Chapter 02: International Flow of Funds

Transcription

1 Chpter 02: Interntionl Flow of Funds 1. Recently, the U.S. experienced n nnul lnce of trde representing.. lrge surplus (exceeding $100 illion). smll surplus c. level of zero d. deficit d 2. A high home infltion rte reltive to other countries would the home country's current ccount lnce, other things eing equl. High growth in the home income level reltive to other countries would the home country's current ccount lnce, other things eing equl.. increse; increse. increse; decrese c. decrese; decrese d. decrese; increse c Moderte 3. If country's government imposes triff on imported goods, tht country's current ccount lnce will likely (ssuming no retlition y other governments).. decrese. increse c. remin unffected d. either A or C is possile Moderte 4. purchses more U.S. exports thn the other countries listed here.. Itly. Spin Copyright Cengge Lerning. Powered y Cognero. Pge 1

2 Chpter 02: Interntionl Flow of Funds c. Mexico d. Cnd d 5. An increse in the current ccount deficit will plce pressure on the home currency vlue, other things eing equl.. upwrd. downwrd c. no d. upwrd or downwrd (depending on the size of the deficit) 6. If the home currency egins to pprecite ginst other currencies, this should the current ccount lnce, other things eing equl (ssume tht sustitutes re redily ville in other countries, nd tht the prices chrged y firms remin the sme).. increse. hve no impct on c. reduce d. ll of the ove re eqully possile c Moderte 7. The Interntionl Finnce Corportion ws estlished to promote economic development:. in Asi through grnts to usinesses.. y providing nonsusidized lons (t mrket interest rtes) to governments nd their gencies. c. y providing low-interest-rte lons (elow-mrket rtes) to poor ntions. d. through the privte sector y providing lons to corportions nd investing in their stock. d Copyright Cengge Lerning. Powered y Cognero. Pge 2

3 Chpter 02: Interntionl Flow of Funds LEARNING OBJECTIVES: INFM.MADU The World Bnk ws estlished to reduce poverty nd promote economic development:. in Asi through grnts to usinesses.. y providing nonsusidized lons (t mrket interest rtes) to governments nd their gencies. c. y providing low-interest-rte lons (elow-mrket rtes) to poor ntions. d. through the privte sector y providing lons to corportions nd investing in their stock. LEARNING OBJECTIVES: INFM.MADU The Interntionl Development Assocition ws estlished to promote economic development:. in Asi through grnts to usinesses.. y providing nonsusidized lons (t mrket interest rtes) to governments nd their gencies. c. y providing low-interest-rte lons (elow-mrket rtes) to poor ntions. d. through the privte sector y providing lons to corportions nd investing in their stock. c LEARNING OBJECTIVES: INFM.MADU Which of the following would likely hve the lest direct influence on country's current ccount?. infltion. ntionl income c. exchnge rtes d. triffs e. tx on income erned from foreign stocks e Copyright Cengge Lerning. Powered y Cognero. Pge 3

4 Chpter 02: Interntionl Flow of Funds STATE STANDARDS: United Sttes - OH - DISC.INFM.MADU The "J-curve" effect descries:. the continuous long-term inverse reltionship etween country's current ccount lnce nd the country's growth in gross domestic product.. the short-run tendency for country's lnce of trde to deteriorte even while its currency is depreciting. c. the tendency for exporters to initilly reduce the price of goods when their own currency pprecites. d. the tendency of country's currency to initilly deprecite fter the country's infltion rte declines. 12. An increse in the use of quots is expected to:. reduce the country's current ccount lnce, if other governments do not retlite.. increse the country's current ccount lnce, if other governments do not retlite. c. hve no impct on the country's current ccount lnce unless other governments retlite. d. increse the volume of country's trde with other countries. Moderte 13. The United Sttes typiclly hs lnce-of-trde surplus in its trde with.. Chin. Jpn c. A nd B d. none of the ove d 14. The North Americn Free Trde Agreement (NAFTA) incresed restrictions on:. trde etween Cnd nd Mexico. Copyright Cengge Lerning. Powered y Cognero. Pge 4

5 Chpter 02: Interntionl Flow of Funds. trde etween Cnd nd the United Sttes c. direct foreign investment in Mexico y U.S. firms. d. none of the ove. d 15. According to the text, interntionl trde (exports plus imports comined) s percentge of GDP is:. higher in the United Sttes thn in Europen countries.. lower in the United Sttes thn in Europen countries. c. higher in the United Sttes thn in out hlf the Europen countries, nd lower in the United Sttes thn in the others. d. out the sme in the United Sttes s in Europen countries. 16. The direct foreign investment positions y U.S. firms hve generlly over time. Restrictions y governments on direct foreign investment hve generlly over time.. incresed; incresed. incresed; decresed c. decresed; decresed d. decresed; incresed Moderte 17. Which of the following countries purchses the lrgest mount of exports y U.S. firms?. Mexico. Jpn c. Cnd d. Frnce Copyright Cengge Lerning. Powered y Cognero. Pge 5

