Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Recently, the UK experienced an annual balance of trade representing a
__________.
a. | large surplus (exceeding £100 billion) | c. | level of zero | b. | small
surplus | d. | deficit |
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2.
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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) |
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3.
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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. |
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4.
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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. |
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5.
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The primary component of the current account is the:
a. | balance of trade. | c. | balance of capital market flows. | b. | balance of money
market flows. | d. | unilateral
transfers. |
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6.
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A General Agreement on Tariffs and Trade (GATT) accord in 1993 called
for:
a. | increased trade restrictions outside of North America. | b. | lower trade
restrictions around the world. | c. | uniform environmental standards around the
world. | d. | uniform worker health laws. |
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7.
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______________ is (are) income received by investors on foreign investments in
financial assets (securities).
a. | Portfolio income | c. | Unilateral transfers | b. | Direct foreign income | d. | Factor income |
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8.
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The World Bank's Multilateral Investment Guarantee Agency (MIGA):
a. | offers various forms of export insurance. | b. | offers various forms
of import insurance. | c. | offers various forms of exchange rate risk
insurance. | d. | provides loans to developing countries. | e. | offers various forms
of political risk insurance. |
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9.
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A weakening of the U.S. dollar with respect to the British pound would likely
reduce the U.S. exports to Britain and increase U.S. imports from Britain.
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10.
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Changes in country ownership of long-term and short-term assets are measured in
the balance of payments with the capital account.
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11.
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Direct foreign investment by UK.-based MNCs occurs primarily in the Bahamas and
Brazil.
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12.
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A tariff is a maximum limit on imports.
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