International Business 12th edition by Charles Hill
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International Commerce Charles Hill 12e
ISBN:9781260092349
1) The global financial system encompasses the institutional frameworks that regulate currency exchange rates.
Answer: TRUE
Explanation: The global financial system encompasses the institutional frameworks that regulate currency exchange rates.
Issue: 1 Simple
Subject: The Evolution of the World Financial System
Learning Goal: 11-01 Describe the historical development of the contemporary world financial system.
Cognitive Level: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
2) The gold standard demanded fixed currency exchange rates against the U.S. dollar.
Answer: FALSE
Explanation: Fixing currencies to gold and ensuring convertibility is what constitutes the gold standard. By 1880, several major trading nations, including Great Britain, Germany, Japan, and the United States, had adopted the gold standard.
Issue: 1 Simple
Subject: The Evolution of the World Financial System
Learning Goal: 11-01 Describe the historical development of the contemporary world financial system.
Cognitive Level: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
3) The fixed exchange rate system established at Bretton Woods collapsed due to speculative pressures on the U.S. dollar.
Answer: TRUE
Explanation: The U.S. dollar was the sole currency convertible into gold in the fixed exchange rate system set up at Bretton Woods. As the currency that acted as the reference point for all others, the dollar held a central position in the system. The system crumbled when the key currency, the U.S. dollar, faced speculative pressure.
Issue: 2 Medium
Subject: The Evolution of the World Financial System
Learning Goal: 11-01 Describe the historical development of the contemporary world financial system.
Cognitive Level: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
4) Gold was designated as the official reserve asset in the Jamaica agreement of 1976.
Answer: FALSE
Explanation: In the Jamaica agreement, gold was abandoned as a reserve asset. The IMF distributed its gold reserves to members at the prevailing market value, placing the proceeds in a trust fund to aid impoverished nations.
Issue: 1 Simple
Subject: The Evolution of the World Financial System
Learning Goal: 11-01 Describe the historical development of the contemporary world financial system.
Cognitive Level: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
5) Market dynamics have led to a stable dollar exchange rate under a floating exchange rate system.
Answer: FALSE
Explanation: Under a floating exchange rate system, market forces have resulted in a fluctuating dollar exchange rate. Governments have frequently intervened in the market by buying and selling dollars to mitigate the market’s volatility and rectify perceived overvaluation or undervaluation of the dollar.
Issue: 1 Simple
Subject: The Evolution of the World Financial System
Learning Goal: 11-01 Describe the historical development of the contemporary world financial system.
Cognitive Level: Understand
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
6) The agreement reached at Bretton Woods established the International Monetary Fund (IMF) and the World Bank.
Answer: TRUE
Explanation: The agreement at Bretton Woods created two global organizations—the International Monetary Fund (IMF) and the World Bank.
Issue: 1 Simple
Subject: The Role of the World Bank and the International Monetary Fund in the Global Financial System
Learning Goal: 11-02 Explain the roles played by the World Bank and the IMF in the global financial system.
Cognitive Level: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
7) Post the Bretton Woods agreement, the dollar was the only currency exchangeable for gold.
Answer: TRUE
Explanation: Only the dollar remained exchangeable for gold at a rate of $35 per ounce. Each country determined its desired exchange rate against the dollar and then calculated the gold value of the currency based on that selected dollar exchange rate.
Issue: 1 Simple
Subject: The Role of the World Bank and the International Monetary Fund in the Global Financial System
Learning Goal: 11-02 Explain the roles played by the World Bank and the IMF in the global financial system.
Cognitive Level: Remember
AACSB: Knowledge Application
Accessibility: Keyboard Navigation
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