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Econ340 midterm II
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Questions in this quiz (19)
1A currency is said to be externally convertible when only nonresidents may convert it into foreign currency without limitations.
- ATrue
- BFalse
2According to the pragmatic nationalist view, FDI should only be undertaken if the benefits outweigh the costs.
- ATrue
- BFalse
3 In international trade, the risk of not getting paid for a product that is exported from one country to another is referred to as the foreign exchange risk.
- ATrue
- BFalse
4Several levels of economic integration are possible in theory. From most integrated to the least integrated they are area free trade area, a customs union, a common market, an economic union, and finally, a full political union.
- ATrue
- BFalse
5By limiting imports through the imposition of quotas, governments increase the attractiveness of FDI and licensing.
- ATrue
- BFalse
6While the move toward regional economic integration is generally seen as a good thing, some observers worry that it will lead to a world in which regoinal trade blocs compete against each other.
- ATrue
- BFalse
7FDI takes on two forms: greenfield investments and licensing.
- ATrue
- BFalse
8The case for fixed exchange rates rests on arguments about monetary discipline, limited speculation and uncertainty, and the lack of connection between the trade balance and exchange rates.
- ATrue
- BFalse
9The law of one price states that in competitive markets free of transportation costs and barriers to trade, identical products sold in different countries must sell for the same price when their price is expressed in terms of the same currency.
- ATrue
- BFalse
10A customs union eliminates trade barriers between member countries and adopts a common external trade policy.
- ATrue
- BFalse
11It is harder to establish a free trade and investment regime among a limited number of adjacent countries than among the world community.
- ATrue
- BFalse
12When a U.S. tourist in Edinburgh goes to a bank to convert her dollars into pounds, the exchange rate is the forward exchange rate.
- ATrue
- BFalse
13Three main benefits of inward FDI for a host country are:
- Athe resource-transfer e¤ect, the employment e¤ect, and the balance of payments e¤ect
- Bthe capital transfer e¤ect, the technology e¤ect, and the currency exchange e¤ect
- Cthe cultural awareness e¤ect, the technology e¤ect, and the balance of payments e¤ect
- D the resource-transfer e¤ect, the technology e¤ect, and the currency exchange e¤ect
14__________ analysis draws on economic theory to construct sophisticated econometric models for predicting exchange rate movements.
- Atechnical
- Bbasic
- Cfundamental
- Dcrucial
15The ___________ market school argues that forward exchange rates do the best possible job of forecasting future spot exchange rates, so investing in exchange rate forecasting services would be a waste of time and money.
- Aefficient
- Bclosed
- Cinefficient
- Dfree
16The _____________ of foreign direct investment refers to the amount of FDI undertaken over a given period (normally a year). The _________ of foreign direct investment refers to the total accumulated value of foreign-owned assets at any time.
- Aflow, stock
- Bstock, flow
- Cportfolio, current
- Dstockpile, portfolio
17The Purchasing Power Parity theory tells us that a country with a high in‡ation rate will see
- Aa depreciation in its currency value
- Ban appreciation in its currency value
- Cno change
- Deconomic stability as a result of high in‡ation
18_____________ occurs when high-cost domestic producers are replaced by low-cost producers. ____________ occurs when lower-cost external suppliers are replaced by higher-cost suppliers within the free trade area.
- A Trade qualification, Trade synergy
- BTrade synergy, Trade qualification
- CTrade diversion, Trade creation
- DTrade creation, Trade diversion
19Some countries try to hold the value of their currency within some range against an important reference currency. This is referred to as a:
- Adirty-float
- Bfree float
- Cpegged float
- Dfixed variable
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- Quiz on Econ340 midterm II, created by apull on 04/05/2015.
- Author
- apull
- Language
- English
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