Test bank International Finance MCQ (word)Chap 4.doc

Fundamentals of Multinational Finance, 3e (Moffett) Chapter 4 The Balance of Payments 4.1 Multiple Choice and True/False Questions 1) The balance of payments as applied to a course in international finance may be defined as A) the amount still owed by an exporting firm after making an initial down payment. B) the amount still owed by governments to the International Monetary Fund. C) the measurement of all international economic transactions between the residents of a country and foreign residents. D) the amount of a countrys merchandise trade deficit or surplus. Answer: C Topic: BOP Introduction Skill: Conceptual 2) Balance of payment (BOP) data may be important for any of the following reasons: A) BOP data helps to forecast a countrys market potential, especially in the short run. B) The BOP is an important indicator of a countrys foreign exchange rate. C) Changes in a countrys BOP may signal a change in controls over payment of dividends and interest. D) All of the above. Answer: D Topic: BOP Introduction Skill: Conceptual 3) A country experiencing a serious BOP ________ is more likely to ________ exports than otherwise. A) surplus; contract B) deficit; contract C) deficit; expand D) none of the above Answer: A Topic: BOP Understanding Skill: Analytical 4) Which of the following would NOT be considered a typical BOP transaction? A) Toyota U.S.A. is a U.S. distributor of automobiles manufactured in Japan by its parent company. B) The U.S. subsidiary of European financial giant, Credit Suisse, pays dividends to its parent in Zurich. C) A U.S. tourist purchases gifts at a museum in London. D) All are example of BOP transactions. Answer: D Topic: BOP Understanding Skill: Conceptual 5) The authors identify a tip for understanding BOP accounting. They recommend that you follow the cash flow. Answer: TRUE Topic: BOP Introduction Skill: Rec