国际金融选择题加名词解释加简答题答案.doc

Chapter 1:11. If domestic investment is greater than domestic saving,A. expenditures equal domestic income and net exports equal zero.B. expenditures are greater than domestic income and net exports are negative.C. expenditures are less than domestic income and net exports are positive.D. expenditures are greater than domestic income and net exports are positive zero.12. If domestic investment is less than domestic saving,A. expenditures equal domestic income and net exports equal zero.B. expenditures are greater than domestic income and net exports are negative.C. expenditures are less than domestic income and net exports are positive.D. expenditures are greater than domestic income and net exports are positive zero.13.If domestic savings equals 10 and domestic investment equals 6, then the current account balance equals:A. -16 B. -4 C. +4 D. +1614.If a nations domestic savings equals 6 and a nations domestic investment equals 10, then the nation is experiencing:A. a net capital outflow. B a net capital inflow. C. no net capital inflow or outflow. D. a current account surplus.15.If a nations domestic saving is 25 and the nations domestic investment is 30, then the nation is experiencing:A. a current account surplus. B. a current account deficit C. a net capital inflow D. both B and C16. A current account deficit in the U.S. is:A.necessarily bad because it represents a lack of domestic saving.B.necessarily good because it represents foreign savings in the U.S.C.necessarily bad because it undermines the U.S.s ability to experience economic growth.D.is neither good nor bad.Chapter 2:11.Which of the following exchange rates is adjusted for price changes?A. Nominal exchange rate. B. Real exchange rate. C. Effective exchange rate. D. Forward exchange rate.12. The table below reports the movements of prices and exchange rates for the U.S. and Indonesia over a years time. July 1, 2003 July 1, 2004 _ Indonesian rupiah/$U.S. 2,435 14,500 Indonesian price level (CPI) 100 152 U.S. price level (CPI) 100 102During this time, the Indonesian rupiah experienced a nominalA. depreciation and a real appreciation.B. depreciation and a real depreciation.C. appreciation and a real appreciation.D. appreciation and a real depreciation.13. Based on the values in the table below, the percentage change in the value of the rupiah was _ and the rate of inflation in Indonesia was _. July 1, 2003 July 1, 2004 _ _ Indonesian rupiah/U.S. 2,435 14,500 Indonesian price level (CPI) 100 152 U.S. price level (CPI) 100 102 A. 16.8% depreciation, 2% B. 495.5% depreciation, 52% C. 16.8% appreciation, 52% D. 495.5% appreciation, 52%14.The effective exchange rate is A.the exchange rate facing large banks and other high-volume traders.B.the exchange rate facing retail customers.C.the nominal exchange rate adjusted for inflation.D.a measure of the weighted-average value of a currency relative to a selected group of countries.15.An exchange rate that is weighted by the share of each partner in a nations trade is an example of aA. spot exchange rate. B. effective exchange rate.C. nominal exchange rate. D. real exchange rate.16. The Special Drawing Right (SDR) is a A. means by which banks offer their best clients preferential loan rates. B. preliminary form of the proposed common currency in Europe.C. composite currency created by the International Monetary Fund.D. type of bank account used by currency traders.Chapter 3:11.Which of the following arrangements places the greatest restriction on policymakers and requires the greatest sacrifice of policy autonomy?A.a free float. B. a currency-basket peg. C.dollarization. D. a currency board.12.If the Chinese renminbi, whose unit of currency is the yuan, is revalued relative to the U.S. dollar, thenA. for each yuan, one can expect to buy fewer dollars.B. for each yuan, one can expect to buy more dollars.C. the exchange rate between the renminbi and the dollar will remain constant.D.it is impossible to tell what will happen to the exchange rate or the number of dollars that one can buy with each yuan, since this depends on the supply and the demand for the yuan relative to the dollar.13. Currency basket pegs usually involve pegging the domestic currency to A. each of the major currencies of the world.B. the relative price of a chosen basket of consumer goods.C. a weighted average of only a small selected number of different currencies.D.within an upper and lower limit of a band relative to either the U.S. dollar or the Japanese yen.14. A dirty float exchange rate system refers to A.an exchange rate system wherein policymakers allows the value of the domestic currency to be determine only by the forces of supply and demand.B.an exchange rate system whereby each of the members of the system peg their currency against one of the major currencies, such as the U.S. dollar, which is in turn pegged against a commodity, such as gold.C.an exchange rate arrangement in which the domestic currency is primarily managed by the central bank of a foreign country, which is typically the major trading partner.D.an exchange rate arrangement in which a nation allows the international value of its currency to be