VI. Multiple Choice Questions
1. Globalization refers to:
A. only increasing market integration, while international economic integration refers to the
strengthening of existing international linkages of commerce and the addition of new
international linkages.
B. only the expansion of world governance and global society, while international economic
integration refers to the strengthening of existing international linkages of commerce and the
addition of new international linkages.
C. only the increased mobility of peoples and information, while international economic
integration refers to the strengthening of existing international linkages of commerce and the
addition of new international linkages.
D. the increasing market integration, the expansion of world governance and global society, and
the increased mobility of peoples and information, while international economic integration
refers to the strengthening of existing international linkages of commerce and the addition of
new international linkages.
Answer: D
2. International economic integration refers to:
A. the expansion of world governance and society.
B. the increased mobility of peoples and information.
C. the strengthening of existing international linkages of commerce and the addition of new
linkages.
D. the strengthening of existing international linkages of commerce but not the addition of new
linkages.
Answer: C
3. Globalization refers to _________, and international economic integration refers to
___________.
A. a broader scope of the internationalization process, a narrower focus of the
internationalization process.
B. a narrower scope of the internationalization process, a broader focus of the
internationalization process.
C. the same thing as international economic integration, the strengthening of international
linkages of commerce.
D. None of the above.
Answer: A
4. Open trade in goods, services, and financial assets by leading economies of the world at levels
close to those observed today:
A. have never been experienced.
B. had been experienced before World War I.
C. had been experienced between World War I and World War II.
D. had been experienced only immediately before the Korean conflict.
Answer: B
5. Real sector transactions deal with:
A. transactions in goods and services.
B. transactions in financial assets.
C. transactions in both goods and services and financial assets.
D. transactions in neither goods and services nor in financial assets.
Answer: A
6. Financial sector linkages deal with:
A. transactions in goods and services.
B. transactions in financial assets.
C. transactions in both goods and services and financial assets.
D. transactions in neither goods and services nor in financial assets.
Answer: A
7. In terms of real sector activity, world trade in goods and services:
A. is important only to developed economies.
B. is important only to developing economies.
C. is important to both developed and developing economies.
D. is important to neither developed nor developing economies.
Answer: C
8. In the last 35 years, the nearly 6 percent per annum growth in world trade has led to a
_______-fold cumulative increase in world trade.
A. two
B. three
C. four
D. five
Answer: D
9. When measured as a multiple of world exports of goods and services, foreign exchange turnover
in 2004 was approximately:
A. 12:1.
B. 38:1.
C. 61:1.
D. 50:1.
Answer: D
10. Over the last 35 years, the data on trade and financial flows show:
A. decreased real flows and decreased financial flows.
B. increased real flows and decreased financial flows.
C. decreased real flows and increased financial flows.
D. increased real flows and increased financial flows.
Answer: D
VI. Multiple Choice Questions
1. A market that involves the immediate sale or purchase of an asset is known as a(n)
A. currency market.
B. bond market.
C. spot Market.
D. free market.
Answer: C
2. The minimum value of a spot currency transaction is generally
A. $100,000.
B. $500,000.
C. $1 million.
D. $5 million.
Answer: C
3. If the currency-per-U.S. dollar exchange rate of the New Zealand dollar is 1.5, what is one New
Zealand dollar worth in terms of U.S. dollars?
A. $0.50 B. $0.67 C. $1.00 D. $1.50
Answer: B
4. Suppose exchange rate of the Argentinean peso relative to the U.S. dollar is 3 (Peso/$). If the
peso were to undergo a 50 percent depreciation, the new exchange value would be:
A. 1.5. B. 4.5. C. 3.5. D. 0.5..
Answer: B
5. For which of the following sets of exchange rates has the cross rate been correctly calculated?
A. £1 = 2 Swiss francs; $1.50 = £1; $1 = 0.75 Swiss francs
B. ¥200 = $1.00; 1 ringgit = $0.15; 20 ringgit = ¥1
C. £1 = 1.5 euro; 3 Swiss francs = 2 euros; 2.25 Swiss francs = £1
D. ¥100 = $1.00; 1 ringgit = $0.15; 20 ringgit = ¥1
Answer: C
6. A Korean trader wishes to make a purchase of Czech crystal worth 3 million Czech korunas.
Unfortunately, there is no published value of the Korean won to Czech koruna exchange rate. In
order to calculate the current price of the crystal in won, the trader will need to calculate
A. the real exchange rate.
B. a cross rate.
