1. On August 15, 1971 President ___________ announced that the US would no longer redeem currency for gold.
a. Franklin D. Roosevelt
b. Bill Clinton
c. John F. Kennedy
d. Richard Nixon
2. (T/F) The OTC Market has gradually evolved into the largest, fastest and most flexible currency trading market in the world.
3. The __________ of the world have become highly interdependent because of improvements in _________ and transportation technologies and the lowering of barriers to trade.
a. Societies, education
b. Economies, communication
c. Cultures, living standards
d. Nations, religious acceptance
3. (T/F) Currency arbitrage means buying a currency in one market at a low price and reselling moments later in another market at a higher price.
4. Select the two reasons that global financial markets are important to borrowers.
a. Expanding the supply of money and expanding lending opportunities
b. Expanding lending opportunities and reduce the cost of money
c. Reduce the cost of money and expand the supply of money
d. Reducing risk and expanding lending opportunities
5. (T/F) In the United States, the Federal Reserve Bank is responsible for regulating the growth of the economy, which is accomplished by the increase or decrease of money supply.
6. Participation is voluntary, but before qualifying to adopt the Euro, a country must participate in the _________ one of the convergence criteria for entry.
a. ERM
b. EMU
c. ERM II
d. EEC
e. ERM I
7. (T/F) With 11 beginning member in 1952, the European Union has now grown to a total of 28 members.
8. (T/F) The Foreign Exchange Market is a physical and virtual institutionalized structure whereby currency of one country is exchanged to currency of another country.
9. The 1922 Fordney-McCumber Act raised US tariffs to historically high levels.
10. All of the following are EU Member countries except:
a. Portugal
b. Peru
c. Malta
d. Lithuania
11. (T/F) The role of the IMF is to supervise the exchange rate practices of member countries and to encourage the free convertibility of any national money into the monies of other countries.
12. Primary guardians of national currencies and usually responsible for setting monetary policy and exchange rate policy.
a. Commercial Banks and Investments Banks
b. Corporations
c. Central Banks and Governments
d. Investment Firms
13. (T/F) The membership requirements for the European Monetary Union (EMU) are based on the 5 convergent criterion: Price Stability, Sound Public Finance, Sustainable Public Finances Commodity, Durability Convergence and Exchange Rate Stability.
14. Which of the following is not an industrial product exchanged within the global financial market?
a. Food
b. Shares of Stock
c. National Currencies
d. Child Labor
15. (T/F) The law of PPP states that similar goods or commodities in different countries should remain at the same price after conversion of currencies according to current exchange rates.
16. Use the FX market to facilitate international business activities.
a. Commercial Banks and Investment Banks
b. Corporations
c. Central Banks and Governments
d. Investment Firms
17. The most prominent major financial markets are located:
a. New York City, Tokyo, and London
b. Atlanta, Shanghai, London
c. New York, Shanghai, Switzerland
d. Chicago, Tokyo, London
18. The end result of the global competition is ___________ products and ___________ for consumers.
a. Lower Quality, Lower Prices
b. Higher Quality, Higher Prices
c. Lower Quality, Higher Prices
d. Higher Quality, Lower Prices
19. (T/F) Two most popular products traded on the security exchange markets are stocks and bonds.