ECO 304L Midterm: Financing International Trade
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QUESTION 1
_____ refer to the forces of change whose direction and sometimes timing can be predicted.
Uncertainties | ||
Trends | ||
Occurrences | ||
Scenarios | ||
Forecasts |
2 points
QUESTION 2
Management institutes, certification agencies, and headhunting firms are examples of specialized intermediaries for:
financial markets. | ||
markets for managerial talent. | ||
markets for products. | ||
auction markets. | ||
labor market. |
2 points
QUESTION 3
_____ involves analyzing markets for their potential size, accessibility, cost of operations, and buyer needs and practices to aid the company in deciding whether to invest in entering that market.
Search retargeting | ||
Unique selling proposition | ||
Rebranding | ||
First-mover advantage | ||
Market due diligence |
2 points
QUESTION 4
Consumer safari refers to the initiatives taken by Unilever executives to spend a day with consumers in their homes to:
understand how they use products. | ||
convince them to use more Unilever products. | ||
train them to make multiple use of their products. | ||
estimate how many products they use. | ||
help them set up cottage industries for their products. |
2 points
QUESTION 5
_____ refer to the forces of change whose direction and pace is largely unknown.
Uncertainties | ||
Trends | ||
Occurrences | ||
Scenarios | ||
Forecasts |
2 points
QUESTION 6
_____ are straight-line, one-factor projections from present to future.
Estimates | ||
Opportunities | ||
Scenarios | ||
Forecasts | ||
Plans |
2 points
QUESTION 7
The United States is separated from Nigeria by 5,840 miles and the Atlantic Ocean. According to the CAGE framework this is a case of:
emotional distance. | ||
economic distance. | ||
cultural distance. | ||
geographic distance. | ||
administrative distance. |
2 points
QUESTION 8
The GDP of France is 2.113 trillion USD whereas Sierra Leone's GDP is approximately 4.812 billion USD. According to the CAGE framework, this is a case of:
emotional distance. | ||
economic distance. | ||
cultural distance. | ||
geographic distance. | ||
administrative distance. |
2 points
QUESTION 9
_____ occurs when a function is taken out of one's country of residence to be performed in another country, generally at a lower cost.
Open sourcing | ||
Offshoring | ||
Exporting | ||
Importing | ||
Licensing |
2 points
QUESTION 10
Which of the following is true of acquisitions?
The acquiring company will be eligible for any financial help from the company whose shares it is trying to acquire. | ||
It affords the firm maximum control and has the most potential to provide above-average returns. | ||
The acquiring company enters into an agreement with the target business to pursue a set of agreed-upon goals while remaining independent organizations. | ||
The acquiring firm avoids the expense of establishing operations in the new country. | ||
The acquiring company gains control of another firm by purchasing its stock. |
2 points
QUESTION 11
Which of the following statements holds true for the ISO 9001:2008 certification?
Organizations which supply raw materials are barred from applying for the ISO 9001:2008 certification. | ||
Companies which meet the criteria of a minimum financial turnover can apply for the ISO 9001:2008 certification. | ||
The ISO 9001:2008 certification is a mark that a company's products and services have met quality standards. | ||
Companies that had achieved ISO 9001:2000 certification were exempt from being recertified to meet ISO 9001:2008 standards. | ||
ISO 9001:2008 certification specifically focuses on the environment. |
2 points
QUESTION 12
_____ refers to buying goods and services from foreign sources and bringing them back into the home country.
Open sourcing | ||
Offshoring | ||
Exporting | ||
Importing | ||
Farmshoring |
2 points
QUESTION 13
The _____ is the contract between the exporter and the carrier, authorizing the carrier to transport the goods to the buyer's destination.
letter of credit | ||
bill of lading | ||
customs invoice | ||
export declaration | ||
license |
2 points
QUESTION 14
_____ is the document by which the exporter tells the importer to pay a specified amount at a specified time.
Letter of credit | ||
Bill of lading | ||
Customs invoice | ||
Insurance certificate | ||
Bill of exchange |
2 points
QUESTION 15
Which of the following can also function as collateral against loans?
Certificate of origin | ||
Export declaration | ||
License | ||
Customs invoice | ||
Bill of lading |
2 points
QUESTION 16
_____ refers to the financing granted against collateral, which can be the imported/exported goods.
Angel funding | ||
Purchase Order Financing | ||
Secured financing | ||
Overdraft | ||
Cash advance |
2 points
QUESTION 17
Which of the following is a contractual mode of entry into a foreign market?
