International Business Environment Questions

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PART 1 C

International Business Environment

94 Questions

[1] Source: CMA 0676 1-34

Which of the following economic policies would not tend to

correct a balance of payments deficit in the U.S.?

A. Increase productivity in the manufacturing of U.S.

exports.

B. More effective use of monetary and fiscal policies

to reduce inflation.

C. A redistribution of economic aid and mutual

defense burdens toward western European countries.

D. Increase value of U.S. currency in relation to

foreign currencies.

[2] Source: CMA 0680 1-17

The value of the U.S. dollar in relation to other foreign

currencies is

A. Determined directly by the price of gold because

the value of the U.S. dollar is tied to the price of gold.

B. Set by the U.S. government in consultation with

other foreign governments.

C. Set along with the value of other currencies held

by the International Monetary Fund.

D. Determined by the forces of supply and demand

on the foreign exchange markets.

[3] Source: CMA 0680 1-20

When the U.S. dollar is expected to rise in value against

foreign currencies, a U.S. company with foreign currency

denominated receivables and payables should

A. Slow down collections and speed up payments.

B. Slow down collections and slow down payments.

C. Speed up collections and speed up payments.

D. Speed up collections and slow down payments.

[4] Source: CMA 1281 1-12

If a country has only two factors of production, labor and

capital, and it has a relative abundance of capital, the

country will tend to

A. Import capital-intensive goods and export

labor-intensive goods.

B. Refrain from trading owing to the abundance of

capital.

C. Export capital-intensive goods and import

labor-intensive goods.

D. Place an embargo on the export of

capital-intensive goods.

[5] Source: CMA 1281 1-16

In most recent years, the U.S. balance of payments has

registered a deficit. This balance of payments deficit is a

measure of the excess of

A. Exports over imports.

B. Imports over exports.

C. Imports, private capital outflows, grants, and

remittances over exports and private capital inflows.

D. Goods imports over services imports.

[6] Source: CMA 0682 1-12

Of the following transactions, the one that would result in a

debit entry in the U.S. balance of payments account is the

A. Receipt of dividends by an American corporation

from its German subsidiary.

B. Buying of IBM shares by a Kuwaiti investor.

C. U.S. export of military equipment to Saudi Arabia.

D. Expenditure of a U.S. resident vacationing in

France.

[7] Source: CMA 0682 1-13

Which one of the following transactions would result in a

credit entry in the U.S. balance of payments account?

A. A New York bank pays $5,000 in interest to

foreigners.

B. Volkswagen's U.S. subsidiary remits a dividend of

$1 million to its parent company in Germany.

C. A U.S. exporter buys marine insurance from a

British insurance company.

D. An Iowa farmer exports grain to Turkey.

[8] Source: CMA 1282 1-12

One may characterize the current international monetary

system developed by the industrialized countries as a

A. Clean float. Freely floating exchange rates are

determined solely by the forces of demand and

supply.

B. Managed or dirty float. Central banks intervene in

the foreign exchange market to influence the

exchange rates.

C. Stable-rate system.

D. Gold-based system.

[9] Source: CMA 1282 1-13

An overvalued currency can be considered as

A. A tax on exports and a subsidy to imports.

B. A tax on imports and a subsidy to exports.

C. A tax on both exports and imports.

D. A subsidy to both exports and imports.

[10] Source: CMA 1282 1-14

Given a spot rate of $1.8655 and a 90-day forward rate of

$1.8723, the pound sterling in the forward market is

A. Being quoted at a premium.

B. Being quoted at a discount.

C. Undervalued.

D. Overvalued.

[11] Source: CMA 1282 1-17

Disregarding demand for its factors of production, a

country's comparative advantage will lie in those goods

whose production requires comparatively large amounts of

its

A. Relatively scarce resources.

B. Relatively abundant resources.

C. Natural resources.

D. Capital.

[12] Source: CMA 1282 1-18

The difference between tariffs and quotas is

A. That the tariff is expressed as a percentage of

price and the quota is expressed as an amount per

unit.

B. That a tariff limits price and a quota limits

quantities.

C. That a tariff is a tax and a quota is a subsidy.

D. That a tariff is a duty, whereas a quota is a

limitation on quantities.

[13] Source: CMA 1282 1-19

A voluntary export quota is

A. A form of unilateral import quota.

B. Meaningless because of its voluntary nature.

C. A form of import quota negotiated with a country.

D. A violation of the World Trade Organization.

[14] Source: CMA 1285 1-25

The most significant advantage gained by a nation that

participates in international trade is the

A. Higher rates of dividend and interest income

received by its citizens and firms from their foreign

investments.

B. Greater availability of goods and services in

domestic markets.

C. Enlarged revenues accruing to its national

government from the imposition of import duties.

D. Increased profits and wages earned by firms and

workers, respectively, in export industries.

[15] Source: CMA 1285 1-26

The appropriate remedy for the dumping of products by a

foreign firm in the U.S. market would be to

A. Pass "buy American" laws.

B. Impose restrictions on U.S. exports to the

offending country.

C. Impose countervailing duties.

D. Deny "most favored nation" treatment to exporters

of the offending country.

[16] Source: CMA 1285 1-27

Trade restrictions such as tariffs and import quotas

represent

A. An attempt by the government to bring about a

more equitable distribution of income.

B. An increase in the unit costs of domestic

producers who compete with foreign firms.

C. A subsidy paid by domestic consumers to foreign

producers of the duty-burdened commodities.

D. A subsidy paid by domestic consumers to

domestic producers of the duty-burdened

commodities.

[17] Source: CMA 1285 1-28

The creation of a regional economic bloc of trading nations

such as the European Union (EU),

A. Discourages foreign investment by nonmember

multinational companies.

B. Encourages trade between the member nations

and nonmember nations.

C. Requires the adoption of a common monetary

unit.

D. Discriminates economically against nonmember

nations.

[18] Source: CMA 1285 1-30

The dominant reason countries devalue their currencies is

A. Improve the balance of payments.

B. Discourage exports without having to impose

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PART 1 C International Business Environment 94 Questions [1] Source: CMA 0676 1-34 Which of the following economic policies would not tend to correct a balance of payments deficit in the U.S.? A. Increase productivity in the manufacturing of U.S. exports. B. More effective use of monetary and fiscal policies to reduce inflation. C. A redistribution of economic aid and mutual defense burdens toward western European countries. D. Increase value of U.S. currency in relation to foreign currencies. [2] Source: CMA 0680 1-17 The value of the U.S. dollar in relation to other foreign currencies is A. Determined directly by the price of gold because the value of the U.S. dollar is tied to the price of gold. B. Set by the U.S. government in consultation with other foreign governments. C. Set along with the value of other currencies held by the International Monetary Fund. D. Determined by the forces of supply and demand on the foreign exchange markets. [3] Source: CMA 0680 1-20 When the U.S. dollar is expected to rise in value against foreign currencies, a U.S. company with foreign currency denominated receivables and payables should A. Slow down collections and speed up payments. B. Slow down collections and slow down payments. C. Speed up collections and speed up payments. D. Speed up collections and slow down payments. [4] Source: CMA 1281 1-12 If a country has only two factors of production, labor and capital, and it has a relative abundance of capital, the country will tend to ...
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