International Financial Management 11th Edition Madura Test Bank
International Financial Management 11th Edition Madura Test Bank
International Financial Management 11th Edition Madura Test Bank
2. A high home inflation rate relative to other countries would ____ the home country's current account
balance, other things equal. A high growth in the home income level relative to other countries would
____ the home country's current account balance, other things equal.
a. increase; increase
b. increase; decrease
c. decrease; decrease
d. decrease; increase
ANS: C PTS: 1
3. If a country's government imposes a tariff on imported goods, that country's current account balance
will likely ____ (assuming no retaliation by other governments).
a. decrease
b. increase
c. remain unaffected
d. either A or C are possible
ANS: B PTS: 1
4. ____ purchases more U.S. exports than the other countries listed here.
a. Italy
b. Spain
c. Mexico
d. Canada
ANS: D PTS: 1
5. An increase in the current account deficit will place ____ pressure on the home currency value, other
things equal.
a. upward
b. downward
c. no
d. upward or downward (depending on the size of the deficit)
ANS: B PTS: 1
6. If the home currency begins to appreciate against other currencies, this should ____ the current
account balance, other things equal (assume that substitutes are readily available in the countries, and
that the prices charged by firms remain the same).
a. increase
b. have no impact on
c. reduce
d. all of the above are equally possible
ANS: C PTS: 1
© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted
in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10. Which of the following would likely have the least direct influence on a country's current account?
a. inflation.
b. national income.
c. exchange rates.
d. tariffs.
e. a tax on income earned from foreign stocks.
ANS: E PTS: 1
© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted
in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
ANS: B PTS: 1
13. The U.S. typically has a balance of trade surplus in its trade with ____.
a. China
b. Japan
c. A and B
d. none of the above
ANS: D PTS: 1
14. The North American Free Trade Agreement (NAFTA) increased restrictions on:
a. trade between Canada and Mexico.
b. trade between Canada and the U.S.
c. direct foreign investment in Mexico by U.S. firms.
d. none of the above.
ANS: D PTS: 1
15. According to the text, international trade (exports plus imports combined) as a percentage of GDP is:
a. higher in the U.S. than in European countries.
b. lower in the U.S. than in European countries.
c. higher in the U.S. than in about half the European countries, and lower in the U.S. than the
others.
d. about the same in the U.S. as in European countries.
ANS: B PTS: 1
16. The direct foreign investment positions by U.S. firms have generally ____ over time. Restrictions by
governments on direct foreign investment have generally ___ over time.
a. increased; increased
b. increased; decreased
c. decreased; decreased
d. decreased; increased
ANS: B PTS: 1
17. Which of the following countries purchases the largest amount of exports by U.S. firms?
a. Mexico
b. Japan
c. Canada
d. France
ANS: C PTS: 1
19. As a result of the European Union, restrictions on exports between ____ were reduced or eliminated.
a. member countries and the U.S.
b. member countries
c. member countries and European non-members
© 2012 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted
in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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