Question 1

Direct foreign investment into the U.S. represents a ____.

Accepted Answer

A)   capital inflow
B)   trade inflow
C)   capital outflow
D)   trade outflowE) All of the above
F) B) and C)

Question 2

Over the last several years, international trade has generally:

Accepted Answer

A)   increased for most major countries.
B)   decreased for most major countries.
C)   stayed about constant for most major countries.
D)   increased for about half the major countries and decreased for the others.E) All of the above
F) C) and D)

Question 3

Japan's annual interest rate has been relatively ____ compared to other countries for several years, because the supply of funds in its credit market has been very ____.

Accepted Answer

A)   low; small
B)   high; small
C)   low; large
D)   high; largeE) A) and D)
F) All of the above

Question 4

The ____, an accord among 117 nations, called for lower tariffs around the world.

Accepted Answer

A)   General Agreement on Tariffs and Trade (GATT) 
B)   North American Free Trade Agreement (NAFT
A)  
C)   Single European Act of 1987
D)   European Union Accord
E)   None of the aboveF) A) and B)
G) C) and E)

Question 5

Which of the following is not a goal of the International Monetary Fund (IMF) ?

Accepted Answer

A)   To promote cooperation among countries on international monetary issues
B)   To promote stability in exchange rates
C)   To enhance a country's long-term economic growth via the extension of structural adjustment loans
D)   To promote free trade
E)   To promote free mobility of capital funds across countriesF) C) and D)
G) A) and C)

Question 6

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 7

Portfolio investments represent 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 8

The capital account reflects changes in country ownership of long-term (but not short-term) assets.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The World Bank frequently enters into cofinancing agreements. Under these agreements, financing is provided by the World Bank and/or official aid agencies, export credit agencies, or commercial banks.

Accepted Answer

A) True 
 B)False

Question 11

An increase in the use of quotas is expected to:

Accepted Answer

A)   reduce the country's current account balance, if other governments do not retaliate.
B)   increase the country's current account balance, if other governments do not retaliate.
C)   have no impact on the country's current account balance unless other governments retaliate.
D)   increase the volume of a country's trade with other countries.E) All of the above
F) B) and C)

Question 12

Which of the following would increase the current account of Country X? Country Y is Country X's sole trading partner.

Accepted Answer

A)   Inflation increases in countries X and Y by comparable amounts.
B)   Country X's and Country Y's currencies depreciate by the same amount.
C)   Country X imposes tariffs on imports from Country Y, and Country Y retaliates by imposing an identical tax on X's exports.
D)   The central banks of Country X and Country Y reduce the money supply to increase interest rates.
E)   Country X imposes a quota on imports, and Country Y retaliates by imposing an identical quota on X's exports.F) B) and D)
G) All of the above

Question 13

Outsourcing allows some MNCs to reduce costs but shifts jobs to other countries.

Accepted Answer

A) True 
 B)False

Question 14

The balance of payments is a measurement of all transactions between domestic and foreign residents over a specified period of time.

Accepted Answer

A) True 
 B)False

Question 15

According to the "J curve effect," a weakening of the U.S. dollar relative to its trading partners' currencies would result in an initial ____ in the current account balance, followed by a subsequent ____ in the current account balance.

Accepted Answer

A)   decrease; increase
B)   increase; decrease
C)   decrease; decrease
D)   increase; increaseE) A) and D)
F) None of the above

Exam 2: International Flow of Funds

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

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 capital account reflects changes in country ownership of long-term (but not short-term) assets.

Correct Answer
verified

An increase in the use of quotas is expected to:

Correct Answer
verified

According to the "J curve effect," a weakening of the U.S. dollar relative to its trading partners' currencies would result in an initial in the current account balance, followed by a subsequent in the current account balance.

Correct Answer
verified

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

Correct Answer
verified

Outsourcing allows some MNCs to reduce costs but shifts jobs to other countries.

Correct Answer
verified

Japan's annual interest rate has been relatively compared to other countries for several years, because the supply of funds in its credit market has been very .

Correct Answer
verified

Which of the following would increase the current account of Country X? Country Y is Country X's sole trading partner.

Correct Answer
verified

Direct foreign investment into the U.S. represents a ____.

Correct Answer
verified

The World Bank frequently enters into cofinancing agreements. Under these agreements, financing is provided by the World Bank and/or official aid agencies, export credit agencies, or commercial banks.

Correct Answer
verified

Over the last several years, international trade has generally:

Correct Answer
verified

The balance of payments is a measurement of all transactions between domestic and foreign residents over a specified period of time.

Correct Answer
verified

The ____, an accord among 117 nations, called for lower tariffs around the world.

Correct Answer
verified

Which of the following is not a goal of the International Monetary Fund (IMF) ?

Correct Answer
verified

Exam 2: International Flow of Funds

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

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 capital account reflects changes in country ownership of long-term (but not short-term) assets.

Correct AnswerverifiedShow Answer

An increase in the use of quotas is expected to:

Correct AnswerverifiedShow Answer

According to the "J curve effect," a weakening of the U.S. dollar relative to its trading partners' currencies would result in an initial ____ in the current account balance, followed by a subsequent ____ in the current account balance.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Outsourcing allows some MNCs to reduce costs but shifts jobs to other countries.

Correct AnswerverifiedShow Answer

Japan's annual interest rate has been relatively ____ compared to other countries for several years, because the supply of funds in its credit market has been very ____.

Correct AnswerverifiedShow Answer

Which of the following would increase the current account of Country X? Country Y is Country X's sole trading partner.

Correct AnswerverifiedShow Answer

Direct foreign investment into the U.S. represents a ____.

Correct AnswerverifiedShow Answer

The World Bank frequently enters into cofinancing agreements. Under these agreements, financing is provided by the World Bank and/or official aid agencies, export credit agencies, or commercial banks.

Correct AnswerverifiedShow Answer

Over the last several years, international trade has generally:

Correct AnswerverifiedShow Answer

The balance of payments is a measurement of all transactions between domestic and foreign residents over a specified period of time.

Correct AnswerverifiedShow Answer

The ____, an accord among 117 nations, called for lower tariffs around the world.

Correct AnswerverifiedShow Answer

Which of the following is not a goal of the International Monetary Fund (IMF) ?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

According to the "J curve effect," a weakening of the U.S. dollar relative to its trading partners' currencies would result in an initial in the current account balance, followed by a subsequent in the current account balance.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Japan's annual interest rate has been relatively compared to other countries for several years, because the supply of funds in its credit market has been very .

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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