1. Which nation accounts for the largest amount of OPEC's oil reserves and production?

a. Iran
b. Libya
c. Iraq
d. Saudi Arabia

2. Most developing-nation exports go to industrial nations while most developing-nation imports originate in industrial nations.

3. The European Union is primarily intended to permit:

a. Countries to adopt scientific tariffs on imports
b. An agricultural commodity cartel within the group
c. The adoption of export tariffs for revenue purposes
d. Free movement of resources and products among member nations

4. Which nation is not a member of the North American Free Trade Association?

a. Canada
b. Greenland
c. Mexico
d. United States

5. NAFTA is a:

a. Monetary union
b. Free trade area
c. Common market
d. Customs union

6. In the United States, which group was most likely to be hurt by the North American Free Trade Agreement?

a. Unskilled labor
b. Skilled labor
c. Owners of capital equipment
d. Owners of financial capital

7. Economic integration is the process of eliminating restrictions on international trade, payments, and factor mobility.

8. As of 2002, members of the European Monetary Union agreed to replace their currencies with the:

a. mark
b. dollar
c. franc
d. euro

9. U.S. labor unions argued against the North American Free Trade Agreement on the grounds that it would result in U.S. companies relocating in Mexico in order to take advantage of lower wage rates.

10. Firms undertake multinational operations in order to:

a. Hire low-wage workers
b. Manufacture in nations they have difficulty exporting to
c. Obtain necessary factor inputs
d. All of the above

11. Conglomerate integration would occur if General Motors Inc. of the United States acquired a controlling interest in a British chemical company.

12. Critics of multinational corporations maintain that they often abandon domestic workers in order to take advantage of lower wage scales abroad.

13. On the balance-of-payments statements, merchandise imports are classified in the:

a. Current account
b. Capital account
c. Unilateral transfer account
d. Official settlements account

14. That U.S. importers purchase bananas from Brazil constitutes a debit transaction on the U.S. balance of payments.

15. Which of the following is classified as a credit in the U.S. balance of payments?

a. U.S. exports
b. U.S. gifts to other countries
c. A flow of gold out of the U.S.
d. Foreign loans made by U.S. companies

16. The U.S. balance of trade is determined by:

a. Exchange rates
b. Growth of economies overseas
c. Relative prices in world markets
d. All of the above

17. The U.S. has a balance of trade deficit when its:

a. Merchandise exports exceed its merchandise imports
b. Merchandise imports exceed its merchandise exports
c. Goods and services exports exceed its goods and services imports
d. Goods and services imports exceed its goods and services exports

18. On the U.S. balance-of-payments statement, the following transactions are credits, leading to the receipt of dollars from foreigners: merchandise exports, transportation receipts, income received from investments abroad, and investments in the United States by foreign residents.

19. An appreciation in the value of the U.S. dollar against the British pound would tend to:

a. Discourage the British from buying American goods
b. Discourage Americans from buying British goods
c. Increase the number of dollars that could be bought with a pound
d. Discourage U.S. tourists from traveling to Britain

20. A surplus on Germany's goods-and-services balance indicates that Germany has sold more goods and services to foreigners than it has bought from them over a one-year period.

21. If Canadian speculators believed the Swiss franc was going to appreciate against the U.S. dollar, they would:

a. Purchase Canadian dollars
b. Purchase U.S. dollars
c. Purchase Swiss francs
d. Sell Swiss francs

22. Swap transactions among commercial banks involve the conversion of one currency to another at one point with an agreement to reconvert it back into the original currency at some point in the future.

23. A major difference between the spot market and the forward market is that the spot market deals with:

a. The immediate delivery of currencies
b. The merchandise trade account
c. Currencies traded for future delivery
d. Hedging of international currency risks

24. The "spread" is a bank's profit margin on foreign exchange trading and equals the difference between the bid rate and the offer rate.

25. The balance on merchandise trade:

a. Must be negative
b. Must be positive
c. Must be zero
d. May be negative, positive, or zero

26. A person needing foreign exchange immediately would purchase it on the spot market.

27. Over time, a depreciation in the value of a nation's currency in the foreign exchange market will result in:

a. Exports rising and imports falling
b. Imports rising and exports falling
c. Both imports and exports rising
d. Both imports and exports falling.