Deck 9: Global Finance and Business

Question 1

Though private speculators may lose out because of it,a successful intervention in __________ can make money for governments.

A)stock markets
B)free markets
C)large economies
D)global currency markets

Answer 1

D

Question 2

A hard currency can be __________ leading world currencies.

A)converted into
B)difficult to convert into
C)devalued against
D)combined with

Answer 2

A

Question 3

On average,what has the annual inflation rate of the industrialized Western states been over the past three decades?

A)around 15 percent
B)around 50 percent
C)around 5 percent
D)around 10 percent

Answer 3

C

Question 4

What type of exchange rate system is typically utilized in the world today?

A)pegged rate system
B)U)S.dollar system
C)planned system
D)floating rate system

Question 5

The system established after World War II to manage the world economy was the __________.

A)World Trade Organization
B)Bretton Woods system
C)International Monetary Fund
D)World Bank

Question 6

Many states will bridge the gap between floating and fixed exchange rates by periodically intervening in the currency markets,usually to promote stability.This type of intervention is called a(n)__________ system.

A)interventionist
B)periodic float
C)primary float
D)managed float

Question 7

The largest default in IMF history was made by __________ in 2003.

A)China
B)Liberia
C)Argentina
D)Zimbabwe

Question 8

An exchange rate is the rate at which a state's __________ can be exchanged for a different state's __________.

A)currency,debt
B)currency,currency
C)debt,currency
D)goods,goods

Question 9

How does the IMF assist countries in balancing their economies?

A)by providing loans for particular development projects
B)by allowing states to borrow against their deposits of financial reserves and repay the loans in subsequent years
C)by entering currency markets to support faltering currencies
D)by regulating the amount of currencies available to speculators

Question 10

__________ exchange rates exist when a government establishes official rates of exchange for its currency,whereas __________ exchange rates exist when exchange rates are determined by global currency markets.

A)Managed float,fixed
B)Fixed,floating
C)Floating,hard
D)Hard,managed float

Question 11

Under President Nixon,the international economic system moved from __________ exchange rates to __________ exchange rates.

A)managed float,floating
B)floating,managed float
C)fixed,floating
D)floating,fixed

Question 12

For centuries,the global currency that had value in all countries was __________.

A)the U.S.dollar
B)the British pound
C)precious metals
D)the SDR

Question 13

The interest rate the government charges when it loans money to private banks is known as the __________ rate.

A)central bank
B)government
C)reserve
D)discount

Question 14

The pillars of the international monetary system continue to be the __________ and the World Bank.

A)International Monetary Fund
B)International Trade Organization
C)Organization of Petroleum Exporting Countries
D)World Trade Organization

Question 15

The IMF and the World Bank use a __________ system.

A)one-nation,one-vote
B)consensus voting
C)weighted voting
D)hegemonic voting

Question 16

Central banks in industrialized countries maintain the value of the state's currency by limiting the amount of __________ and by preventing high inflation.

A)gold on the market
B)money printed
C)credit
D)distribution

Question 17

The principle determinant of the long-term value of a state's currency is __________.

A)speculation in global currency markets
B)its fiscal health during economic crises
C)whether it incurs a trade surplus or deficit
D)the supply and demand of the currency

Question 18

The IMF established __________ as the replacement for gold as a world standard.

A)the Special Drawing Right
B)silver
C)floating exchange rates
D)international exchange coins

Question 19

If a national currency is convertible,it means that __________.

A)it has flexible values
B)it can be exchanged for another currency
C)citizens can use several different currencies to purchase domestic goods
D)its value floats between upper and lower limits

Question 20

International monetary relations immediately after World War II were based on __________.

A)floating exchange rates
B)fixed exchange rates
C)the silver standard
D)managed exchange rates

Question 21

Which of the following is a reason states go into debt?

A)due to a trade deficit
B)due to bad investments
C)borrowing to pay for government budget surpluses
D)to create greater standing wealth

Question 22

How does the International Monetary Fund (IMF)compare with the World Bank?

A)The IMF works to balance international payments,whereas the World Bank works to balance national accounts.
B)The IMF coordinates international currency exchange and the balance of international payments,whereas the World Bank provides development loans to developing countries.
C)The IMF has states as members,whereas the World Bank has regional banks such as the European Bank for Reconstruction and Development as members.
D)The IMF prefers the operation of multinational corporations across borders,whereas the World Bank prefers the operation of national companies across borders.

