesses.
B)  by providing nonsubsidized loans (at market interest rates)  to governments and their agencies.
C)  by providing low-interest-rate loans (below-market rates)  to poor nations.
D)  through the private sector by providing loans to corporations and investing in their stock.E) A) and C)
F) All of the above

Question 14

The "J-curve" effect describes:

Accepted Answer

A)  the continuous long-term inverse relationship between a country's current account balance and the country's growth in gross domestic product.
B)  the short-run tendency for a country's balance of trade to deteriorate even while its currency is depreciating.
C)  the tendency for exporters to initially reduce the price of goods when their own currency appreciates.
D)  the tendency of a country's currency to initially depreciate aFter the country's inflation rate declines.E) All of the above
F) B) and D)

Question 15

A U.S. purchase of patent rights from a firm in Mexico reflects a credit to the U.S. balance of payments account.

Accepted Answer

A) True 
 B)False

Question 16

The North American Free Trade Agreement (NAFTA)  increased restrictions on:

Accepted Answer

A)  trade between Canada and Mexico.
B)  trade between Canada and the United States
C)  direct foreign investment in Mexico by U.S. firms.
D)  none of the above.E) A) and D)
F) All of the above

Question 17

A weak home currency may not be a perfect solution to correct a balance-of-trade deficit because:

Accepted Answer

A)  it reduces the prices of imports paid by local companies.
B)  it increases the prices of exports by local companies.
C)  it prevents international trade transactions from being prearranged.
D)  foreign companies may reduce the prices of their products to stay competitive.E) A) and D)
F) A) and C)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

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 D)
F) None of the above

Question 20

____ represents aid, grants, and giFts from one country to another.

Accepted Answer

A)  Secondary income
B)  Primary income
C)  The balance of trade
D)  The balance of payments
E)  The capital accountF) A) and B)
G) B) and E) A

Exam 2: International Flow of Funds

Also known as the "central banks' central bank," the ____ attempts to facilitate cooperation among countries with regard to international transactions.

Correct Answer
verified

U.S. government officials would likely prefer that China devalue the yuan against the dollar.

Correct Answer
verified

A balance-of-trade surplus indicates an excess of merchandise imports over merchandise exports.

Correct Answer
verified
False

Which of the following will probably not result in an increase in a country's current account balance (assuming everything else remains constant) ?

Correct Answer
verified

The term "dumping" refers to the:

Correct Answer
verified

The balance of payments is a summary of all transactions between domestic and foreign residents for a specific country over a specified period of time.

Correct Answer
verified

The General Agreement on Tariffs and Trade (GATT) accord of 1993 called for:

Correct Answer
verified

A country's net outflow of funds its interest rates, and its economic conditions.

Correct Answer
verified

Which of the following countries purchases the largest amount of exports by U.S. firms?

Correct Answer
verified

Correct Answer
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The primary component of the current account is the:

Correct Answer
verified
A

Direct foreign investment into the United States represents a ____.

Correct Answer
verified

The World Bank was established to reduce poverty and promote economic development:

Correct Answer
verified

The "J-curve" effect describes:

Correct Answer
verified

A U.S. purchase of patent rights from a firm in Mexico reflects a credit to the U.S. balance of payments account.

Correct Answer
verified

The North American Free Trade Agreement (NAFTA) increased restrictions on:

Correct Answer
verified

A weak home currency may not be a perfect solution to correct a balance-of-trade deficit because:

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

____ represents aid, grants, and giFts from one country to another.

Correct Answer
verified
A

Exam 2: International Flow of Funds

Also known as the "central banks' central bank," the ____ attempts to facilitate cooperation among countries with regard to international transactions.

Correct AnswerverifiedShow Answer

U.S. government officials would likely prefer that China devalue the yuan against the dollar.

Correct AnswerverifiedShow Answer

A balance-of-trade surplus indicates an excess of merchandise imports over merchandise exports.

Correct AnswerverifiedFalse

Which of the following will probably not result in an increase in a country's current account balance (assuming everything else remains constant) ?

Correct AnswerverifiedShow Answer

The term "dumping" refers to the:

Correct AnswerverifiedShow Answer

The balance of payments is a summary of all transactions between domestic and foreign residents for a specific country over a specified period of time.

Correct AnswerverifiedShow Answer

The General Agreement on Tariffs and Trade (GATT) accord of 1993 called for:

Correct AnswerverifiedShow Answer

A country's net outflow of funds ____ its interest rates, and ____ its economic conditions.

Correct AnswerverifiedShow Answer

Which of the following countries purchases the largest amount of exports by U.S. firms?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The primary component of the current account is the:

Correct AnswerverifiedA

Direct foreign investment into the United States represents a ____.

Correct AnswerverifiedShow Answer

The World Bank was established to reduce poverty and promote economic development:

Correct AnswerverifiedShow Answer

The "J-curve" effect describes:

Correct AnswerverifiedShow Answer

A U.S. purchase of patent rights from a firm in Mexico reflects a credit to the U.S. balance of payments account.

Correct AnswerverifiedShow Answer

The North American Free Trade Agreement (NAFTA) increased restrictions on:

Correct AnswerverifiedShow Answer

A weak home currency may not be a perfect solution to correct a balance-of-trade deficit because:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

____ represents aid, grants, and giFts from one country to another.

Correct AnswerverifiedA

Correct Answer
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False

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A country's net outflow of funds its interest rates, and its economic conditions.

Correct Answer
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A

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A