International Business 15th Edition by Daniels – Test Bank

International Business 15th Edition by Daniels – Test Bank

International Business: Environments and Operations, 15e (Daniels et al.)
Chapter 9 The Determination of Exchange Rates

1) The primary objective of the International Monetary Fund is to ________.
A) encourage euro adoption
B) promote exchange rate stability
C) establish a unilateral system of payments
D) foster the power of the foreign-exchange market
Answer: B
Diff: 2
Learning Outcome: Summarize the roles of the international monetary system and global capital market
Skill: Concept
Objective: 1
AACSB: Application of knowledge

2) The Bretton Woods Agreement established a system of fixed exchange rates under which each IMF member country set a ________.
A) quota
B) par value
C) gold standard
D) nominal interest rate
Answer: B
Diff: 2
Learning Outcome: Summarize the roles of the international monetary system and global capital market
Skill: Concept
Objective: 1
AACSB: Application of knowledge

3) In order to join the IMF, a country must contribute a certain sum of money, called a ________.
A) special drawing right
B) trade balance
C) monetary reserve
D) quota
Answer: D
Diff: 1
Learning Outcome: Summarize the roles of the international monetary system and global capital market
Skill: Concept
Objective: 1
AACSB: Application of knowledge

4) Which of the following best describes the special drawing right?
A) an international reserve asset created to supplement members’ existing reserve assets
B) the official currency for international trade established by the World Bank
C) a substitute for the fixed value of gold as determined by currency rates
D) a contribution made by countries to join the IMF
Answer: A
Diff: 2
Learning Outcome: Summarize the roles of the international monetary system and global capital market
Skill: Concept
Objective: 1
AACSB: Application of knowledge
5) The value of the SDR is currently based on the ________.
A) euro
B) U.S. dollar
C) weighted average of four currencies
D) weighted average of six currencies
Answer: C
Diff: 2
Learning Outcome: Summarize the roles of the international monetary system and global capital market
Skill: Concept
Objective: 1
AACSB: Application of knowledge

6) What role has the IMF played in the Greek financial crisis of 2010-2011?
A) setting the value of the drachma
B) releasing funds for debt payments
C) demanding the sale of state-owned assets
D) lowering interest rates for international investors
Answer: B
Diff: 2
Learning Outcome: Summarize the roles of the international monetary system and global capital market
Skill: Concept
Objective: 1
AACSB: Dynamics of the global economy

7) Which of the following was NOT a result of the Smithsonian Agreement?
A) revaluation of currencies other than the dollar against gold
B) establishment of par values the quota system
C) devaluation of the dollar against gold
D) widening of exchange-rate flexibility
Answer: B
Diff: 2
Learning Outcome: Summarize the roles of the international monetary system and global capital market
Skill: Concept
Objective: 1
AACSB: Application of knowledge