Greenfield ventures | ||
Licensing | ||
Joint ventures | ||
Acquisition | ||
Merger |
2 points
QUESTION 18
_____ refers to an organization that assists foreign companies in exporting their products to Japan by providing free-market entry information and business-partner matching as well as some subsidies.
Japan Bank for International Cooperation | ||
Japan External Trade Organization | ||
Development Bank of Japan | ||
Master Trust Bank of Japan | ||
Japan Post Bank Company |
2 points
QUESTION 19
Which of the following statements holds true for a nonentity joint venture?
In a nonentity joint venture, the partner with the smaller capital investment loses control over the joint venture after a period of two months. | ||
In a nonentity joint venture, each of the partners contributes capital and resources in exchange for an equity stake and share in any resulting profits. | ||
In a nonentity joint venture, the control of the joint venture is in the hands of the party which makes the larger capital investment. | ||
In a nonentity joint venture, there is no contribution of capital to form a new entity. | ||
In a nonentity joint venture the benefit gained is in the form of collective profits rather than individual profits. |
2 points
QUESTION 20
The _____ is a legal document issued by a bank at the importer's (or buyer's) request wherein the importer promises to pay a specified amount of money when the bank receives documents about the shipment.
export declaration | ||
license | ||
letter of credit | ||
bill of lading | ||
customs invoice |
2 points
QUESTION 21
_____ refers to the constellation of business, corporate, and international strategy elements, which managers must consider when making decisions.
Five Forces Analysis | ||
Cluster model | ||
Strategy diamond | ||
Porter's four corners model | ||
Strategic grouping |
2 points
QUESTION 22
Strategy implementation is the process of:
deciding which strategies to follow in order to diversify. | ||
performing all the activities necessary to do what has been planned. | ||
deciding the businesses in which an organization would compete. | ||
addressing the issue of the kind of strategies an organization would follow. | ||
devising plans to add value to the existing line of business. |
2 points
QUESTION 23
The _____ function requires monitoring performance so that it meets the performance standards established by the organization.
controlling | ||
leading | ||
planning | ||
organizing | ||
job design |
2 points
QUESTION 24
_____ refers to the sequence of activities that include the various steps of the supply chain as well as additional activities, such as marketing, sales, and service.
Value chain | ||
Differentiation | ||
Cost leadership | ||
Scope | ||
Homesourcing |
2 points
QUESTION 25
Outsourcing involves:
diversifying into a new business. | ||
the sale of products or services in one country that are sourced in another country. | ||
the company delegating an entire process to the outsource vendor. | ||
guiding the choice of markets that a firm competes in. | ||
performing a service by staff from within an organization and also by an external service provider. |
2 points
QUESTION 26
The U.S. fast-food chain Sonic will only open new outlets in states that are adjacent to states where it already has stores. This is an example of:
differentiation. | ||
increasing vertical scope. | ||
diversification. | ||
offshoring. | ||
increasing geographic scope. |
2 points
QUESTION 27
_____, which are a part of the SWOT analysis, assess the external attractive factors that represent the reason for a business to exist and prosper.
Strengths | ||
Weaknesses | ||
Threats | ||
Opportunities | ||
Strategies |
2 points
QUESTION 28
_____ refers to the number of different topographical markets in which an organization participates.
Geographic scope | ||
Value chain | ||
Differentiation | ||
Cost leadership | ||
Offshoring |
2 points
QUESTION 29
The first step in the planning process is:
establishing organizational objectives. | ||
formulating and ensuring the effective implementation of plans. | ||
the SWOT analysis. | ||
identifying multiple ways of achieving organizational objectives. | ||
monitoring the progress and evaluating the success of the plans. |
2 points
QUESTION 30
In Holland, KFC makes a potato-and-onion croquette, while in France it sells pastries alongside chicken. KFC:
has centralized its business processes to enable it to provide the services mentioned. | ||
assumes that consumer needs and desires vary by country. | ||
assumes that the world is flat. | ||
sells the same products in the same way in every country. | ||
is following the cost-leadership strategy. |
2 points
QUESTION 31
An automobile giant headquartered in the United States sells high-end bikes across the world. It wants to enter an emerging market. Customers in the market cannot afford the types of accessories used in the bikes. Thus the regional branch of the organization makes an autonomous decision to remove the accessories and to offer a toned-down version of the bikes to compete in the emerging market. This decision is accepted by the headquarters on the principle that the man on the ground is the best judge of local conditions. The above serves as an example of a(n):
decentralized organizational structure. | ||
reverse engineering. | ||
centralized organizational structure. | ||
reverse innovation. | ||
open sourcing. |
2 points
QUESTION 32
Nike products are manufactured in factories in countries such as China, Vietnam, Indonesia, and Mexico. Wholesalers, retailers, agents, and brokers are intermediaries who help in bringing the products to the consumer. These intermediaries bring the products from the factories to the consumers. They serve as an example of:
product branding. | ||
market positioning. | ||
market segmentation. | ||
channel of distribution. | ||
social marketing. |
2 points
QUESTION 33
Which of the following statements holds true for a global brand?
