AGB 302 Final Review pt 5 Exam
Questions with Complete Solutions
The movement toward regional economic integration been most successful in
________. - Answer-Europe
A(n) ________ has no barriers to trade between member countries, includes a common
external trade policy, and allows factors of production to move freely between members.
- Answer-Common Market
A(n) ________ entails even closer economic integration and cooperation than a
common market. - Answer-Economic Union
Linking neighboring countries economically and making them interdependent: - Answer-
creates incentives to increase political cooperation as well.
The ________ is primarily a consultative rather than legislative body. - Answer-
European Parliament
Three long-term EU members, Great Britain, ________, and Sweden, have not adopted
the euro. - Answer-Denmark
The ________ was established to increase multinational cooperation in view of the
economic rise of the Pacific nations and the growing interdependence within the region.
- Answer-Asia-Pacific Economic Cooperation
The emerging role of the ________ in competition policy suggests the EU is
increasingly willing and able to intervene and impose conditions on companies
proposing mergers and acquisitions. - Answer-European Comission
Country X and Country Y reach an agreement to boost bilateral trade. They agree to
remove all barriers to the trade of goods and services. They, however, are free to
determine their own trade policies with regard to nonmembers. Which level of economic
integration is this an example of? - Answer-A free trade area
Which feature of a common market differentiates it from a customs union? - Answer-
Ability of factors of production to move freely between members
Assuming the 30-day forward exchange rate was $1 = ×130 and the spot exchange rate
was $1 = ×120, the dollar is selling at a ________ on the 30-day forward market. -
Answer-Premium
Which of the following refers to the simultaneous purchase and sale of a given amount
of foreign exchange for two different value dates? - Answer-Currency swap
, ________ are exchange rates governing some specific future date foreign exchange
transactions. - Answer-Forward exchange rates
Assume that the current exchange rate is 1 = $1.50. If you exchange 1,000 euros for
dollars, you will receive ________. - Answer-$1,500
The ________ is the rate at which a foreign exchange dealer converts one currency into
another currency on a particular day. - Answer-Spot exchange rate
The short-term movement of funds from one currency to another in the hopes of
profiting from shifts in exchange rates is known as: - Answer-currency speculation
Assume that an American company today invests some of its spare cash in a Hungarian
money market account that will earn 8 percent for a period of two months. Which of the
following, if it happens during the next two months, would imply that the company will
earn less than 8 percent on its investment? - Answer-The dollar appreciates against the
Hungarian forint.
Which of the following is the most important foreign exchange trading center? - Answer-
London
If the demand for dollars outstrips its supply and if the supply of Japanese yen is greater
than the demand for it, what will happen? - Answer-The dollar will appreciate against
the yen
Assume that the law of one price holds. A shirt that retails for $120 in New York sells for
£60 in London. The exchange rate between the British pound and the dollar is £1 =
$1.50. Assuming away transportation costs and trade barriers, this creates a profit-
making opportunity called ________. - Answer-Arbitrage
Which feature of a common market differentiates it from a customs union? - Answer-
Ability of factors of production to move freely between members
The ________ is a global network of banks, brokers, and foreign exchange dealers
connected by a electronic communications system. - Answer-Foreign Exchange Market
The movement toward regional economic integration has been most successful in
________. - Answer-Europe
An exchange of U1 - $1.30 indicates that - Answer-one euro buys 1.30 dollars
Inflation occurs when - Answer-the quantity of money in circulation rises faster than the
stock of goods and services
Questions with Complete Solutions
The movement toward regional economic integration been most successful in
________. - Answer-Europe
A(n) ________ has no barriers to trade between member countries, includes a common
external trade policy, and allows factors of production to move freely between members.
- Answer-Common Market
A(n) ________ entails even closer economic integration and cooperation than a
common market. - Answer-Economic Union
Linking neighboring countries economically and making them interdependent: - Answer-
creates incentives to increase political cooperation as well.
The ________ is primarily a consultative rather than legislative body. - Answer-
European Parliament
Three long-term EU members, Great Britain, ________, and Sweden, have not adopted
the euro. - Answer-Denmark
The ________ was established to increase multinational cooperation in view of the
economic rise of the Pacific nations and the growing interdependence within the region.
- Answer-Asia-Pacific Economic Cooperation
The emerging role of the ________ in competition policy suggests the EU is
increasingly willing and able to intervene and impose conditions on companies
proposing mergers and acquisitions. - Answer-European Comission
Country X and Country Y reach an agreement to boost bilateral trade. They agree to
remove all barriers to the trade of goods and services. They, however, are free to
determine their own trade policies with regard to nonmembers. Which level of economic
integration is this an example of? - Answer-A free trade area
Which feature of a common market differentiates it from a customs union? - Answer-
Ability of factors of production to move freely between members
Assuming the 30-day forward exchange rate was $1 = ×130 and the spot exchange rate
was $1 = ×120, the dollar is selling at a ________ on the 30-day forward market. -
Answer-Premium
Which of the following refers to the simultaneous purchase and sale of a given amount
of foreign exchange for two different value dates? - Answer-Currency swap
, ________ are exchange rates governing some specific future date foreign exchange
transactions. - Answer-Forward exchange rates
Assume that the current exchange rate is 1 = $1.50. If you exchange 1,000 euros for
dollars, you will receive ________. - Answer-$1,500
The ________ is the rate at which a foreign exchange dealer converts one currency into
another currency on a particular day. - Answer-Spot exchange rate
The short-term movement of funds from one currency to another in the hopes of
profiting from shifts in exchange rates is known as: - Answer-currency speculation
Assume that an American company today invests some of its spare cash in a Hungarian
money market account that will earn 8 percent for a period of two months. Which of the
following, if it happens during the next two months, would imply that the company will
earn less than 8 percent on its investment? - Answer-The dollar appreciates against the
Hungarian forint.
Which of the following is the most important foreign exchange trading center? - Answer-
London
If the demand for dollars outstrips its supply and if the supply of Japanese yen is greater
than the demand for it, what will happen? - Answer-The dollar will appreciate against
the yen
Assume that the law of one price holds. A shirt that retails for $120 in New York sells for
£60 in London. The exchange rate between the British pound and the dollar is £1 =
$1.50. Assuming away transportation costs and trade barriers, this creates a profit-
making opportunity called ________. - Answer-Arbitrage
Which feature of a common market differentiates it from a customs union? - Answer-
Ability of factors of production to move freely between members
The ________ is a global network of banks, brokers, and foreign exchange dealers
connected by a electronic communications system. - Answer-Foreign Exchange Market
The movement toward regional economic integration has been most successful in
________. - Answer-Europe
An exchange of U1 - $1.30 indicates that - Answer-one euro buys 1.30 dollars
Inflation occurs when - Answer-the quantity of money in circulation rises faster than the
stock of goods and services
