Chapter 21 MC - CHAPTER TWENTY-ONE Multiple Choice...

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CHAPTER TWENTY-ONE Multiple Choice Questions 21-1. Each country should concentrate on producing that product which it does well. This is called the law of: a. absolute advantage b. communicative advantage c. comparative advantage d. trade advantage 21-2. An exchange rate: a. specifies how many units of one country’s currency can be exchanged for the same number of the other country’s currency b. specifies how many units of one country’s currency can be exchanged for one unit of the other country’s currency c. represents a one for one trade of one currency in terms of another currency d. is an expression of how market baskets are exchanged. 21-3. Currently $1 is worth 0.83. What is the value of one euro in terms of the U.S. dollar? a. .83dollars/1 euro b. 0.67euros/1 U.S. dollar c. 1.5 U.S. dollars/1 euro d. 1.5euros/1 U.S. dollar 21-4. If the value of one currency goes down in value relative to that of a second currency, the second currency is: a. appreciating b. weakening c. depreciating d. more than one of the above 21-5. If a given country’s currency is weakening; importers from other countries will ____________of that country’s goods. a. buy less b. buy more c. buy the same amount d. buy a fluctuating amount 4
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21-6. The Greek drachma has strengthened against the U.S.$. Greek people will: a. buy less U.S. goods b. buy more U.S. goods c. buy the same amount of U.S. goods d. buy a fluctuating amount of U.S. goods 21-7. An exchange rate between two currencies which is found by using a common third currency is known as a currency: a. exchange rate b. cross rate c. exchange currency rate d. cross foreign currency rate 21-8. The U.S.$ is worth 90 yen; the U.S.$ is also worth 10 Mexican pesos. What is the value of the yen in terms of the peso? a. 90 yen/Mex$ 1 b. 9 yen/Mex$ 1 c. Mex$1/ 19yen d. Mex$0.111/ 1 yen 21-9. Problems associated with repatriating profits include which of the following? a. the foreign economy gets stronger b. repatriating is only done with dividends, not cash c. the home currency strengthens d. the exchange rate holds steady 21-10. You purchased a stock with marks in Germany. You will be hurt if: a. the U.S.$ strengthens relative to the euro b. the U.S.$ weakens relative to the euro c. the U.S. economy has a recession d. you are not impacted by the value of the home currency
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Chapter 21 MC - CHAPTER TWENTY-ONE Multiple Choice...

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