practice problems_exam2

practice problems_exam2 - 1 The accounting statement that...

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1 The accounting statement that summarizes all the economic transactions between residents of the home country and residents of all other countries is called the a) balance of trade b) current account balance c) balance of payments d) capital account balance 2 In a freely floating exchange rate system, if the capital account surplus for the U.S. rises, what will most likely happen to the real value of the dollar? a) it will decline b) it will rise c) there is no impact on the dollar d) the IMF will step in to adjust rising exchange rates 3 If a real value of a nation's freely floating currency increases, and the nation's current account is initially zero, its capital account will most likely be a) in deficit b) in surplus c) adjusted for the rate of inflation d) decreased by the amount of increase in the current account 4 A nation that is running a savings deficit a) must spend less than it produces b) will invest domestically more than it saves c) will invest domestically less than it saves d) must have a net capital outflow 5 One good indicator of political risk is a) the severity of capital flight b) the level of local interest rates c) the level of local tax rates d) a large middle class population 6 A large government deficit relative to GDP, a high rate of money expansion accompanied by fixed exchange rates, along with substantial government expenditures are some of the common characteristics of _________ risk. a) exchange rate b) interest rate c) country d) investment 7 A structure of incentives that rewards risk taking in productive ventures is an indicator of long-run _____________ health for a country. a)
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This note was uploaded on 02/22/2011 for the course BMGT 446 taught by Professor Staff during the Spring '08 term at Maryland.

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practice problems_exam2 - 1 The accounting statement that...

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