International Finance

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Exercise Questions for Mid-term Exam

1. Which of the following factors of production DO NOT flow freely between countries? A) Labors and Land
B) Financial capital
C) (Non-military) Technology
D) All of the above factors of production flow freely among countries.

2. 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

3. The post WWII international monetary agreement that was developed in 1944 is known as the ________. A) United Nations.
B) League of Nations.
C) Yalta Agreement.
D) Bretton Woods Agreement.

4. Which of the following led to the eventual demise of the fixed currency exchange rate regime worked out at Bretton Woods? A) Widely divergent national monetary and fiscal policies among member nations. B) Differential rates of inflation across member nations.

C) Several unexpected economic shocks to member nations.
D) all of the above

5. Which of the following correctly identifies exchange rate regimes from less fixed to more fixed? A) Independent floating, currency board arrangement, crawling pegs. B) Independent floating, currency board arrangement, managed float. C) Independent floating, crawling pegs, exchange arrangements with no separate legal tender. D) Exchange arrangements with no separate legal tender, currency board arrangement, crawling pegs.

6. Which of the following is NOT a major subaccount of the Balance of Payments? A) The financial account.
B) The accounts payable.
C) The capital account.
D) The current account.

7. The balance of payments as applied to a course in international finance may be defined as: A) the amount still owed by an exporting firm after...
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