My AGBM 338 Exam 2 Guide Questions
with complete solution
One advantage to the U.S. of a strong (appreciating) U.S. dollar is:
a. U.S. exporters find it easier to compete on price abroad
b. Tourists from other countries enjoy lower prices in the U.S., encouraging
tourism
c. U.S. consumers benefit from low prices on imports
d. U.S. companies face less competitive pressure to keep prices low - correct
answer ✔c. U.S. consumers benefit from low prices on imports
Which of the following is not a classical trade theory?
a. Mercantilism
b. Absolute advantage
c. Comparative advantage
d. Product life cycle
e. Factor endowment - correct answer ✔d. Product life cycle
A method of managing operating exposure to exchange rate risk is:
a. Shifting business out of markets in which exchange rate trends are
unfavorable
b. Adjusting prices in response to exchange rate movements
c. Diversifying operations across markets with different exchange rate risks
d. All of the above
e. None of the above - correct answer ✔d. All of the above
Countries with floating exchange rate systems:
, a. Leave their exchange rates entirely to the market
b. Fix their exchange rates to the U.S. dollar
c. Still influence their exchange rates through policies such as interest rates
and taxes
d. Actively manage their exchange rates through currency interventions -
correct answer ✔c. Still influence their exchange rates through policies such
as interest rates and taxes
A compound tariff is a type of tariff that is:
a. An amount per unit of the good (e.g. $10 per ton)
b. A percentage of the price of the good (e.g. 10%)
c. An amount per unit of the good plus a percentage of the good's price
d. The difference between the world market price and a government-set
domestic price - correct answer ✔c. An amount per unit of the good plus a
percentage of the good's price
A country has an absolute advantage in a good if it can produce that good:
a. At a lower opportunity cost than in other countries
b. With fewer inputs per unit of output than other countries
c. In larger volumes than other countries
d. At a higher level of quality than other countries - correct answer ✔b. With
fewer inputs per unit of output than other countries
The three types of exposure to exchange rate risk covered in this course are:
a. Forward, futures, and options
b. Shifting, sharing, and shirking
c. Transaction, translation, and operating
with complete solution
One advantage to the U.S. of a strong (appreciating) U.S. dollar is:
a. U.S. exporters find it easier to compete on price abroad
b. Tourists from other countries enjoy lower prices in the U.S., encouraging
tourism
c. U.S. consumers benefit from low prices on imports
d. U.S. companies face less competitive pressure to keep prices low - correct
answer ✔c. U.S. consumers benefit from low prices on imports
Which of the following is not a classical trade theory?
a. Mercantilism
b. Absolute advantage
c. Comparative advantage
d. Product life cycle
e. Factor endowment - correct answer ✔d. Product life cycle
A method of managing operating exposure to exchange rate risk is:
a. Shifting business out of markets in which exchange rate trends are
unfavorable
b. Adjusting prices in response to exchange rate movements
c. Diversifying operations across markets with different exchange rate risks
d. All of the above
e. None of the above - correct answer ✔d. All of the above
Countries with floating exchange rate systems:
, a. Leave their exchange rates entirely to the market
b. Fix their exchange rates to the U.S. dollar
c. Still influence their exchange rates through policies such as interest rates
and taxes
d. Actively manage their exchange rates through currency interventions -
correct answer ✔c. Still influence their exchange rates through policies such
as interest rates and taxes
A compound tariff is a type of tariff that is:
a. An amount per unit of the good (e.g. $10 per ton)
b. A percentage of the price of the good (e.g. 10%)
c. An amount per unit of the good plus a percentage of the good's price
d. The difference between the world market price and a government-set
domestic price - correct answer ✔c. An amount per unit of the good plus a
percentage of the good's price
A country has an absolute advantage in a good if it can produce that good:
a. At a lower opportunity cost than in other countries
b. With fewer inputs per unit of output than other countries
c. In larger volumes than other countries
d. At a higher level of quality than other countries - correct answer ✔b. With
fewer inputs per unit of output than other countries
The three types of exposure to exchange rate risk covered in this course are:
a. Forward, futures, and options
b. Shifting, sharing, and shirking
c. Transaction, translation, and operating
