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20 Cards in this Set
- Front
- Back
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According to the economic theory, which of the following factors determines a commodity's price? a. Spot transaction b. Currency hedging c. Forward rates d. Supply and demand |
d. Supply and demand |
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The demand for dollars is much stronger than any other currency because: a. the dollar is the common transaction currency involving both US imports and US exports b. supply of the US dollar is significantly higher than other currencies c. the price of the dollar is much lower compared to the currencies of other countries d. the US dollar is nonconvertible in other countries |
a. the dollar is the common transaction currency involving both US imports and US exports |
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Which of the following is also known as the "law of one price"? a. Common denominator b. Clean float c. Purchasing power parity d. Flexible exchange rate policy |
c. Purchasing power parity |
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In the context of interest rates and money supply, quantitative easing: a. leads to appreciation in the value of a country's currency b. tends to stimulate inflation with more currency c. decreases the per unit value of a currency d. attracts foreign funds |
b. tends to stimulate inflation with more currency |
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In the context of balance of payments (BOP), a country experiencing a current account surplus: a. will see its currency appreciate b. has to be financed by purchase and sales of assets c. will see a decrease in exchange rates d. will experience a decrease in demand for its currency |
a. will see its currency appreciate |
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Which of the following is true of a floating exchange rate policy? a. This policy sets the exchange rate of the domestic currency in terms of another currency b. It prevents erratic fluctuations that may trigger macroeconomic turbulence c. Exchange rate is allowed to fluctuate between an upper and lower range d. Governments believe in the free market and allow it to determine exchange rates |
d. Governments believe in the free market and allow it to determine exchange rates |
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In the context of exchange rate policies, ______ is a pure market solution to determine exchange rates. a. fixed exchange rate b. managed float c. free float d. target exchange rate policy |
c. free float |
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The International Monetary Fund receives its funds from _______. a. subsidiary investing b. member countries' quota c. foreign direct investment d. currency hedging |
b. member countries' quota |
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In the context of foreign exchange, ______ are the classic single-shot exchange of one currency for another. a. currency swaps b. spot transactions c. forward discounts d. forward transactions |
b. spot transactions |
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Which of the following will result from global economic integration? a. It will promote protectionist policies through tariffs and quotas b. Its fundamental goal is to promote peace among countries c. Governments will raise trade barriers due to global economic integration d. Environment will be benefited through global economic integration |
c. Governments will raise trade barriers due to global economic integration |
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Which of the following is an economic benefit of global economic integration? a. It limits investment opportunities and reduces risks b. It allows nations to lower trade barriers for specific trade partners c. It allows for disputes to be handled constructively d. It builds confidence in a multilateral trading system |
d. It builds confidence in a multilateral trading system |
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Which of the following statements is true of global economic integration? a. It leads to war among trading countries b. It facilitates equal distribution of benefits c. It stimulates the economic growth of countries d. It allows discrimination among trading countries |
c. It stimulates the economic growth of countries |
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Which of the following is a disadvantage of global economic integration? a. Trade may be restricted by imposing protectionism b. Critics may not be happy with the environmental impact c. Countries can face discrimination in trade practices d. People can be deprived of their jobs |
b. Critics may not be happy with the environmental impact |
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Which of the following was the General Agreement on Tariffs and Trade's (GATT's) successor? a. The World Trade Organization (WTO) b. The International Monetary Fund (IMF) c. The Federation of International Trade Associations (FITA) d. The Commonwealth of Independent States (CIS) |
a. The World Trade Organization (WTO) |
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Which of the following is a disadvantage of the General Agreement on Tariffs and Trade's (GATT's) policies? a. It increased the average trade tariffs among developed countries b. Non-tariff barriers that were easy to verify and challenges were removed c. It abolished the Multifiber Arrangement (MFA) designed to promote free trade in textiles d. Trade in services and intellectual property (IP) protection was not covered |
d. Trade in services and intellectual property (IP) protection was not covered |
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In comparison with the General Agreement on Tariffs and Trade (GATT), which of the following statements is true of the World Trade Organization (WTO)? a. The World Trade Organization (WTO) led many governments to invoke non-tariff barriers which triggered trade disputes. b. The World Trade Organization (WTO) introduced the Multifiber Arrangement (MFA) which restricted free trade in textiles c. The World Trade Organization (WTO) does not cover Intellectual Property (IP) protection d. The World Trade Organization (WTO) includes effective trade dispute settlement mechanism |
d. The World Trade Organization (WTO) includes effective trade dispute settlement mechanism |
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In the context of the World Trade Organization's (WTO's) trade dispute settlement mechanisms, the losing country: a. experiences no loss of sovereignty b. has to comply with the World Trade Organization's (WTO's) ruling c. can defy the WTO ruling by doing nothing and suffer trade retaliation by the winning country d. can block any unfavorable decision |
c. can defy the WTO ruling by doing nothing and suffer trade retaliation by the winning country |
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Which of the following is a disadvantage of regional economic integration? a. It is centered on preferential treatments for firms outside a region b. It restricts free trade and investment in participating countries within a region c. It reduces the collective political weight of a region d. It may result in some loss of sovereignty in an economic dimension |
d. It may result in some loss of sovereignty in an economic dimension |
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Which of the following is a difference between the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO)? a. The GATT was ineffective in reducing tariff barriers, whereas the WTO reduced tariff barriers b. The GATT includes an effective dispute settlement mechanism, whereas the WTO does not include a dispute settlement mechanism c. The GATT does not cover Intellectual Property (IP) protection, whereas the WTO includes IP protection d. The GATT includes an agreement on the trade of services, whereas the WTO does not cover the trade of services |
c. The GATT does not cover Intellectual Property (IP) protection, whereas the WTO includes IP protection |
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Which of the following improvements resulted after the establishment of the General Agreement on Tariffs and Trade (GATT)? a. Trade growth consistently outpaced the gross domestic product (GDP) growth b. The average tariffs in developed economies significantly increased c. Effective dispute resolution mechanism was established d. Trade in services and intellectual property (IP) protection was covered |
a. Trade growth consistently outpaced the gross domestic product (GDP) growth |
