BUSI 3250 AUBURN FINAL TEST 2026
QUESTIONS WITH CORRECT ANSWERS
GRADED A+
◍ Currency crisis:.
Answer: when a speculative attack on the exchange value of a currency
results in a sharp depreciation in the value of the currency, or forces
authorities to expend large volumes of international currency reserves and
sharply increase interest rates to defend prevailing exchange rates.
◍ An International company (IC) is a company headquartered in another
nation? T/F.
Answer: True
◍ British Exit from the European Union (Brexit):.
Answer: - Voted to leave on June 23, 2016; officially left January 31, 2020.-
Great Britain was uncomfortable with loss of national sovereignty;
immigration also became a key issue. - Britain was EU's second largest
economy and seen as a counterweight to Germany. - Most experts predict
Great Britain will see significant short- to medium-term costs based on exit.
◍ Fixed exchange rate system:.
Answer: countries fix their currencies against each other at a mutually
agreed upon value.• Prior to the introduction of the euro, some European
Union countries operated with fixed exchange rates within the context of the
European Monetary System (EMS)
◍ The domestic environment.
Answer: all the uncontrollable forces originating in the home country that
surround and influence the life and development of the firm
◍ Transaction exposure:.
, Answer: extent to which the income from individual transactions is affected
by fluctuations in foreign exchange values.• Mainly concerned with
short-term transactions.
◍ As used in the text, the term "environment" means all the forces influencing
the life and development of the firm? T/F.
Answer: True
◍ Managed-float or dirty-float system:.
Answer: when the value of a currency is determined by market forces, but
with central bank intervention if it depreciates too rapidly against an
important reference currency
◍ Market drivers.
Answer: -As firms internationalize, they also become global
customers-Firms may go abroad to prevent foreign suppliers from gaining
access to their customers -Mature home country markets may encourage
companies to consider nations with rising GDP/capita, population growth,
and higher rates of GDP growth.
◍ Bretton Woods Agreement cont.:.
Answer: • The US dollar was the only currency to be convertible to gold,
and other currencies would set their exchange rates relative to the dollar.•
Devaluations were not to be used for competitive purposes.• A country
could not devalue its currency by more than 10 percent without IMF
approval.
◍ Reasons for Regional Economic Integration:.
Answer: • Only makes sense when the amount of trade it creates exceeds the
amount it diverts, according to some economists.• Trade creation occurs
when low-cost producers within the free trade area replace high-cost
domestic producers.• Trade diversion occurs when higher-cost suppliers
within the free trade area replace lower-cost external suppliers.
◍ the advent of globalization has had minimal affect on labor standards around
the world. T/F.
, Answer: False
◍ Currency Boards:.
Answer: A country commits to converting its domestic currency on demand
into another currency at a fixed exchange rate.Holds reserves of foreign
currency at the fixed exchange rate equal to at least 100 percent of the
domestic currency issued.• Additional domestic notes and coins can be
introduced only if there are foreign exchange reserves to back it.• Under a
currency board system, government lacks the ability to set interest rates.
◍ Arguments Supporting Globalization.
Answer: 1. Free Trade Enhances Socioeconomic Development2. Free Trade
Promotes More and Better Jobs
◍ Volume of International Trade.
Answer: •Trade in services has been growing faster than trade in
merchandise for the last 20 years.
◍ Fundamental analysis.
Answer: • Draws upon economic factors like interest rates, monetary policy,
inflation rates, or balance of payments information to predict exchange
rates.
◍ bandwagon effect.
Answer: occurs when expectations on the part of traders turn into
self-fulfilling prophecies, and traders join the bandwagon and move
exchange rates based on group expectations.• Government intervention can
prevent bandwagon from starting but is not always effective.Investor
psychology is influenced by political factors and microeconomic events.
◍ Political Drivers.
Answer: -Trends toward the unification and socialization of the global
community- concerns about protectionism by host country markets still exist
◍ Foreign Direct Investment (FDI).