It refers to the brand name of a product that has worldwide recognition. | ||
It refers to the marketing strategy in which a firm marketing a product with a well-developed image uses the same brand name in a different product category. | ||
It refers to products that make the world less flat because of lack of recognition across countries. | ||
It refers to the product that is distributed nationally under a brand name owned by the producer or distributor. | ||
It refers to the changing the identity of a product, relative to the identity of competing products, in the collective minds of the target market. |
2 points
QUESTION 34
An organization that manufactures readymade cotton shirts sources the raw material from all over the world. It does this as a precaution against the failure of one or more companies to deliver the raw materials. The above serves as an example of:
open-sourcing. | ||
multisourcing. | ||
sole-sourcing. | ||
home sourcing. | ||
outsourcing. |
2 points
QUESTION 35
Which of the following holds true for product adaptation?
It refers to the company strategy of modifying an existing product in a way that makes it better fit local needs. | ||
It refers to the total composite of products offered by a particular organization. | ||
It refers to the strategy of taking the company's current products and selling them in other countries without making changes to the product. | ||
It refers to the creation of a new name, term, symbol, design, or a combination of them for an established brand with the intention of developing a differentiated position in the mind of stakeholders and competitors. | ||
It refers to the strategy of creating an entirely new product for a given local market. |
2 points
QUESTION 36
In marketing, market segmentation refers to the:
process of dividing a larger market into smaller markets that share a common characteristic, such as age, gender, income level, or lifestyle. | ||
combination of the four Ps of marketing that can be customized for different countries. | ||
commerce areas where because of price differences across countries, consumers are able to cross international borders to legally purchase products at lower prices than in their home country. | ||
commerce areas where vendors purposely deceive buyers by altering products and then selling them as branded products at a bargain cost. | ||
set of expectations, memories, stories and relationships that-taken together-account for a consumer's decision to choose one product or service over another. |
2 points
QUESTION 37
In marketing, which of the following holds true for counterfeit markets?
It refers to the process of dividing a larger market into smaller markets that share a common characteristic, such as age, gender, income level, or lifestyle. | ||
It refers to the trade of goods and services that are illegal in themselves and/or distributed through illegal channels. | ||
It refers to the commerce areas where, because of price differences across countries, consumers are able to cross international borders to legally purchase products at lower prices than in their home country. | ||
It refers to the commerce areas where vendors purposely deceive buyers by altering products and then sell them as branded products at a bargain cost. | ||
It refers to the secretive, unregulated (though often technically legal) trading in commodity futures. |
2 points
QUESTION 38
_____ refers to buying raw materials, components, or services from one supplier exclusively, rather than buying from two or more suppliers.
Open-sourcing | ||
Multisourcing | ||
Sole-sourcing | ||
Home-sourcing | ||
Outsourcing |
2 points
QUESTION 39
_____ refers to a situation which means that there is no more stock of the company's product.
Stock of record | ||
Stock-check | ||
Safety stock | ||
Stock call | ||
Stock-out |
2 points
QUESTION 40
Which of the following statements holds true for the indirect channel of distribution?
It refers to the shortest channel of distribution, consisting of just the producer and the end consumer. | ||
It refers to the combination of the four Ps of marketing that can be customized for different countries. | ||
It refers to a channel of distribution which contains one or more intermediaries between the consumer and the producer. | ||
It refers to a channel of distribution where the customer is the first and not the last link in the distribution chain. | ||
It refers to the channel of distribution where the company sells its products to the consumers in other countries via the internet without using local retailers. |
TRUE / FALSE
1. True False In the aggregate expenditures model presented in the textbook,
investment is assumed to rise with increases in real GDP and fall with decreases in real GDP.
2. True False When C + Ig = GDP in a private closed economy, S = Ig and there are no unplanned changes in inventories.
3. True False The risk-free interest rate is the rate on long-term U.S. government bonds.
4. True False Bond prices and interest rates are directly or positively related.
5. True False The public debt is the accumulation of all deficits and surpluses that have occurred through time.
6. True False The M2 money supply may be larger or smaller than the M1 money supply depending on the size of small-denominated time deposit balances and Money Market Mutual Fund balances held by individuals.
