AGB 302 WEEK 5 QUIZ LATEST UPDATE WITH VERIFIED SOLUTIONS

AGB 302 WEEK 5 QUIZ LATEST UPDATE WITH VERIFIED SOLUTIONS When a tourist goes to a bank in a foreign country to convert money into a local currency exchange rate used is the Forward rate spot rate currency swap rate carry trade Spot rate Country X and country Y reach an agreement to boost bilateral trade they agreed to remove all barriers to the trade of goods and services. They however are free to determine their own trade policies with regard to nonmembers which level of economic integration is this an example of? A free trade area a common market an economic union a customs union A free trade area The short term movement of funds from one currency to another in the hopes of profiting from shifts in exchange rates is known as Currency speculation currency risk mitigation currency hedging currency arbitrage Currency speculation A _____ entails even closer economic integration and cooperation than a common market. Economic union free trade area Full political union customs union Economic union An exchange rate of € = $1. 30 indicates that One euro buys $1.30 One could get 1.30 Euros for $1 euro buys $0.77 $1 is worth 1.30 euros One euro buys 1.30 dollars Which of the following is a reason why the European Union is considered an imperfect economic union? factors of production are not allowed to move freely between member countries almost all markets are heavily regulated not all members of the union have adopted the euro products and services are not allowed to move freely between member countries Not all members of the union have adopted the euro Inflation occurs when the stock of goods and services increases in the quantity of money in circulation decreases The quantity of money in circulation rises faster than the stock of goods and services output increases faster than the money supply The money supply decreases and the output increases The quantity of money in circulation rises faster than the stock of goods and services A _____ is one which prices do not reflect all available information externally convertible market speculative market efficient market inefficient market Inefficient market Which feature of a common market differentiates it from a customs union? a common external trade policy toward nonmembers ability of factors of production to move freely between members harmonization of members' tax rates a common currency Ability of factors of production to move freely between members The is primarily a consulted rather than legislative body Court of justice European commission European Parliament council of the European Union European Parliament Restrictions on external convertibility can allow domestic companies to freely invest abroad hamper foreign companies wishing to do business in that country limit domestic companies from investing abroad limit the amount of product a foreign company can produce in that country Limit domestic companies from investing abroad On average studies indicate that NAFTA's overall impact has been large but negative small but positive large and positive small and negative Small but positive From least integrated to most integrated the levels of economic integration are a common market a free trade area an economic union a customs union and a political union commons union a free trade area a common market a political union and an economic union common market, an economic union, a customs union, a free trade area and a political union. Free trade area a customs union, a common market, an economic union and a political union Free trade area, a customs union, a common market, and economic union, and a political union. To ensure that a free trade agreement does not result in trade diversion, which of the following have to come within the scope of the WTO? Energy markets Services nontariff barriers tax rates Nontariff barriers The risk that arises from volatile changes in exchange rates is known as Foreign exchange risk economic exposure transactional exposure translational exposure Foreign exchange risk The ________ is a global network of banks, brokers, and foreign exchange dealers connected by electronic communication systems. Foreign market database foreign exchange market global marketplace united global database Foreign exchange market A __________ is the simultaneous purchase and sale of a given amount of foreign exchange for two different values Currency swap arbitrage spot exchange carry trade Currency swap The rate at which one country is converted into another is known as the _____________ Exchange rate currency swap rate fluctuation rate carryover rate Exchange rate A political benefit of economic integration is that it: Reduces the potential for violent conflict. Enables participants to achieve gains from the free flow of trade. Enables participants to achieve gains from the free flow of investment. Allows countries to specialize in production of goods and services that they can produce most efficiently. Reduces the potential for violent conflict The movement toward regional economic integration has been most successful in _________ Central America Africa Asia Europe Europe