6 Chpter 02: Interntionl Flow of Funds c 18. The primry component of the current ccount is the:. lnce of trde.. lnce of gifts. c. lnce of id pyments. d. lnce of grnt pyments. 19. As result of the Europen Union, restrictions on exports etween were reduced or eliminted.. memer countries nd the United Sttes. memer countries c. memer countries nd Europen nonmemers d. none of the ove 20. Over the lst severl yers, interntionl trde hs generlly:. incresed for most mjor countries.. decresed for most mjor countries. c. styed out constnt for most mjor countries. d. incresed for out hlf the mjor countries nd decresed for the others. Copyright Cengge Lerning. Powered y Cognero. Pge 6

7 Chpter 02: Interntionl Flow of Funds STATE STANDARDS: United Sttes - OH - DISC.INFM.MADU Which of the following is not result of the North Americn Free Trde Agreement (NAFTA)?. incresed trde etween the United Sttes nd Centrl Americn countries. incresed imports y the United Sttes from Mexico c. incresed exports y U.S. firms to Mexico d. incresed estlishment of susidiries in Mexico y U.S. firms 22. The Generl Agreement on Triffs nd Trde (GATT) ccord of 1993 clled for:. incresed trde restrictions outside North Americ.. lower trde restrictions round the world. c. uniform environmentl stndrds round the world. d. uniform worker helth lws. 23. Which of the following is mentioned in the text s possile mens y which the government my ttempt to improve its lnce-of-trde position (increse its exports or reduce its imports)?. The government could ttempt to reduce its home currency's vlue.. The government could require firms to engge in outsourcing. c. The government could provide susidies to importers. d. All of the ove re mentioned. Moderte 24. The demnd for U.S. exports tends to increse when:. economic growth in foreign countries decreses. Copyright Cengge Lerning. Powered y Cognero. Pge 7

8 Chpter 02: Interntionl Flow of Funds. the currencies of foreign countries strengthen ginst the dollr. c. U.S. infltion rises. d. none of the ove. Moderte 25. The term "dumping" refers to the:. exporting of goods tht do not meet qulity stndrds.. sle of junk onds to foreign countries. c. removl of foreign susidiries y the host government. d. exporting of goods t prices elow cost. d 26. The primry income component in country s current ccount my reflect income received due to:. grnts.. direct foreign investment. c. id. d. gifts. 27. A wek home currency my not e perfect solution to correct lnce-of-trde deficit ecuse:. it reduces the prices of imports pid y locl compnies.. it increses the prices of exports y locl compnies. c. it prevents interntionl trde trnsctions from eing prerrnged. d. foreign compnies my reduce the prices of their products to sty competitive. d Copyright Cengge Lerning. Powered y Cognero. Pge 8

9 Chpter 02: Interntionl Flow of Funds 28. Intrcompny trde mkes up more thn percent of ll interntionl trde c. 25 d. 13 e Like the Interntionl Monetry Fund (IMF), the is composed of numer of ntions s memers. However, unlike the IMF, it uses the privte rther thn the government sector to chieve its ojectives.. World Bnk. Interntionl Finnce Corportion (IFC) c. World Trde Orgniztion (WTO) d. Interntionl Development Assocition (IDA) e. Bnk for Interntionl Settlements (BIS) LEARNING OBJECTIVES: INFM.MADU The World Bnk's Multilterl Investment Gurntee Agency (MIGA):. offers vrious forms of export insurnce.. offers vrious forms of import insurnce. c. offers vrious forms of exchnge rte risk insurnce. d. provides lons to developing countries. e. offers vrious forms of politicl risk insurnce. e Copyright Cengge Lerning. Powered y Cognero. Pge 9

10 Chpter 02: Interntionl Flow of Funds LEARNING OBJECTIVES: INFM.MADU Also known s the "centrl nks' centrl nk," the ttempts to fcilitte coopertion mong countries with regrd to interntionl trnsctions.. World Bnk. Interntionl Finnce Corportion (IFC) c. World Trde Orgniztion d. Interntionl Development Assocition (IDA) e. Bnk for Interntionl Settlements (BIS) e LEARNING OBJECTIVES: INFM.MADU Direct foreign investment into the United Sttes represents.. cpitl inflow. trde inflow c. cpitl outflow d. trde outflow LEARNING OBJECTIVES: INFM.MADU A lnce-of-trde surplus indictes n excess of imports over exports.. Flse 34. A wekening of the U.S. dollr with respect to the British pound would likely reduce U.S. exports to Britin nd Copyright Cengge Lerning. Powered y Cognero. Pge 10

