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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.

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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
to
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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