Liberty University BUSI 604 International Business Test 2

Question 1

2 out of 2 points

The major difference between the currency futures market and the OTC market is that futures settle gains and losses on a daily basis through the margin mechanism.

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•             Question 2

2 out of 2 points

Most currencies are quoted in relation to the British Sterling.

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•             Question 3

2 out of 2 points

(___________) is considered a sign of economic recovery and stabilization but makes the currency of a country more expensive compared to other currencies, having a direct inverse effect on exports and imports.

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•             Question 4

2 out of 2 points

Global financial markets are important to borrowers for two reasons such as (1) to expand the supply of money, and (2) reduce the cost of money.

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•             Question 5

2 out of 2 points

Actual currencies change hands in FX Markets transactions and can also be completed electronically.

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•             Question 6

2 out of 2 points

In ideal functioning markets, speculation and (_______) assist in the reduction of unavoidable risks associated with uncertainties, such as unemployment, catastrophic losses, and diminished business revenue.

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•             Question 7

2 out of 2 points

Purchasing Power Parity has an impact on exchange rates and indicates the current level of inflation of one currency against another.

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•             Question 8

2 out of 2 points

The (___________) monitors the various companies and organizations that are quoted on the security exchange and make sure they meet the requirements for being listed.

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•             Question 9

2 out of 2 points

(__________) essentially decreases a consumer’s purchasing power by making goods and services more expensive.

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•             Question 10

2 out of 2 points

If a currency price is expected to rise in the future, a buyer pays a higher price, which is considered a forward discount.

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•             Question 11

2 out of 2 points

A large percentage of all FX market transactions are spot transactions.

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•             Question 12

2 out of 2 points

The FX swap of currency amounts is normally variable.

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•             Question 13

2 out of 2 points

The most important issue in understanding the effects of exchange rates on business is its (________).

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•             Question 14

2 out of 2 points

Global financial markets are important to lenders for two major reasons: (1) expanding (________) and (2) reducing (________).

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•             Question 15

0 out of 2 points

In the U.S., the Security Exchange Commission monitors activities of exchange markets and OTC markets.

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•             Question 16

2 out of 2 points

Fixed exchange rates, also known as pegged exchange rates, occur when a government or central bank ties the official exchange rate to another country’s currency or the price of gold.

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•             Question 17

0 out of 2 points

A currency board is a government’s bank and is capable of bailing out a failing bank.

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•             Question 18

2 out of 2 points

OTC participants trade on a physical trading floor.

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•             Question 19

0 out of 2 points

(________) gives every state the right to lead its existence free from external interference.

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•             Question 20

2 out of 2 points

The (______) is guided by the belief in the importance of building an integrated petroleum industry as a cornerstone for future economic integration amongst Arab countries.

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•             Question 21

0 out of 2 points

Agreements between participating nations are managed and promoted through (__________).

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•             Question 22

2 out of 2 points

The Council of Europe judges claims by member states that the European Commission has exceeded its authority.

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•             Question 23

2 out of 2 points

(_________) is the largest agreement in the world (approximately 1.56 billion people).

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•             Question 24

2 out of 2 points

The Economic Union requires that member countries harmonize their tax, monetary and fiscal policies, create a common currency, and concede a certain amount of sovereignty to the supranational organization to which they belong.

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•             Question 25

0 out of 2 points

The objective of the OECD is increasing economic welfare through  the  world by covering issues associated with social work and economic efforts within participating governments and nonparticipating governments.

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•             Question 26

2 out of 2 points

The goals of the (_________) are threefold: (1) the reduction and eventual eradication of poverty in signatory island and land-locked nations, (2) sustainable economic development in signatory island and land-locked nations, and (3) the gradual integration of signatory countries into the world economy.

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•             Question 27

2 out of 2 points

The intent to form a trading bloc may range from the potential of trade creation to the desire for economic protectionism.

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•             Question 28

0 out of 2 points

Freedom and the absence of random violence is not one of the five basic goals espoused by national governments.

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•             Question 29

2 out of 2 points

Non-tariff barriers refer to laws and regulations affecting trade; these include barriers that governments use to ensure accountability and quality.

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•             Question 30

2 out of 2 points

History has displayed how conflicts can affect the supply and demand of oil resources, resulting in (______) fluctuation.

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•             Question 31

2 out of 2 points

Non-tariff barriers involve financial methods (e.g., taxes on imports) of protecting national industries from competition by foreign corporations.

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•             Question 32

2 out of 2 points

To become a member state in the ANCOM, a prospective country needs to fulfill political and economic preconditions known as the Copenhagen Criteria.

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•             Question 33

2 out of 2 points

The stages of regional economic integration are as follows: Free Trade Agreement, (__________), Common Market, Economic Union, and (_________).

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•             Question 34

2 out of 2 points

South America is one of the largest trading blocs in the world.

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•             Question 35

0 out of 2 points

Increasing attention is being paid to the rapidly growing economies of (_______) and (_________), as they evolve from primarily agricultural dependence into industrial giants with regional superpower status.

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•             Question 36

2 out of 2 points

The (______) operates as a common market, granting national treatment to all (___) firms and citizens in any other (____) country, as well as removing all barriers to cross country investment and services trade.

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•             Question 37

0 out of 2 points

The (__________) examines and decides on claims brought by the European Commission against member states for noncompliance with EU laws or directives.

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•             Question 38

2 out of 2 points

In a (___________), one client company contracts another company to build and deliver a ready to operate industrial plant or infrastructure facility, such as a power plant, a highway or a port. In such cases, the client can be a government agency.

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•             Question 39

2 out of 2 points

One advantage of a management contract is that the host nation provides the funds for any infrastructure associated with the project management.

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•             Question 40

0 out of 2 points

A company can keep itself flexible by following a (____________) which allows the firm to switch partners or exit the market altogether if the need arises.

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•             Question 41

2 out of 2 points

As one of the primary government facilitators for small businesses, the (_____) agency will provide corporate services, which include financing, trade counseling, and commodity brokerage.

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•             Question 42

2 out of 2 points

A (__________) is a voluntary arrangement between companies involving exchange sharing, co-development of products, technologies, or services.

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•             Question 43

2 out of 2 points

Small businesses cannot compete in the global economy.

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•             Question 44

2 out of 2 points

(________) entry is optimal for businesses that may not have enough financial capital to initiate operations in a new market.

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•             Question 45

0 out of 2 points

In attractive markets, short-term profitability for a firm is expected to be provided through these investment modes.

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