7. True False Excess reserves are the amount by which required reserves exceed actual reserves.
8. True False The public debt is held as Treasury bills, Treasury notes, Treasury bonds, and U.S. savings bonds.
9. True False The equilibrium price level and equilibrium level of real GDP occur at the intersection of the aggregate demand curve and the aggregate supply curve.
10. True False Investment is highly stable; it increases over time at a very steady rate.
MULTIPLE CHOICE
11. A recessionary expenditure gap is:
A. the amount by which the full-employment GDP exceeds the level of aggregate expenditures.
B. the amount by which equilibrium GDP falls short of the full-employment GDP.
C. the amount by which investment exceeds saving at the full-employment GDP.
D. the amount by which aggregate expenditures exceed the full-employment level of GDP.
12. The multiplier effect indicates that:
A. a decline in the interest rate will cause a proportionately larger increase in investment.
B. a change in spending will change aggregate income by a larger amount.
C. a change in spending will increase aggregate income by the same amount.
D. an increase in total income will generate a larger change in aggregate expenditures.
13. Which one of the following is true about the U.S. Federal Reserve System?
- There are 12 regional Federal Reserve Banks.
B. The head of the U.S. Treasury also chairs the Federal Reserve Board.
C. There are 14 members of the Federal Reserve Board.
D. The Open Market Committee is smaller in size than the Federal Reserve Board.
14. If the nominal interest rate is 18 percent and the real interest rate is 6 percent, the inflation rate is:
A. 18 percent.
B. 24 percent.
C. 12 percent.
D. 6 percent.
15.
Refer to the above diagram for a private closed economy. The equilibrium level of GDP is:
A. $400.
B. $300.
C. $200.
D. $100.
16. Which of the following represents the most expansionary fiscal policy?
A. a $10 billion tax cut
B. a $10 billion increase in government spending
C. a $10 billion tax increase
D. a $10 billion decrease in government spending
17.
Refer to the above table. The economy shown is a:
A. private economy.
B. private open economy.
C. mixed closed economy.
D. mixed open economy.
18. Currency held in the vault of First National Bank is:
A. counted as part of M1.
B. counted as part of M2, but not M1.
C. only counted as part of M1 if it was deposited into a checking account.
D. not counted as part of the money supply.
19. If the dollar appreciates relative to foreign currencies, we would expect:
A. the multiplier to decrease.
B. the country's exports and imports to both fall.
C. the country's net exports to rise.
D. the country's net exports to fall.
20. The most important determinant of consumption and saving is the:
A. level of bank credit.
B. level of income.
C. interest rate.
D. price level.
21. The multiple by which the commercial banking system can increase the supply of money on the basis of each dollar of excess reserves is equal to:
A. the reciprocal of the required reserve ratio.
B. 1 minus the required reserve ratio.
C. the reciprocal of the income velocity of money.
D. 1/MPS.
22. Which one of the following would not shift the aggregate demand curve?
A. a change in the price level
B. depreciation of the international value of the dollar
C. a decline in the interest rate at each possible price level
D. an increase in personal income tax rate
23. The cyclically-adjusted budget tells us:
A. that in a full-employment economy the Federal budget should be in balance.
B. that tax revenues should vary inversely with GDP.
C. what the size of the Federal budget deficit or surplus would be if the economy was at full
employment.
D. the actual budget deficit or surplus realized in any given year.
24. The aggregate supply curve:
A. is explained by the interest rate, real-balances, and foreign purchases effects.
B. gets steeper as the economy moves from the top of the curve to the bottom of the curve.
C. shows the various amounts of real output that businesses will produce at each price level.
D. is downsloping because real purchasing power increases as the price level falls.
25.
Refer to the above diagram. If the equilibrium price level is P1, then:
A. aggregate demand is AD2.
B. the equilibrium output level is Q3.
C. the equilibrium output level is Q2.
D. producers will supply output level Q1
26. Discretionary fiscal policy refers to:
A. any change in government spending or taxes that destabilizes the economy.
B. the authority that the President has to change personal income tax rates.
C. intentional changes in taxes and government expenditures made by Congress to stabilize the economy.
D. the changes in taxes and transfers that occur as GDP changes.
27.
Refer to the above diagram. Which tax system has the most built-in stability?
A. T4
B. T3
C. T2
D. T1
28.
Refer to the given graph. A shift of the consumption schedule from C1 to C2 might be caused by a(n):
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29. When a bank loan is repaid the supply of money:
A. is constant, but its composition will have changed.
B. is decreased.
C. is increased.
D. may either increase or decrease.
30. The Federal budget deficit is found by:
A. subtracting government tax revenues plus government borrowing from government spending in a particular year.
B. subtracting government tax revenues from government spending in a particular year.
C. cumulating the differences between government spending and tax revenues over all years since the nation's founding.
D. subtracting government revenues from the noninvestment-type government spending in a particular year.
31.
