Midterm Exam
Multiple Choice Questions (5 Points Each):
Q. 1 Under the gold standard of currency exchange that existed from 1879 to 1914, an ounce of gold cost $20.67 in U.S. dollars and £4.2474 in British pounds. Therefore, the exchange rate of pounds per dollar under this fixed exchange regime was (a) £4.8665/$. (b) £0.2055/$. (c) always changing because the price of gold was always changing. (d) unknown because there is not enough information to answer this question.
Answer: B
Q. 2 Which of the following investment strategies will allow me to make a profit if I anticipate that the value of the Euro, a currency that I do not own, is going to fall over the next 90 days and I am correct in my prediction? (a) Sell Euros short. (b) Buy Euros short. (c) Sell dollars short. (d) Buy Euros long.
Answer: A
Q. 3 In January 2002, the Argentine Peso changed in value from Peso1.00/$ to Peso1.40/$, thus, the Argentine Peso ___________ against the U.S. dollar. (a) strengthened (b) weakened (c) remained neutral (d) All of the above
Answer: B
Q. 4 Which of the following is NOT part of the Financial Account of the BOP? (a) Net foreign direct investment. (b) Net imports/exports of services. (c) Net portfolio investment. (d) Other Financial items.
Answer: B
Q. 5 The ___________ includes all international economic transactions with income or payment flows occurring within the year. (a) capital account (b) current account (c) financial account (d) IMF account
Answer: B
Q. 6 Anaconda Copper Inc. created a subsidiary in Chile last year to mine copper ore. The proportion of net income paid back to the parent company as a dividend would be recorded in the current account subcategory of _______________. (a) services trade (b) income trade (c) goods trade (d) current transfers
Answer: B
Q. 7
Q. 1 Under the gold standard of currency exchange that existed from 1879 to 1914, an ounce of gold cost $20.67 in U.S. dollars and £4.2474 in British pounds. Therefore, the exchange rate of pounds per dollar under this fixed exchange regime was (a) £4.8665/$. (b) £0.2055/$. (c) always changing because the price of gold was always changing. (d) unknown because there is not enough information to answer this question.
Answer: B
Q. 2 Which of the following investment strategies will allow me to make a profit if I anticipate that the value of the Euro, a currency that I do not own, is going to fall over the next 90 days and I am correct in my prediction? (a) Sell Euros short. (b) Buy Euros short. (c) Sell dollars short. (d) Buy Euros long.
Answer: A
Q. 3 In January 2002, the Argentine Peso changed in value from Peso1.00/$ to Peso1.40/$, thus, the Argentine Peso ___________ against the U.S. dollar. (a) strengthened (b) weakened (c) remained neutral (d) All of the above
Answer: B
Q. 4 Which of the following is NOT part of the Financial Account of the BOP? (a) Net foreign direct investment. (b) Net imports/exports of services. (c) Net portfolio investment. (d) Other Financial items.
Answer: B
Q. 5 The ___________ includes all international economic transactions with income or payment flows occurring within the year. (a) capital account (b) current account (c) financial account (d) IMF account
Answer: B
Q. 6 Anaconda Copper Inc. created a subsidiary in Chile last year to mine copper ore. The proportion of net income paid back to the parent company as a dividend would be recorded in the current account subcategory of _______________. (a) services trade (b) income trade (c) goods trade (d) current transfers
Answer: B
Q. 7