QUESTION Which of the following observations about the International Monetary Fund (IMF) is true? A. The IMF can force countries to adopt the policies required to correct economic mismanagement. B. Internal political problems can affect a government’s commitment to taking corrective action in return for an IMF loan. C. In recent years, the IMF has […]
QUESTION It is most appropriate for a firm to contract out manufacturing when: A. individual manufacturers have few firm-specific skills that contribute to the value of their product. B. the value of the host country currency is expected to appreciate. C. supplier switching costs are correspondingly high. D. firm-specific technology and expertise add significant value […]
QUESTION Which of the following is a feature of the current monetary system? A. It is free from government intervention. B. It is free from volatile movements in exchange rates. C. It has increased foreign exchange risk for businesses. D. It has made it easier to get insurance coverage against exchange rate changes. E. Instruments […]
QUESTION Vornoda Inc., a multinational clothing and accessory brand, has been facing huge economic losses due to unpredictable exchange rate movements. In order to gain considerable immunity against such currency fluctuations, Vornoda Inc. should: A. pursue strategies that increase its economic exposure. B. avoid using instruments like forward market and swaps. C. disperse production to […]
QUESTION Which of the following statements is true about the current monetary system? A. Use of instruments such as the forward market and swaps has decreased since the breakdown of the Bretton Woods system. B. The present monetary system lacks the volatile movements in exchange rates that existed in a fixed exchange rate system. C. […]
QUESTION The actions that managers take to attain the goals of the firm are referred to as a firm’s strategy. Indicate whether the statement is true or false. ANSWER TRUE A firm’s strategy can be defined as the actions that managers take to attain the goals of the firm.
QUESTION The amount of value a firm creates is measured by the difference between its costs of production and the value that consumers perceive in its products. Indicate whether the statement is true or false. ANSWER TRUE The way to increase the profitability of a firm is to create more value. The amount of […]
QUESTION Profit growth is measured by the percentage increase in net profits over time. Indicate whether the statement is true or false. ANSWER TRUE Profit growth is measured by the percentage increase in net profits over time.
QUESTION The higher the firm’s profit per unit sold is, the greater its profitability will be, all else being equal. Indicate whether the statement is true or false. ANSWER TRUE The higher the firm’s profit per unit sold is, the greater its profitability will be, all else being equal.
QUESTION Consumer surplus captures some of the value of a product thereby reducing the price a firm can charge for it. Indicate whether the statement is true or false. ANSWER TRUE The price a firm charges for a good or service is typically less than the value placed on that good or service by […]
