International Business Test 3 (Chapters 9-11)
When a broker buys a currency low and sells it high, this is called
Arbitrage
ASEAN is
Association of Southeast Asian Nations
A ______ crisis refers to a loss confidence in the banking system that leads to a run on banks, as individuals and companies withdraw their deposits.
Banking
Which of the following is a case against NAFTA?
Both a and b (find answer in book)
A ___________ market has no barriers to trade among member countries, includes a common external trade policy and allows factors of production to move freely among members.
Common
Which level of economic integration eliminates trade barriers between member countries and adopts a common external trade policy?
Customs Union
Which of the following is NOT a criticism of IMF's policy prescriptions?
Discipline (moral hazard, lack of accountability, observations)
The role of the IMF is to avoid the repetition of a global economic chaos through a combination of ______ and ______.
Discipline and Flexibility
__________ exposure is the extent to which a firm's future international earning power is affected by changes in exchange rates.
Economic
EFTA is
European Free Trade Association
Falling demand for U.S. dollars and rising demand for euros translated into a ___________ in the value of the dollar against the euro.
Fall
If the spot exchange rate is £1 = $1.50 when the market opens, and £1 = $1.48 at the end of the day, the pound has appreciated, and the dollar has depreciated
False
A ______ crisis is a situation in which a country cannot service its foreign debt obligations, whether private-sector of government debt.
Foreign Debt
A ______ exchange rate happens when the value of the currency is fixed relative to a reference currency.
Pegged
A currency ___________ totally involves the short-term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates. move freely among members.
Speculation
Chapter 10: Which country's currency is profiled in the opening case?
Thailand
A pair of shoes costs £40 in Britain. An identical pair costs $50 in the United States when the exchange rate is £1 = $1.50. Which of the following is correct?
The United States offers a better deal
Which of the following arguments strengthen the idea of floating exchange rates?
Trade deficits can be corrected through changes in exchange rates
__________ exposure is the extent to which the income from individual transactions is affected by fluctuations in foreign exchange values.
Transaction
A benefit to companies of economic integration is the opportunity to centralize their production and reduce costs.
True
A key benefit resulting from the adoption of the euro is the ability to compare prices across member markets.
True
The International Monetary Fund's original function was to provide a pool of money from which members could borrow in the short term.
True
The efficient market school argues that investing in exchange rate forecasting services would be a waste of money
True
