In order to protect against foreign exchange risk, firms can use A) the spot market for foreign exchange. B) interest rate arbitrage. C) purchasing power parity. D) the forward market for foreign exchange. E) the J-curve. ANSWER D
Date: September 10th, 2020
Which of the following would cause the IS curve to shift to the left? A) an increase in government expenditures B) a decrease in the money supply C) an increase in domestic investment D) a decrease in taxes ANSWER B
Date: September 10th, 2020
If a country has a large deficit in its current account A) it has a large surplus in its financial account. B) it exports more than it imports. C) it is a net creditor to the rest of the world. D) None of the above are necessarily true. ANSWER A
Date: September 10th, 2020
A central bank’s international reserves consists of its holdings of A) gold. B) silver and gold. C) foreign assets and gold. D) domestic assets and precious metals. E) foreign and domestic currency holdings. ANSWER C
Date: September 10th, 2020
The future date on which the currencies are actually exchanged is called what? A) the value date B) the spot exchange date C) the two-day window D) the commitment date E) the forward exchange rate ANSWER A
Date: September 10th, 2020
Trade without serious income distribution effects is most likely to happen A) in sophisticated manufactures trade between rich countries. B) in simple manufactures trade between developing countries. C) in sophisticated manufactures trade between rich and poor countries. D) in agricultural trade between rich countries. E) in labor-intensive industries like clothing. ANSWER A
Date: September 10th, 2020
The experience of Chile’s foreign sector in the last two decades of the 20th century supports the proposition that economic growth is supported by A) import substitution. B) industrialization policies. C) trade liberalization policies. D) intra-industry trading. E) trade embargoes. ANSWER C
Date: September 10th, 2020
When an individual or firm in the United States requests that a bank sell foreign exchange, the bank will probably A) call a foreign bank and arrange a purchase. B) call the central bank and arrange a purchase. C) call another bank customer with foreign exchange holdings. D) call another domestic bank and arrange a […]
Date: September 10th, 2020
Internal economies of scale means that A) firms are experiencing lower average production costs due to a geographical concentration of firms in their industry that make it cheaper and easier to hire highly specialized workers and inputs. B) firms will have lower profits after international trade begins, because costs will be higher than when they […]
Date: September 10th, 2020
Refer to the above table. Suppose Airbus is set to produce the aircraft before Boeing. Which company will enter the market? What will be an ideal response? ANSWER Airbus will produce and Boeing will not.
Date: September 10th, 2020