Question 23

Buying stocks and bonds in a foreign country is an example of __________.

A)remittances
B)government transactions
C)foreign direct investment
D)indirect portfolio investment

Question 24

The 1997 Asian crisis started when currency speculators began selling off the currencies of __________.

A)China,Malaysia,the Philippines,and Taiwan
B)Thailand,Japan,Hong Kong,and Malaysia
C)Indonesia,Malaysia,Thailand,and the Philippines
D)Japan,China,Taiwan,and South Korea

Question 25

The __________ is basically the balance of trade,whereas __________ are foreign investments in and by a country.

A)capital account,changes in currency reserves
B)current account,capital flows
C)trade account,remittances
D)national account,government investments

Question 26

Capital goods are products that can be used as __________ for further production.

A)extractions
B)loans
C)inputs
D)standing

Question 27

There is lingering poverty in much of the global South.This is despite the IMF and World Bank both attempting to promote __________ in poor countries,as part of each of their missions.

A)state rebuilding
B)economic integration
C)global unity
D)economic development

Question 28

In the first three weeks of 2009,after the price of its main export,oil,plummeted,Russia depreciated its ruble six times.This is an example of the principle of __________.

A)currency devaluation
B)currency easing
C)appreciated currency
D)reduced inflation

Question 29

Inflation in __________ was lower than in __________ in 2014.

A)China,the industrialized West
B)South Asia,the Middle East
C)Latin America,Africa
D)Africa,Russia/CIS

Question 30

In recent years,China has maintained a low currency value,relative to other states,in order to __________.

A)promote exports and boost export-related industries
B)force an increase in domestic consumption
C)improve trade relations with Western states
D)improve trade relations with Southeast Asian states

Question 31

Because the U.S.economy no longer held the overwhelming dominance it had in 1944,the United States dropped the __________ in the 1970s.

A)gold economy
B)platinum standard
C)gold standard
D)exchange rate

Question 32

With respect to the decisions of the Federal Reserve,__________.

A)if the Fed allows too much money into circulation,deflation will result
B)other states' monetary policies do not affect decisions of the Fed
C)decisions about interest rates can affect foreign investment
D)decisions are generally dependent upon the political process

Question 33

What is the common interest of states with respect to currencies?

A)a low value so that all states can import more
B)stability in exchange rates for the purpose of international transactions
C)a high value so that all states can export more
D)a high value so that governments can make money as their currency devalues

Question 34

How is monetary policy distinguished from fiscal policy?

A)Monetary policy is set by national governments,whereas fiscal policy is set by the World Bank.
B)Monetary policy can cause inflation,whereas fiscal policy contributes to standing wealth.
C)Monetary policy is government policy about printing and circulating money,whereas fiscal policy is government policy about spending and taxation.
D)Monetary policy is the favored approach of the United States to managing the economy,whereas fiscal policy is the favored approach of European countries.

Question 35

Which statement is a consequence of the globalization and integration of financial markets?

A)Banks' investment portfolios often contain millions of dollars in assets located in other countries.
B)Economic crises are less common and typically less severe than they used to be.
C)Investors and businesses are denied access to overseas markets.
D)It fails to provide a better return on investment for investors.

Question 36

With respect to its position in the international economy,the United States __________.

A)has had a trade deficit since the early 1980s
B)is as strong relative to other countries as it was in the 1950s
C)has had high unemployment since the mid-1990s
D)was once the world's leading debtor state,but is now the leading lender state

Question 37

Building a factory in a foreign country is an example of __________.

A)remittances
B)government transactions
C)foreign direct investment
D)indirect portfolio investment

Question 38

What is the approximate amount of the United States' national debt today?

A)$1 trillion
B)$5 trillion
C)$18 trillion
D)$36 trillion

Question 39

The Bretton Woods system __________.

A)was closely tied to Mexican leadership
B)was based on a mixture of economic liberalism and protectionism
C)included the "gold standard"
D)was designed to diffuse global economic unity

Question 40

The summary of a state's financial transactions with the rest of the world,including trade,foreign aid,and the remittance of income by citizens employed abroad,is known as a __________.

A)balance of payments
B)gross national product
C)merchandise trade
D)capital flow

Question 41

Governments often prefer a weak value for their own currency.

Question 42

Except for 19 states that share the euro,each state uses its own currency,which has no inherent value.

