1) concerning exchange rate forecasting, fundamental analysis involves consideration
of a variety of macroeconomic variables and policies that tend to affect currency values.
a.true
b.false
2) assume that ford motor company obtains some of its inputs in mexico (foreign
sourcing). as the peso becomes a larger portion of ford’s total costs, a dollar
depreciation leads to a (an) ____ in the peso cost of a ford vehicle and a (an) ____ in
the dollar cost of a ford compared to the cost changes that occur when all input costs are
dollar denominated.
a.decrease, increase
b.increase, decrease
c.decrease, decrease
d.increase, increase
3) during periods of weak demand, the organization of petroleum countries has
implemented production (export) quotas to ensure that excess oil supplies be kept off
the market.
a.true
b.false
4) suppose mexico and the united states were the only two countries in the world. there
exists an excess supply of pesos on the foreign exchange market. this suggests that:
a.mexico’s current account is in surplus
b.mexico’s current account is in deficit
c.the u.s. current account is in deficit
d.the u.s. current account is in equilibrium
5) “owned” international reserves consist of:
a.special drawing rights
b.oil facility
c.imf drawings
d.reciprocal currency arrangements
6) under managed floating exchange rates, central bank intervention is used to offset
temporary fluctuations in exchange rates that contribute to uncertainty in carrying out
transactions in international trade and finance.
a.true
b.false
7) the plaza agreement of 1985 and louvre accord of 1987 are examples of:
a.tariff trade barrier formation
b.nontariff trade barrier formation
c.international economic policy coordination
d.beggar-thy-neighbor policies
8) john stuart mill’s theory of reciprocal demand best applies when trading partners:
a.are of equal size and importance in the market
b.produce under increasing cost conditions
c.partially specialize in the production of commodities
d.have similar taste and preference levels
9) a positive balance on the goods-and-services account of the balance of payments
indicates an excess of exports over imports which must be added to the nation’s gross
domestic product.
a.true
b.false
10) in 1973 the major industrial countries terminated managed-floating exchange rates
and adopted an adjustable-pegged exchange rates.
a.true
b.false
11) countervailing duties are intended to neutralize any unfair advantage that foreign
exporters might gain over domestic producers because of foreign:
a.tariffs
b.subsidies
c.quotas
d.buy-national policies