primarily determined by market forces, but intervenes occasionally to stabilize its currency.15. The G7/G8 economic summits were started by:A. Russian President Bois Yeltsin B. U.S. President Gerald FordC. U.S President William Clinton. D. French President Valery Giscard dEstaing.16. The Smithsonian agreement refers to A.the understanding that most of the major industrialized countries came to at the end of the depression era regarding the non-sustainability of the gold standard as it was currently practiced.B.an agreement that was made to establish new par values for the G10 countries that had participated in the Bretton Woods system.C.the agreement that President Nixon came to vis a vis the other G10 members to suspend temporarily the convertibility of the dollar into gold or other reserve assets.D.the initial agreement that set forth future economic cooperation under the North American Free Trade Association.Chapter 4:11. Interest rate equalization across countries on similar financial instruments is calledA. sterilization. B. optimization. C. interest rate parity. D. an arbitrage opportunity.12.Covered interest rate parity implies that the difference between the domestic and foreign interest rates should equalA. zero. B. the forward premium or discount. C. the purchasing power parity exchange rate. D. the yield to maturity.13. One limitation of using forward markets as a hedge is A.that a sizable minimum transaction is required in order to participate in forward markets.B.an insufficient number of speculators who are willing to absorb the riskiness of the transaction.C. an absence of government regulation in forward markets.D. that forward markets are exchange tradable.14.The condition relating interest differentials to an expected change in the spot rate of the domestic currency is calledA. covered interest rate parity. B. uncovered interest rate parity.C. absolute purchasing power parity. D. relative purchasing power parity.15. Uncovered interest rate parity may not hold exactly due to A. a risk premium. B. a hedge adjustment. C. the inflation effect. D. an adjustment for nominal rather than real interest rates.16. The additional risk of a currency due to political instability is referred to asA. anarchy. B. the discount factor. C. unhedgeable. D. country risk. Chapter 5:11. The segmented markets theory is grounded in the assumption thatA. inflation will be prevalent in only certain long-term bonds.B. investors have identical preferences for all bond maturities.C. bonds with different maturities are nonsubstitutable.D. domestic investors prefer domestic bonds.12. An investor using the expectations theory would buy a two-year bond at the present time only if its yield isA. greater than or equal to the average of the one-year spot rate and the expected spot rate a year later.B. less than the average of the one-year spot rate and the expected spot rate a year later.C. greater than or equal to the expected spot rate a year later.D. greater than or equal to the one-year spot rate.13. The preferred habitat theory suggests that investorsA. have a preference for domestic over foreign bonds.B. will only select bonds over a small range of terms to maturity.C. have a preferred maturity length but are willing to move away from this if the interest rate differential is high enough.D. prefer, all else being equal, to hold the bonds issued by a particular group of firms in a region of the world with a shallow yield curve.14. Because of the possibility of default and low liquidity, some bonds carryA. no premium. B. a risk premium.C. a margin account. D. a lower interest rate.15. The primary reason that municipal bonds earn a lower interest rate than treasury bonds is thatA. municipal bonds have less risk. B. treasury bonds are in greater supply.C. municipal bonds are often serial type bonds. D. the interest earned on municipal bonds is tax-exempt.16. Reinvestment risk arises from a situation in whichA. long-term instruments prevent investors from acting to take advantage of increases in interest rates.B. an investor cannot be guaranteed the same interest rate when rolling over short-term instruments.C. the investor suffers from an inability to liquidate short-term instruments at opportune times.D. an instrument cannot be transferred back into the domestic currency immediately.Chapter 6:11. For a government desiring a profitable, safe banking system, which of the following is not an argument for allowing banks to hold equities in their portfolios?A. Equities typically offer larger returns than bonds.B. Equity and bond returns have a tendency to move in opposite directions.C. Banks would be able to gain access to additional information about portfolio risks.D. Banks already do in effect hold equities by virtue of the fact that they provide loans to private firms.12. When a banks assets fall below the value of its liabilities it is said to beA. illiquid. B. insolvent. C. below par. D. inseparable.13. When a bank is temporarily unable to honor depositors requests to withdraw funds, it isA. illiquid. B. insolvent. C. below par. D. inseparable.14. The worlds single largest payment system is located inA. the United States