Question : 1.4   Why Study International Finance? 1) American companies can borrow funds A) : 1373624

 

1.4   Why Study International Finance?

 

1) American companies can borrow funds

A) only in U.S. financial markets.

B) only in foreign financial markets.

C) in both U.S. and foreign financial markets.

D) only from the U.S. government.

 

2) The price of one country’s currency in terms of another country’s currency is called the

A) exchange rate.

B) interest rate.

C) Dow Jones industrial average.

D) prime rate.

 

3) The market where one currency is converted into another currency is called the ________ market.

A) stock

B) bond

C) derivatives

D) foreign exchange

4) Everything else constant, a stronger dollar will mean that

A) vacationing in England becomes more expensive.

B) vacationing in England becomes less expensive.

C) French cheese becomes more expensive.

D) Japanese cars become more expensive.

 

5) Which of the following is most likely to result from a stronger dollar?

A) U.S. goods exported aboard will cost less in foreign countries, and so foreigners will buy more of them.

B) U.S. goods exported aboard will cost more in foreign countries and so foreigners will buy more of them.

C) U.S. goods exported abroad will cost more in foreign countries, and so foreigners will buy fewer of them.

D) Americans will purchase fewer foreign goods.

 

6) Everything else held constant, a weaker dollar will likely hurt

A) textile exporters in South Carolina.

B) wheat farmers in Montana that sell domestically.

C) automobile manufacturers in Michigan that use domestically produced inputs.

D) furniture importers in California.

 

7) Everything else held constant, a stronger dollar benefits ________ and hurts ________.

A) American businesses; American consumers

B) American businesses; foreign businesses

C) American consumers; American businesses

D) foreign businesses; American consumers

 

8) From 1980 to early 1985 the dollar ________ in value, thereby benefiting American ________.

A) appreciated; consumers

B) appreciated, businesses

C) depreciated; consumers

D) depreciated, businesses

 

9) From 1980 to 1985 the dollar appreciated relative to the British pound. Holding everything else constant, one would expect that, when compared to 1980,

A) fewer Britons traveled to the United States in 1985.

B) Britons imported more wine from California in 1985.

C) Americans exported more wheat to England in 1985.

D) more Britons traveled to the United States in 1985.

10) When in 1985 a British pound cost approximately $1.30, a Shetland sweater that cost 100 British pounds would have cost $130. With a weaker dollar, the same Shetland sweater would have cost

A) less than $130.

B) more than $130.

C) $130, since the exchange rate does not affect the prices that American consumers pay for foreign goods.

D) $130, since the demand for Shetland sweaters will decrease to prevent an increase in price due to the stronger dollar.

 

11) Everything else held constant, a decrease in the value of the dollar relative to all foreign currencies means that the price of foreign goods purchased by Americans

A) increases

B) decreases.

C) remains unchanged.

D) either increases, decreases, or remains unchanged.

 

12) American farmers who sell beef to Europe benefit most from

A) a decrease in the dollar price of euros.

B) an increase in the dollar price of euros.

C) a constant dollar price for euros.

D) a European ban on imports of American beef.

 

13) If the price of a euro (the European currency) increases from $1.00 to $1.10, then, everything else held constant,

A) a European vacation becomes less expensive.

B) a European vacation becomes more expensive.

C) the cost of a European vacation is not affected.

D) foreign travel becomes impossible.

 

14) Everything else held constant, Americans who love French wine benefit most from

A) a decrease in the dollar price of euros.

B) an increase in the dollar price of euros.

C) a constant dollar price for euros.

D) a ban on imports from Europe.

15) From 1980-1985, the dollar strengthened in value against other currencies.  Who was helped and who was hurt by this strong dollar?