11 Chpter 02: Interntionl Flow of Funds increse U.S. imports from Britin over time.. Flse Moderte 35. The World Bnk extends lons only to developed ntions, while the Interntionl Development Assocition (IDA) extends lons only to developing ntions.. Flse LEARNING OBJECTIVES: INFM.MADU The World Bnk frequently enters into cofinncing greements, under which it joins with officil id gencies, export credit gencies, or commercil nks in providing finncing.. Flse LEARNING OBJECTIVES: INFM.MADU The lnce of pyments is summry of ll trnsctions etween domestic nd foreign residents for specific country over specified period of time.. Flse Copyright Cengge Lerning. Powered y Cognero. Pge 11

12 Chpter 02: Interntionl Flow of Funds 38. The vlue of finncil ssets trnsferred cross country orders y people who move to different country is included in the lnce of pyments in the cpitl ccount.. Flse 39. Portfolio investment represents trnsctions involving long-term finncil ssets (such s stocks nd onds) etween countries tht do not ffect the trnsfer of control.. Flse 40. The current ccount represents the investment in fixed ssets in foreign countries tht cn e used to conduct usiness opertions.. Flse 41. Exporting of products y one country to other countries t prices elow cost is clled elsticity.. Flse Copyright Cengge Lerning. Powered y Cognero. Pge 12

13 Chpter 02: Interntionl Flow of Funds STATE STANDARDS: United Sttes - OH - DISC.INFM.MADU Direct foreign investment y U.S.-sed MNCs occurs primrily in the Bhms nd Brzil.. Flse LEARNING OBJECTIVES: INFM.MADU The J-curve effect is the initil worsening of the U.S. trde lnce due to wekening dollr ecuse of estlished trde reltionships tht re not esily chnged; s the dollr wekens, the dollr vlue of imports initilly rises efore the U.S. trde lnce is improved.. Flse Moderte 44. Outsourcing is the process of sucontrcting to third prty in nother country to provide supplies or services tht were previously otined internlly.. Flse 45. Intrcompny trde is the exporting of products y one country to other countries elow cost.. Flse Copyright Cengge Lerning. Powered y Cognero. Pge 13

14 Chpter 02: Interntionl Flow of Funds 46. A triff is mximum limit on imports.. Flse 47. A country's net outflow of funds its interest rtes, nd its economic conditions.. ffects; ffects. ffects; does not ffect c. does not ffect; does not ffect d. does not ffect; ffects LEARNING OBJECTIVES: INFM.MADU The sle of ptent rights y U.S. firm to Russin firm reflects credit to the U.S. lnce of pyments ccount.. Flse 49. A U.S. purchse of ptent rights from firm in Mexico reflects credit to the U.S. lnce of pyments ccount.. Flse Copyright Cengge Lerning. Powered y Cognero. Pge 14

15 Chpter 02: Interntionl Flow of Funds 50. Regrding the U.S. lnce of pyments, cpitl ccount items re reltively minor compred to the finncil ccount items.. Flse 51. In recent yers, the United Sttes hs hd reltively (compred to other countries) lnce of trde with Chin.. smll; surplus. lrge; surplus c. smll; deficit d. lrge; deficit d 52. The Centrl Americn Trde Agreement (CAFTA) is intended to rise triffs nd regultions etween the United Sttes, the Dominicn Repulic, nd Centrl Americn countries.. Flse Copyright Cengge Lerning. Powered y Cognero. Pge 15

16 Chpter 02: Interntionl Flow of Funds 53. U.S. government officils would likely prefer tht Chin devlue the yun ginst the dollr.. Flse 54. Assume tht some U.S. firms will purchse supplies from either Chin or from U.S. firms. If the Chinese yun pprecites ginst the dollr, tht should reduce the U.S. lnce-of-trde deficit with Chin.. Flse Moderte 55. Assume the United Sttes hs lnce-of-trde surplus with the country of Thor. When individuls in Thor without permission mnufcture video gmes nd DVDs tht look lmost exctly like the originl products produced in the United Sttes nd other countries, they the U.S. lnce-of-trde surplus with Thor. This ctivity is clled.. reduce; flipping. reduce; pircy c. increse; pircy d. increse; flipping Moderte 56. Jpn's nnul interest rte hs een reltively compred to other countries for severl yers, ecuse the supply of funds in its credit mrket hs een very.. low; smll. high; smll c. low; lrge d. high; lrge c Copyright Cengge Lerning. Powered y Cognero. Pge 16