Answer: Direct investments in equipment, structures, and organizations in a
foreign country at a level that is sufficient to obtain significant management
QUESTIONS WITH CORRECT ANSWERS
GRADED A+
◍ Currency crisis:.
Answer: when a speculative attack on the exchange value of a currency
results in a sharp depreciation in the value of the currency, or forces
authorities to expend large volumes of international currency reserves and
sharply increase interest rates to defend prevailing exchange rates.
◍ An International company (IC) is a company headquartered in another
nation? T/F.
Answer: True
◍ British Exit from the European Union (Brexit):.
Answer: - Voted to leave on June 23, 2016; officially left January 31, 2020.-
Great Britain was uncomfortable with loss of national sovereignty;
immigration also became a key issue. - Britain was EU's second largest
economy and seen as a counterweight to Germany. - Most experts predict
Great Britain will see significant short- to medium-term costs based on exit.
◍ Fixed exchange rate system:.
Answer: countries fix their currencies against each other at a mutually
agreed upon value.• Prior to the introduction of the euro, some European
Union countries operated with fixed exchange rates within the context of the
European Monetary System (EMS)
◍ The domestic environment.
Answer: all the uncontrollable forces originating in the home country that
surround and influence the life and development of the firm
◍ Transaction exposure:.
, Answer: extent to which the income from individual transactions is affected
by fluctuations in foreign exchange values.• Mainly concerned with
short-term transactions.
◍ As used in the text, the term "environment" means all the forces influencing
the life and development of the firm? T/F.
Answer: True
◍ Managed-float or dirty-float system:.
Answer: when the value of a currency is determined by market forces, but
with central bank intervention if it depreciates too rapidly against an
important reference currency
◍ Market drivers.
Answer: -As firms internationalize, they also become global
customers-Firms may go abroad to prevent foreign suppliers from gaining
access to their customers -Mature home country markets may encourage
companies to consider nations with rising GDP/capita, population growth,
and higher rates of GDP growth.
◍ Bretton Woods Agreement cont.:.
Answer: • The US dollar was the only currency to be convertible to gold,
and other currencies would set their exchange rates relative to the dollar.•
Devaluations were not to be used for competitive purposes.• A country
could not devalue its currency by more than 10 percent without IMF
approval.
◍ Reasons for Regional Economic Integration:.
Answer: • Only makes sense when the amount of trade it creates exceeds the
amount it diverts, according to some economists.• Trade creation occurs
when low-cost producers within the free trade area replace high-cost
domestic producers.• Trade diversion occurs when higher-cost suppliers
within the free trade area replace lower-cost external suppliers.
◍ the advent of globalization has had minimal affect on labor standards around
the world. T/F.
, Answer: False
◍ Currency Boards:.
Answer: A country commits to converting its domestic currency on demand
into another currency at a fixed exchange rate.Holds reserves of foreign
currency at the fixed exchange rate equal to at least 100 percent of the
domestic currency issued.• Additional domestic notes and coins can be
introduced only if there are foreign exchange reserves to back it.• Under a
currency board system, government lacks the ability to set interest rates.
◍ Arguments Supporting Globalization.
Answer: 1. Free Trade Enhances Socioeconomic Development2. Free Trade
Promotes More and Better Jobs
◍ Volume of International Trade.
Answer: •Trade in services has been growing faster than trade in
merchandise for the last 20 years.
◍ Fundamental analysis.
Answer: • Draws upon economic factors like interest rates, monetary policy,
inflation rates, or balance of payments information to predict exchange
rates.
◍ bandwagon effect.
Answer: occurs when expectations on the part of traders turn into
self-fulfilling prophecies, and traders join the bandwagon and move
exchange rates based on group expectations.• Government intervention can
prevent bandwagon from starting but is not always effective.Investor
psychology is influenced by political factors and microeconomic events.
◍ Political Drivers.
Answer: -Trends toward the unification and socialization of the global
community- concerns about protectionism by host country markets still exist
◍ Foreign Direct Investment (FDI).
Answer: Direct investments in equipment, structures, and organizations in a
foreign country at a level that is sufficient to obtain significant management
