chapter1 exercises

By Pauline Ramos,2014-06-07 13:53
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chapter1 exercises



    1. If a country unexpectedly imposes restrictions on imports, this trade barrier is an example


    A) Exchange Rate Risk

    B) Political Risk

    C) Market Imperfections

    D) Expanded Opportunity Set.

    2. A domestic firm that produces and sells its products in one country A) Is protected from foreign exchange risk

    B) Could face foreign exchange risk

    C) Could face no political risk

    D) Is an example of a market imperfection.

3. The European Central Bank is located in

    A) Düsseldorf, Germany

    B) Frankfurt, Germany

    C) London, England

    D) Paris, France.

4. The North American Free Trade Agreement (NAFTA)

    A) Has resulted in massive unemployment in the U.S. as jobs went to Mexico B) Calls for the introduction of a regional currency by 2015, similar to the euro

    C) Is an agreement among the United States, Canada, and Mexico, that calls for the phasing

    out of tariffs and import quotas over a 15-year period

    D) Calls for the privatization of all industries over a 15-year period.

    5. A U.S. investor who is interested in the shares of Nokia Corporation of Finland A) Should probably stick with U.S. companies

    B) Will have an easier time than ever investigating the company, due to the ready flow of

    information over the Internet and the globalization of capital markets

    C) Must travel to Finland in person to buy the shares

    D) Can buy the shares but cannot bring them to the U.S. legally.

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