Question 1

In 2000, the U.S. balance on goods and services deficit stands at about $350 billion.

Accepted Answer

In 2000, the U.S. balance on goods and services (trade deficit) did indeed stand at approximately $350 billion, reflecting the value by which imports of goods and services exceeded exports.

Question 2

In and is exported from the United States exceeded service pours into the United States by 42 billion.

Accepted Answer

The statement seems to imply that the value of goods exported from the United States exceeded the value of services imported into the United States by $42 billion, which is plausible given the context of trade balances where goods and services are often measured separately. However, without specific data or a reference year, it's important to note that trade balances can fluctuate annually.

Question 3

A nation should acquire goods and services from those sources - foreign or domestic - which result in the lowest cost of its own resources. The foregoing is a statement of the Principle of _____
A) Minimum Resource Cost
B) Diminishing Returns
C) Operating Resource Leverage
D) Comparative Advantage
E) International Specialization
F) None of the above

Accepted Answer

The principle described is the Principle of Comparative Advantage, which suggests that countries should specialize in producing goods for which they have a lower opportunity cost and trade for others, thereby maximizing economic efficiency and resource utilization.

Question 4

The currency exchange rate between euros (€) and pounds (£) is €/£ = 1.500 or € 1.50/£. What is the £/€?
A) £ 0.67/€
B) £ 1.50/€
C) £ 3.0/€
D) £ 1.33/€
E) None of the above

Accepted Answer

To find the £/€ rate, take the reciprocal of the €/£ rate: 1 / 1.50 = 0.6667, which rounds to £ 0.67/€.

Question 5

The prices of currency futures contracts traded on an exchange are normally quoted in terms of:
A) U.S. dollars
B) British pounds
C) Japanese yen
D) Canadian dollars
E) SDRs

Accepted Answer

Currency futures contracts are typically quoted in the currency of the underlying asset. In this case, the underlying asset is a currency, so the futures contract will be quoted in the currency of that currency.

Question 6

The Euro fell against the U.S. dollar in international markets, at least during its earliest period of international trading, probably because
A)Observers had believed all along that the Euro would not be able to challenge the U.S. dollar for global leadership as an international reserve currency
B) Several European economies, including Germany, weakened shortly after the Euro appeared, such that inflation began to gather momentum
C) The European Central Bank did not appear to be interested in establishing for itself a strong international leadership position, at least initially
D) B and C only
E) A, B and C

Accepted Answer

The Euro's initial fall against the U.S. dollar was likely due to economic weaknesses in European countries like Germany and the European Central Bank's lack of initial strong international leadership.

Question 7

The United States can consume more than it producers, provided _____________, such as, by issuing
Government and private securities, to finance the consumption.
A) It borrows from Social Security
B) It borrows from the United States trade Representative
C) It borrows from overseas
D) Establishes a payment plan
E) None of the above

Accepted Answer

The United States can consume more than it produces by borrowing from overseas, including from foreign governments, institutions, and investors. This is often done through the issuance of government and private securities.

Question 8

Please explain what is meant by the term balance of payments. Describe and list the principal components of a nation's balance-of -payments accounts.

Accepted Answer

The answer of Please explain what is meant by the...

Question 9

Current Account - a component of the BOP; it includes the merchandise trade balance, service balance, income receipts and payments and unilateral current transfers.

Accepted Answer

The answer of Current Account - a component of the...

Question 10

Please describe and then discuss the major trends that have occurred in the following segments of the United States' balance-of-payments accounts in recent years.

Accepted Answer

The answer of Please describe and then discuss the major...

Question 11

Please explain the meaning of currency risk. How does currency risk affect exporters, importers and investors active in the international financial marketplace?

Accepted Answer

The answer of Please explain the meaning of currency risk....

Question 12

Why was the gold standard developed _____ What problems did it appear to solve and what problems did it create _____ What exactly is the difference between the gold standard and the gold exchange standard?

Accepted Answer

The answer of Why was the gold standard developed _____...

Question 13

When and where was the so-called modified exchange standard created _____ Explain how this

Accepted Answer

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Question 14

The international monetary system we have today has often been labeled the floating currency standard. Briefly explain what this term means in today's world. Can you anticipate any problems that might emerge with this standard for handling currency values and currency risk?

Accepted Answer

The answer of The international monetary system we have today...

Question 15

What exactly are SDRs and what are they for?

Accepted Answer

The answer of What exactly are SDRs and what are...

Question 16

Why do you think the U.S. dollar is such an important currency within the international financial system _____ Is the dollar's importance around the globe a matter of history, resources, economic strength, cultural values or what?

Accepted Answer

The answer of Why do you think the U.S. dollar...

Question 17

What are the principal factors affecting the value of any particular foreign currency in the international exchange markets?

Accepted Answer

The answer of What are the principal factors affecting the...

Question 18

Distinguish between the spot and forward markets for foreign currencies. Why is it necessary to have two markets rather than one?

Accepted Answer

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Question 19

What exactly are the advantages of a hedged position in one or more foreign currencies _____ What about the disadvantages (if any)?

Accepted Answer

The answer of What exactly are the advantages of a...

Question 20

What is a buying hedge in currency futures _____ A selling hedge _____ Under what circumstances is each of these hedges likely to be employed?

Accepted Answer

The answer of What is a buying hedge in currency...

Quiz 23: International Transactions and Currency Values

In 2000, the U.S. balance on goods and services deficit stands at about $350 billion.

In and is exported from the United States exceeded service pours into the United States by 42 billion.

A nation should acquire goods and services from those sources - foreign or domestic - which result in the lowest cost of its own resources. The foregoing is a statement of the Principle of _____

The currency exchange rate between euros (€) and pounds (£) is €/£ = 1.500 or € 1.50/£. What is the £/€?

The prices of currency futures contracts traded on an exchange are normally quoted in terms of:

The Euro fell against the U.S. dollar in international markets, at least during its earliest period of international trading, probably because

The United States can consume more than it producers, provided _____________, such as, by issuing Government and private securities, to finance the consumption.