Trade and FOREX Exam
Questions and Answers
1. 1. All of the following are TRUE regarding international trade EXCEPT
a. Countries experience a trade deficit when imports are greater than
exports
b. Net exports will increase when that country's currency depreciates
c. Exports are considered a debit in a country's balance of trade
d. The balance of payment is a summary of a country's transactions with
other countries
e.The primary components of the balance of payments are the current
account and the capital (financial) account Correct Answer: c. Exports are considered a
debit in a country's balance of trade
2. 2. Which of the following would definitely move a country toward a
current account deficit?
a. An increase in exports
b. An increase in imports
c. An larger capital account deficit
d. An increase in capital outflow
e. A decrease in foreign aid provided to other countries Correct Answer: b. An
increase in imports
3. 3. Which of the following is the best example of foreign direct
investment?
a. The Chinese government buying United States Treasury bonds
b. A business in the United States selling machinery to a company in Japan
c. A United States citizen buying Mexican pesos.
d. The United States sending earthquake relief aid to Haiti
e. A Japanese software company buying a factory in the United States Correct
Answer: e. A Japanese software company buying a factory in the United States
4. 4. The value of a country's currency relative to another country's
currency is called
a. capital flow
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Questions and Answers
1. 1. All of the following are TRUE regarding international trade EXCEPT
a. Countries experience a trade deficit when imports are greater than
exports
b. Net exports will increase when that country's currency depreciates
c. Exports are considered a debit in a country's balance of trade
d. The balance of payment is a summary of a country's transactions with
other countries
e.The primary components of the balance of payments are the current
account and the capital (financial) account Correct Answer: c. Exports are considered a
debit in a country's balance of trade
2. 2. Which of the following would definitely move a country toward a
current account deficit?
a. An increase in exports
b. An increase in imports
c. An larger capital account deficit
d. An increase in capital outflow
e. A decrease in foreign aid provided to other countries Correct Answer: b. An
increase in imports
3. 3. Which of the following is the best example of foreign direct
investment?
a. The Chinese government buying United States Treasury bonds
b. A business in the United States selling machinery to a company in Japan
c. A United States citizen buying Mexican pesos.
d. The United States sending earthquake relief aid to Haiti
e. A Japanese software company buying a factory in the United States Correct
Answer: e. A Japanese software company buying a factory in the United States
4. 4. The value of a country's currency relative to another country's
currency is called
a. capital flow
1/
3