17 Chpter 02: Interntionl Flow of Funds LEARNING OBJECTIVES: INFM.MADU Without interntionl cpitl flows, there would e funding ville in the United Sttes cross ll risk levels, nd the cost of funding would e regrdless of the firm's risk level.. more; lower. more; higher c. less; lower d. less; higher d LEARNING OBJECTIVES: INFM.MADU The primry component of the cpitl ccount is the lnce of trde.. Flse 59. A lnce-of-trde surplus indictes n excess of merchndise imports over merchndise exports.. Flse 60. An Americn tourist visiting Germny nd spending money there (for lodging, food, etc.) will reduce the U.S. current ccount deficit nd reduce Germny's current ccount lnce. Copyright Cengge Lerning. Powered y Cognero. Pge 17

18 Chpter 02: Interntionl Flow of Funds. Flse Moderte LEARNING OBJECTIVES: INFM.MADU A lnce-of-trde deficit indictes n excess of imports over exports.. Flse 62. The cpitl ccount reflects chnges in country ownership of direct foreign investment.. Flse 63. Outsourcing llows some MNCs to reduce costs ut shifts jos to other countries.. Flse 64. A wekening of the U.S. dollr with respect to the British pound would likely reduce U.S. exports to the United Kingdom nd increse U.S. imports from the United Kingdom. Copyright Cengge Lerning. Powered y Cognero. Pge 18

19 Chpter 02: Interntionl Flow of Funds. Flse 65. The World Trde Orgniztion ws estlished to provide forum for multilterl trde negotitions nd to settle trde disputes.. Flse LEARNING OBJECTIVES: INFM.MADU The is the difference etween exports nd imports.. lnce of trde. lnce on goods nd services c. lnce of pyments d. current ccount e. cpitl ccount STATE STANDARDS: United Sttes - OH - DISC.INFM.MADU Which of the following will proly not result in n increse in country's current ccount lnce (ssuming everything else remins constnt)?. decrese in the country's rte of infltion. decrese in the country's ntionl income level c. n increse in government restrictions in the form of triffs or quots d. n pprecition of the country's currency e. All of the ove will result in n incresed current ccount lnce. d Copyright Cengge Lerning. Powered y Cognero. Pge 19

20 Chpter 02: Interntionl Flow of Funds Moderte 68. Which of the following is key component tht determines country s primry income (within the country s current ccount)?. direct foreign investment. interntionl trde c. tx rtes d. gifts Moderte 69. The, n ccord mong 117 ntions, clled for lower triffs round the world.. Generl Agreement on Triffs nd Trde (GATT). North Americn Free Trde Agreement (NAFTA) c. Single Europen Act of 1987 d. Europen Union Accord e. none of the ove LEARNING OBJECTIVES: INFM.MADU Which of the following is not likely to represent strtegy y the government of Country X to reduce its lnce-oftrde deficit with Country Y?. The government of Country X elimintes environmentl restrictions.. The government of Country X susidizes firms in its country to fcilitte dumping. c. The government of Country X provides tx reks to firms in specific industries. d. The government of Country X removes triff on goods imported from Country Y. d Moderte Copyright Cengge Lerning. Powered y Cognero. Pge 20

21 Chpter 02: Interntionl Flow of Funds Bloom's: Anlysis 71. Which of the following sttements is not true?. Exporters commonly complin tht they re eing mistreted ecuse the currency of their country is too wek.. Outsourcing ffects the lnce of trde ecuse it mens tht service is purchsed in nother country. c. Sometimes, trde policies re used to punish countries for vrious ctions. d. Triffs imposed y the EU hve cused some friction etween EU countries tht commonly import products nd other EU countries. e. All of the ove re true. 72. represents id, grnts, nd gifts from one country to nother.. Secondry income. Primry income c. The lnce of trde d. The lnce of pyments e. The cpitl ccount 73. Which of the following is not gol of the Interntionl Monetry Fund (IMF)?. To promote coopertion mong countries on interntionl monetry issues. To promote stility in exchnge rtes c. To enhnce country's long-term economic growth vi the extension of structurl djustment lons d. To promote free trde e. To promote free moility of cpitl funds cross countries c Copyright Cengge Lerning. Powered y Cognero. Pge 21

22 Chpter 02: Interntionl Flow of Funds LEARNING OBJECTIVES: INFM.MADU According to the "J-curve effect," wekening of the U.S. dollr reltive to its trding prtners' currencies would result in n initil in the current ccount lnce, followed y susequent in the current ccount lnce.. decrese; increse. increse; decrese c. decrese; decrese d. increse; increse LEARNING OBJECTIVES: INFM.MADU Copyright Cengge Lerning. Powered y Cognero. Pge 22