Refer to the above information. Money supply M1 for this economy is:
A. $ 60.
B. $ 70.
C. $ 130.
D. $ 140.
32. Which of the following statements is true as a result of Federal Reserve efforts to rescue the financial industry from the financial crisis of 2007 and 2008?
- From February 2008, to May 2009, the Fed oversaw the consolidation of 20 major financial institutions into fewer than a dozen.
B. From March 2008, to February 2009, the Fed experienced a 50 percent decline in the value of assets held.
C. From February 2008, to March 2009, Fed assets more than doubled to nearly $2 trillion.
D. From February 2008, to March 2009, Fed lending caused the U.S. public debt to rise by over $1 trillion.
33. Which of the following is the basic economic policy function of the Federal Reserve Banks?
- holding the deposits or reserves of commercial banks
B. acting as fiscal agents for the Federal government
C. controlling the supply of money
D. the collection or clearing of checks among commercial banks
34. In a fractional reserve banking system:
A. bank panics cannot occur.
B. the monetary system must be backed by gold.
C. banks can create money through the lending process.
D. the Federal Reserve has no control over the amount of money in circulation.
35. |
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36. Assume the Continental National Bank's balance statement is as follows:
Assuming a legal reserve ratio of 20 percent, how much in excess reserves would this bank have after a check for $10,000 was drawn and cleared against it?
A. $ 3,000
B. $ 24,000
C. $ 6,000
D. $ 16,000
37. Answer the question on the basis of the following table for a commercial bank or thrift:
Refer to the above table. When the legal reserve ratio is 25 percent, the excess reserves of this single bank are:
A. $0.
B. $1,000.
C. $5,000.
D. $30,000.
38. Which of the following is a tool of monetary policy?
A. open market operations
B. changes in banking laws
C. changes in tax rates
D. changes in government spending
39. An increase in nominal GDP increases the demand for money because:
A. interest rates will rise.
B. more money is needed to finance a larger volume of transactions.
C. bond prices will fall.
D. the opportunity cost of holding money will decline.
40. Answer the next question on the basis of the following table:
At equilibrium in the above market for money, the total amount of money demanded is:
A. $500.
B. $480.
C. $460.
D. $440.
41. For most financial assets investors must be compensated for:
A. non-diversifiable and diversifiable risk.
B. diversifiable risk and time preference.
C. non-diversifiable risk and time preference.
D. non-diversifiable and diversifiable risk, and time preference.
42. Reserves must be deposited in the Federal Reserve Banks by:
A. only commercial banks which are members of the Federal Reserve System.
B. all depository institutions, that is, all commercial banks and thrift institutions.
C. state chartered commercial banks only.
D. federally chartered commercial banks only.
43.
Refer to the diagrams. Assuming a constant price level, an increase in aggregate expenditures from AE1to AE2 would:
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44. The discount rate is the interest:
A. rate at which the central banks lend to the U.S. Treasury.
B. rate at which the Federal Reserve Banks lend to commercial banks.
C. yield on long-term government bonds.
D. rate at which commercial banks lend to the public.
45. What concept describes how quickly an investment increases in value when interest is paid not only on the original amount invested, but also on the accumulated interest payments?
A. present value
B. future value
C. compound interest
D. real rate of interest
46. The aggregate demand curve:
A. is upsloping because a higher price level is necessary to make production profitable as production costs rise.
B. is downsloping because production costs decline as real output increases.
C. shows the amount of expenditures required to induce the production of each possible level of real output.
D. shows the amount of real output that will be purchased at each possible price level.
47. The Security Market Line depicts the relationship between the:
A. average expected rate of return on stocks and the average expected rate of return on bonds.
B. average expected rate of return of a financial asset and the discount rate.
C. risk level of a financial asset and the prime interest rate.
D. average expected rate of return and risk level of a financial asset.
48. Arbitrage causes all financial assets:
A. of the same risk level to have the same price.
B. to have the same expected rate of return.
C. to have the same beta.
D. of the same risk level to have the same average expected rate of return.
49. |
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50. Given the expected rate of return on all possible investment opportunities in the economy:
A. an increase in the real rate of interest will reduce the level of investment.
B. a decrease in the real rate of interest will reduce the level of investment.
C. a change in the real interest rate will have no impact on the level of investment.
D. an increase in the real interest rate will increase the level of investment.
END OF THE EXAM