B. Europe. C. Japan. D. China.15. The risk that late receipt of a payment may generate a loss for a bank is an example ofA. systemic risk. B liquidity risk. C. Herstaat risk. D. credit risk.16. The possibility that a bank may experience a loss due to failure to receive a promised payment is an example ofA. liquidity risk B. systemic risk. C. Herstaat risk. D. credit risk.Chapter 7:11.Critics of the IMF argue its secrecy and tendency to impose high conditionality only when pressed to increases the IMFs risk of encountering:A. adverse selection. B. moral hazard. C. Neither A nor C. D. Both A and C.12.Which of the following is not a standard theory for explaining financial crises?A. Economic fundamentals. B. Self fulfilling expectations and contagion effects.C. Structural moral hazard problems. D. efficient intermediaries.13.Financial intermediaries perform all of the following functions except:A. matching savers and borrowers. B. increasing average costs of investmentC. reducing information asymmetries. D. pooling risks.14.Asymmetric information may result in all of the following problems except:A. adverse selection. B. herding behavior. C. moral hazard. D. reducing average costs of investment15.Portfolio capital flows tend to _ and foreign direct investment flows tend to _.A. generate near term income, establish financial control. B. establish financial control, generate near term income.C. both tend to generate near term income. D. both tend to establish financial control.16.By their nature, portfolio flows _ and foreign direct investment _.A. are difficult to reverse, are easy to reverse. B. are to easy reverse, are difficult to reverse.C. both are easy to reverse. D. both are difficult to reverse.Chapter 8:11. The Marshall-Lerner condition holds when the:A.sum of the elasticities of import demand and export supply exceed one.B.difference in the elasticites of import demand and export supply exceed one.C.difference in the absolute values of the elasticites of import demand and export supply exceed one.D.sum of the absolute values of the elasticities of import demand and exports supply exceed one.12.The reason one expects supply and demand to be more price elastic over longer time periods is because:A. goods with longer shelf life have higher elasticities.B. there are feedback affects which alter the initial response.C. time is needed for households and businesses to adjust to price changes.D. the elasticity of supply always exceeds that of demand.13.A phenomenon in which a depreciation of the domestic currency causes a nations balance of payments to worsen before it improves is called:A. the J-curve effect. B. the S-curve effect. C. devaluation. D. pass-through effects.14. The basic assumption underlying the J-curve effect is that:A.people are myopic in their views of how the exchange rate will evolve over time.B.initially, supply will exceed demand but in equilibrium the two will be equated.C.supply and demand are less elastic in the short run than in the long run. D.an overshooting effect occurs as people change their investment horizons.15.The idea that a countrys trade balance may first deteriorate after a currency devaluation and only later improve is known as:A. the relative price effect. B. the elasticity effect. C. the pass through affect. D. the J-Curve.16.The effect of a currency depreciation that results in higher domestic prices of imported goods and services is known as: A. the pass-out effect. B. the pass-through effect. C. cost-push inflation. D. demand-pull inflation.Chapter 9:11.When the domestic price level is equal to the spot exchange rate times the foreign price level then:A. absolute purchasing power parity holds. B. uncovered interest parity holds.C. covered interest parity holds. D. the central bank is forced to intervene in foreign exchange markets.12.The underlying principle of the monetary approach is that balance of payments and spot exchange rates are influenced by:A. speculation in the foreign exchange markets.B.any event that causes a difference between the quantity of money demanded and the quantity supplied.C. forward market prices.D. only the relative money supplies among countries.13.Under a fixed exchange rate, the additional purchase of foreign goods will generate a balance of payments:A. surplus with no change in the exchange rate. B. deficit with no change in the exchange rate.C. deficit with an appreciation in the exchange rate. D. surplus with a depreciation in the exchange rate.14.Under a flexible exchange rate, the additional purchase of foreign goods will generate:A. a depreciation of the domestic currency with a balance of payments surplus.B. an appreciation of the domestic currency with a balance of payments deficits.C.an appreciation of the domestic currency with no change in the balance of payments.D.a depreciation of the domestic currency with no change in the balance of payments.15.According to the monetary approach, under a fixed exchange rate, a rise in the foreign price level will result in a A. balance of payments surplus. B. balance of payments deficits.C. devaluation of the domestic currency. D. a balance of payments equilibrium16.According to the monetary approac