Question 43

In attempting to join the world capitalist economy in 1991,Russia and Eastern European countries faced which challenge?

A)integration into the national maritime system
B)devaluing their currencies to curb inflation
C)attracting foreign investment
D)creating instability in currency markets

Question 44

A state in which a foreign MNC operates is called the __________ country,whereas the state where the MNC has its headquarters is called the __________ country.

A)subsidiary,headquarters
B)host,home
C)home,host
D)investor,investing

Question 45

Multinational corporations try to maneuver to obtain positive terms and search for states with stable currencies and political environments in which to make direct investments.

Question 46

International alliances between __________ headquartered in different states are becoming more frequent.

A)SDRs
B)NGOs
C)IGOs
D)MNCs

Question 47

Though limited in efforts to do so,governments cooperate to manage the fluctuations of exchange rates.

Question 48

International debt results from a protracted imbalance in capital flows-a state borrowing more than it lends-to cover a chronic trade deficit or government budget deficit.

Question 49

MNCs and the countries in which they invest often come into conflict over __________.

A)inflation rates
B)taxation and the method of transportation of goods to and from the country
C)monetary policy and trade policy
D)fiscal policy and the language to be used in negotiations

Question 50

The targets of most foreign direct investment in the world are __________.

A)Western industrialized states
B)OPEC members
C)states in the global South
D)Asia and the Pacific

Question 51

Which statement is true about multinational corporations in international political relations?

A)They act as agents of intergovernmental organizations.
B)National governments act as agents of NGOs.
C)They are "citizens of the world," beholden to no government.
D)Their actions frequently reflect states' national interests.

Question 52

What is the international business environment most conducive to the creation of wealth by MNCs?

A)rapidly changing conditions so that no one government can exercise control over an MNC
B)countries being divided into rival trading blocs so that MNCs can take advantage of bargaining
C)stable international security so investments are not threatened
D)policies of mercantilism

Question 53

An example of a U.S.-based MNC bending to pressure from the U.S.government regarding foreign direct investment is __________.

A)Chevron in Angola
B)Unocal in Afghanistan
C)TotalFinaElf in Nigeria
D)Conoco in Iran

Question 54

The most important types of multinational corporations are __________ corporations.

A)financial
B)industrial
C)service
D)agricultural

Question 55

How does foreign direct investment compare with indirect portfolio investment?

A)Foreign direct investment involves investments such as owning a factory,company,or real estate in a foreign country,whereas indirect portfolio investment involves such things as buying stocks and bonds or making loans to a foreign company.
B)Foreign direct investment involves investments such as owning a factory,company,or real estate in a foreign country,whereas indirect portfolio investment involves such things as taking loans from a foreign company.
C)Foreign direct investment involves actions such as trading in the currency of a foreign country,whereas indirect portfolio investment involves such things as buying stocks and bonds or making loans to a foreign company.
D)Foreign direct investment involves making loans to a foreign company,whereas indirect portfolio investment involves taking loans from a foreign company.

Question 56

Generally,multinational corporations support stable international security relations and promote policies favorable to business.

Question 57

Reserves of hard currency and gold maintained by states back a national currency and cover short-term imbalances in international financial flows.

Question 58

The rise of the dollar-gold standard in 1971 reflected the decline of America's preeminent financial position.

Question 59

The largest multinational corporations are based in developing states.

Question 60

From 1945 to 1971,the World Bank and IMF worked with states' central banks to maintain stable international monetary relations by pegging state currencies to the U.S.dollar and the dollar to gold.

Question 61

The relative value of __________ can be set by fixed exchange rates.

Question 62

Use of the gold standard was an example of a(n)__________ exchange rate.

Question 63

Foreign direct investment in Russia,Bolivia,and Venezuela dropped significantly after the host country __________ foreign assets.

Question 64

The __________ is the interest rate that the government charges when it loans money to private banks.

Question 65

Some multinational corporations sell goods,whereas others,such as McDonald's,sell __________.

Question 66

Industrialized states turn __________ policy over to semiautonomous central banks to ensure discipline in printing money.

Question 67

As it pursued the complicated transition from communism to capitalism,Russia's position declined drastically,and it is still not fully integrated into the __________.

Question 68

__________ investments involve tangible goods,unlike portfolio investments.

Question 69

In an effort to keep track of the flow of money in and out of states,the __________ operates a system of national accounts.