PLS-IR FINAL EXAM UPDATED ACTUAL QUESTIONS AND CORRECT ANSWERS

PLS-IR FINAL EXAM UPDATED ACTUAL QUESTIONS AND
CORRECT ANSWERS

Question:
1. According to some analysts, military power no longer will be the central focus of international
competition. Instead, which of the following will become the determining factor of the globe's future
destiny?
Answer:
Geo-economics

Question:
2. Which of the following is NOT an indicator of the globalization trend that began more than a century
ago?
Answer:
A succession change in the British monarchy

Question:
3. What term has been used to describe the multifaceted phenomenon that encompasses the development
of interconnected material relations, the increasing rapidity with which they take place, and the shift in
public perception of these changes?
Answer:
Globalization

Question:
4. What is the term for financial procedures used to calculate the value of currencies and credits when
capital is transferred across borders through trade, investment, foreign aid, and loans?
Answer:
d. The international monetary system

Question:
5. A corporation has been affected by which of the following phenomena when it shifts from competing
solely in a national market to earning and investing capital in the worldwide market?
Answer:
d. The globalization of finance

Question:
6. Arbitrage is a market that has grown 60 times faster than the value of world trade since 1973. It involves
the buying and selling of which of the following for profit based on fluctuations in their relative value?
Answer:
Currencies

Question:
7. Which of the following institutions is the most critical factor in allowing for global trade because it
provides stability and a predictable method for determining the value of sales and investments?

,Answer:
a. The international monetary system

Question:
8. Panama has pegged the value of its national currency, the balboa, to the American dollar: One Balboa
equals One American dollar. Which of the following terms does this situation illustrate?
Answer:
a. Fixed Exchange Rate

Question:
9. A government wishes to stimulate the economy by increasing the money supply. Which of the following
will most likely occur?
Answer:
Inflation

Question:
10. Rita believes that the Japanese yen will be worth more than it is now in three months, so she decides to
buy yen so she can sell it at a profit later on. How is Rita behaving?
Answer:
d. She is behaving as an arbitrage speculator.

Question:
11. What is the total amount of currency in circulation called?
Answer:
c. The money supply

Question:
12. At Bretton Woods, the United States and Britain reached a compromise that blended commercial
liberal preference for an open economy with mercantilist desire for active state involvement in their
domestic economies. What kind of liberalism is it known as?
Answer:
b. Embedded liberalism

Question:
13. Which of the following institutions was NOT formed to maintain the Liberal International Economic
Order (LIEO)?
Answer:
b. The Federal Reserve

Question:
14. The system devised by Bretton Woods worked because which of the following countries assumed the
role of hegemonic leadership with the support of others?
Answer:
c. The United States

Question:
15. Which of the following is an example of a speculative attack?

, Answer:
c. Investors anticipate that mass unemployment in Europe will lead to a decline in the euro's value, and as a
result, sell off large quantities of the currency.

Question:
16. Which institution was created to act as a stabilization fund for countries that adopted a fixed exchange
rate and needed to offset short-term balance-of-payment problems after World War II?
Answer:
a. The International Monetary Fund (IMF)

Question:
17. Because of the U.S. commitment to exchange gold for dollars at any time, the dollar became
universally accepted. Which of the following terms best describes how the American dollar is considered?
Answer:
c. A parallel currency

Question:
18. Which of the following economic concepts defined the gap between the amount of dollars in
circulation and the amount of dollars actually supported by gold holdings?
Answer:
a. Dollar overhang

Question:
19. In 1971, President Nixon announced that the U.S. would no longer convert dollars into gold, and that
market forces would determine currency values in a system based on which of the following?
Answer:
d. Floating exchange rates

Question:
20. What is the correct order of a financial crisis cycle, such as the one in the United States that came to a
head in 2008?
Answer:
c. Displacement, boom period, overtrading, and revulsion

Question:
21. During the "overtrading" stage of the U.S. housing crisis in 2008, the market for traditional mortgages
was oversaturated because everyone who was willing and able to purchase or refinance a home had done
so. However, due to a continued demand for securities, which of the following groups led banks to sell
risky mortgages?
Answer:
d. Subprime home buyers

Question:
22. Which country has a cash-only system and was considered the fifth most stable economy in the world
in 2009?
Answer:
Moldova