Question 1

In balance of payments accounting, a credit entry for the home country is

Accepted Answer

A credit entry in the balance of payments for the home country reflects an international transaction where foreigners make payments to residents of the home country. This could be due to exports of goods and services, income from investments abroad, or transfers.

Question 2

If the value of exports for a country is $35,500,000 and the value of imports is $35,000,000, the balance of trade can be described as

Accepted Answer

The balance of trade is in surplus because the value of exports ($35,500,000) exceeds the value of imports ($35,000,000) by $500,000, making it favorable.

Question 3

All of the following statements are explanations of the reason for short-term capital transfers from Country X to Country Y EXCEPT

Accepted Answer

Lower interest rates in Country Y would not typically motivate short-term capital transfers from Country X to Country Y. Investors generally seek higher interest rates for short-term investments, so lower interest rates in Country Y would be a deterrent, not a reason, for such transfers.

Question 4

Multinational firms face exposure to many different types of international risk. Which of the following is not a type of exposure?

Accepted Answer

Foreign economies are not a type of exposure.

Question 5

A firms expects to receive $20,000 from domestic operations and 20,000 British pounds (£) from a business in England. If the pound's value is $1.25, the expected total dollar cash flows are:

Accepted Answer

The firm expects to receive $20,000 from domestic operations and 20,000 British pounds from England. With the pound valued at $1.25, the conversion of 20,000 pounds to dollars is 20,000 * $1.25 = $25,000. Adding this to the $20,000 from domestic operations gives a total of $45,000.

Question 6

When an individual or firm in a particular country requests that a bank sell foreign exchange, the bank will probably

Accepted Answer

When an individual or firm in a particular country requests that a bank sell foreign exchange, the bank will probably call another domestic bank and arrange a purchase.

Question 7

All else equal and under a system of floating exchange rates, if a country enters a period of exceptionally strong growth,

Accepted Answer

The answer of All else equal and under a system...

Question 8

Which of the following would likely have the least direct influence on a country's current account?

Accepted Answer

Inflation primarily affects the price level within a country, which can indirectly influence the current account by making exports more or less competitive internationally. However, compared to national income, exchange rates, and tariffs, which have more direct and immediate impacts on the balance of trade (a major component of the current account), inflation's influence is generally less direct.

Question 9

Major functions of 'IMF' are

Accepted Answer

The answer of Major functions of 'IMF' are
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Question 10

International Monetary Fund is classified as

Accepted Answer

The answer of International Monetary Fund is classified as
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Question 11

International Monetary Fund formal existence came into being in

Accepted Answer

The International Monetary Fund (IMF) formally came into existence on December 27, 1945.

Question 12

International Monetary Fund is headquartered in

Accepted Answer

The answer of International Monetary Fund is headquartered in
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Question 13

How does the IMF meet its primary objective?

Accepted Answer

The answer of How does the IMF meet its primary...

Question 14

The eurocurrency market did not develop until the late 1950s because:

Accepted Answer

European currencies were only convertible for non-residents before 1958.

Quiz 1: International Finance: Monetary Policy