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International Business : The Challenge of Global Competition, 8/e

Donald Ball
Wendell H. McCulloch, California State University Long Beach
Paul L. Frantz, California State University Long Beach
Michael Geringer, California Polytechnic State University
Michael S. Minor, University of Texas Pan American

Understanding the International Monetary System

Multiple Choice Quiz


1	The eurozone's three largest economies include:
		A)	the United Kingdom.
		B)	Spain.
		C)	Italy.
		D)	Finland.


2	Gold is an important element in the international economy and business. The London bullion market alone trades:
		A)	250 to 500 tons of gold a day.
		B)	500 to 750 tons of gold a day.
		C)	750 to 1,000 tons of gold a day.
		D)	1,000 to 1,250 tons of gold a day.


3	One argument for returning to the gold standard, thus making gold the reserve asset of nations, is based on the premise that:
		A)	gold is very portable.
		B)	gold has been deemed consistently valuable throughout the ages.
		C)	the price of gold has remained stable over time.
		D)	he current situation in which the US dollar is the reserve asset is unsustainable.


4	The Bretton Woods Conference in 1944 established:
		A)	the World Bank.
		B)	the International Monetary Fund.
		C)	the gold exchange standard.
		D)	all of the above.


5	At the Bretton Woods Conference, there was general consensus that:
		A)	stable exchange rates were difficult, if not impossible to achieve.
		B)	floating or fluctuating exchange rates had proved to be very satisfactory.
		C)	the government controls of trade, exchange, production, and so forth that had developed from 1931 through World War II were wasteful, discriminatory, and detrimental to expansion of world trade and investment.
		D)	none of the above.


6	A country's balance of payments is a very important indicator of what may happen to the country's economy, including what the government may cause to happen. A general cause of a balance of payments deficit is:
		A)	inflation.
		B)	recession.
		C)	excessive domestic demand.
		D)	government price controls.


7	International debit transactions involve payments by domestic residents to foreign residents. Taking America as the domestic economy, a list of debit transactions might include:
		A)	merchandise exports.
		B)	gifts by foreign residents to Americans.
		C)	dividend, interest, and debt repayment services on domestic-owned capital in America.
		D)	imports of gold.


8	Three sub-accounts are included in the current balance of payments account. These sub-accounts include the:
		A)	current account.
		B)	official reserves account.
		C)	capital account.
		D)	all of the above.


9	One of the sub-accounts that is included in the current balance of payments account is the capital account. The capital account:
		A)	records the net changes in a nation's international financial assets and liabilities over the balance of payment period.
		B)	records a nation's store of gold.
		C)	records a nation's store of gold.
		D)	records long-term investments that give the investors effective control over the object of the investment.


10	A country's official reserves account deals with:
		A)	gold imports and exports.
		B)	changes in foreign currencies held by the government.
		C)	changes in liabilities to foreign central banks.
		D)	all of the above.


11	A temporary balance of payment deficit is one that:
		A)	will take care of itself without any intervention.
		B)	can only be corrected through currency devaluations.
		C)	can be corrected by the country's monetary or fiscal policies.
		D)	requires intervention of the IMF for correction.


12	A central bank is:
		A)	the largest bank located in a country.
		B)	a government institution that manages the monetary policy of a country.
		C)	a government institution that manages the fiscal policy of a country.
		D)	a private institution that regulates a country's money supply.


13	World currencies began floating freely in:
		A)	1968.
		B)	1973.
		C)	1978.
		D)	1983.


14	Of the Asian currencies, the ones that are the more liquid include the:
		A)	South Korean won.
		B)	Taiwan dollar.
		C)	Philippine peso.
		D)	Indonesian rupiah.


15	SDRs are:
		A)	special drawing rights.
		B)	special deposit reserves.
		C)	supplemental deposit reserves.
		D)	supplemental deposit rights.


16	A difference between the European Monetary System and the snake is that the:
		A)	European Monetary System pertains only to European countries, whereas the snake included countries worldwide.
		B)	exchange rates of the European Monetary System are fixed, but those of the snake were flexible.
		C)	European Monetary System utilizes the European Monetary Cooperation Fund, whereas the snake did not.
		D)	none of the above.


17	The European commitment to proceed towards economic and monetary union was signed in 1991 in:
		A)	Paris, France.
		B)	London, England.
		C)	Frankfurt, Germany.
		D)	Maastricht, the Netherlands.


18	The European Currency Unit or ECU is:
		A)	the official currency of the European Union.
		B)	a weighted basket of currencies of European Union member countries.
		C)	a less popular currency than the SDR.
		D)	a retail currency.


19	In terms of the Maastricht Treaty, the transition from national currencies and the ECU to the euro began:
		A)	January 1, 1998.
		B)	January 1, 1999.
		C)	January 1, 2000
		D)	January 1, 2001.


20	Which of the following countries has not adopted the euro?
		A)	Great Britain.
		B)	Finland.
		C)	Italy.
		D)	Luxembourg.

2002 McGraw-Hill Higher Education
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