1. Which nation accounts for the largest amount of OPEC's oil reserves and production? a. Iran b. Libya c. Iraq d. Saudi Arabia 2. Most developing-nation exports go to industrial nations while most developing-nation imports originate in industrial nations. 3. The European Union is primarily intended to permit: a. Countries to adopt scientific tariffs on imports b. An agricultural commodity cartel within the group c. The adoption of export tariffs for revenue purposes d. Free movement of resources and products among member nations 4. Which nation is not a member of the North American Free Trade Association? a. Canada b. Greenland c. Mexico d. United States 5. NAFTA is a: a. Monetary union b. Free trade area c. Common market d. Customs union 6. In the United States, which group was most likely to be hurt by the North American Free Trade Agreement? a. Unskilled labor b. Skilled labor c. Owners of capital equipment d. Owners of financial capital 7. Economic integration is the process of eliminating restrictions on international trade, payments, and factor mobility. 8. As of 2002, members of the European Monetary Union agreed to replace their currencies with the: a. mark b. dollar c. franc d. euro 9. U.S. labor unions argued against the North American Free Trade Agreement on the grounds that it would result in U.S. companies relocating in Mexico in order to take advantage of lower wage rates. 10. Firms undertake multinational operations in order to: a. Hire low-wage workers b. Manufacture in nations they have difficulty exporting to c. Obtain necessary factor inputs d. All of the above 11. Conglomerate integration would occur if General Motors Inc. of the United States acquired a controlling interest in a British chemical company. 12. Critics of multinational corporations maintain that they often abandon domestic workers in order to take advantage of lower wage scales abroad. 13. On the balance-of-payments statements, merchandise imports are classified in the: a. Current account b. Capital account c. Unilateral transfer account d. Official settlements account 14. That U.S. importers purchase bananas from Brazil constitutes a debit transaction on the U.S. balance of payments. 15. Which of the following is classified as a credit in the U.S. balance of payments? a. U.S. exports b. U.S. gifts to other countries c. A flow of gold out of the U.S. d. Foreign loans made by U.S. companies 16. The U.S. balance of trade is determined by: a. Exchange rates b. Growth of economies overseas c. Relative prices in world markets d. All of the above 17. The U.S. has a balance of trade deficit when its: a. Merchandise exports exceed its merchandise imports b. Merchandise imports exceed its merchandise exports c. Goods and services exports exceed its goods and services imports d. Goods and services imports exceed its goods and services exports 18. On the U.S. balance-of-payments statement, the following transactions are cred.

1. 1. Which nation accounts for the
largest
amount of OPEC's oil reserves and production?
a.
Iran
b.
Libya
c.
Iraq
d.
Saudi Arabia
2. Most developing-nation exports go to industrial nations while
most developing-nation imports originate in industrial nations.
3.
The European Union is primarily intended to permit:
a.
Countries to adopt scientific tariffs on imports
b.
An agricultural commodity cartel within the group
c.
The adoption of export tariffs for revenue purposes
d.
Free movement of resources and products among member
nations
4.
Which nation is
not
a member of the North American Free Trade Association?

2. a.
Canada
b.
Greenland
c.
Mexico
d.
United States
5.
NAFTA is a:
a.
Monetary union
b.
Free trade area
c.
Common market
d.
Customs union
6.
In the United States, which group was most likely to be hurt by
the North American Free Trade Agreement?
a.
Unskilled labor
b.
Skilled labor
c.
Owners of capital equipment
d.
Owners of financial capital
7.

3. Economic integration is the process of eliminating restrictions
on international trade, payments, and factor mobility.
8.
As of 2002, members of the European Monetary Union agreed to
replace their currencies with the:
a.
mark
b.
dollar
c.
franc
d.
euro
9.
U.S. labor unions argued against the North American Free Trade
Agreement on the grounds that it would result in U.S.
companies relocating in Mexico in order to take advantage of
lower wage rates.
10.
Firms undertake multinational operations in order to:
a.
Hire low-wage workers
b.
Manufacture in nations they have difficulty exporting to
c.
Obtain necessary factor inputs
d.
All of the above

4. 11.
Conglomerate integration would occur if General Motors Inc. of
the United States acquired a controlling interest in a British
chemical company.
12.
Critics of multinational corporations maintain that they often
abandon domestic workers in order to take advantage of lower
wage scales abroad.
13.
On the balance-of-payments statements, merchandise imports
are classified in the:
a.
Current account
b.
Capital account
c.
Unilateral transfer account
d.
Official settlements account
14.
That U.S. importers purchase bananas from Brazil constitutes a
debit transaction on the U.S. balance of payments.
15.
Which of the following is classified as a
credit
in the U.S. balance of payments?
a.

5. U.S. exports
b.
U.S. gifts to other countries
c.
A flow of gold out of the U.S.
d.
Foreign loans made by U.S. companies
16.
The U.S. balance of trade is determined by:
a.
Exchange rates
b.
Growth of economies overseas
c.
Relative prices in world markets
d.
All of the above
17.
The U.S. has a balance of
trade deficit
when its:
a.
Merchandise exports exceed its merchandise imports
b.
Merchandise imports exceed its merchandise exports
c.
Goods and services exports exceed its goods and services
imports
d.
Goods and services imports exceed its goods and services
exports

6. 18.
On the U.S. balance-of-payments statement, the following
transactions are credits, leading to the receipt of dollars from
foreigners: merchandise exports, transportation receipts, income
received from investments abroad, and investments in the
United States by foreign residents.
19.
An
appreciation
in the value of the U.S. dollar against the British pound would
tend to:
a.
Discourage the British from buying American goods
b.
Discourage Americans from buying British goods
c.
Increase the number of dollars that could be bought with a
pound
d.
Discourage U.S. tourists from traveling to Britain
20.
A surplus on Germany's goods-and-services balance indicates
that Germany has sold more goods and services to foreigners
than it has bought from them over a one-year period.
21.
If Canadian speculators believed the Swiss franc was going to
appreciate
against the U.S. dollar, they would:

7. a.
Purchase Canadian dollars
b.
Purchase U.S. dollars
c.
Purchase Swiss francs
d.
Sell Swiss francs
22.
34. Swap transactions among commercial banks involve the
conversion of one currency to another at one point with an
agreement to reconvert it back into the original currency at
some point in the future.
23.
A major
difference
between the spot market and the forward market is that the spot
market deals with:
a.
The immediate delivery of currencies
b.
The merchandise trade account
c.
Currencies traded for future delivery
d.
Hedging of international currency risks
24.
The "spread" is a bank's profit margin on foreign exchange
trading and equals the difference between the bid rate and the
offer rate.

8. 25.
The balance on merchandise trade:
a.
Must be negative
b.
Must be positive
c.
Must be zero
d.
May be negative, positive, or zero
26.
A person needing foreign exchange immediately would purchase
it on the spot market.
27.
Over time, a
depreciation
in the value of a nation's currency in the foreign exchange
market will result in:
a.
Exports rising and imports falling
b.
Imports rising and exports falling
c.
Both imports and exports rising
d.
Both imports and exports falling