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1.16 In 1992, the European Union decided to create an economic as well as a monetary

union involving the introduction of ________.

a. b. c. d.

a pegged currency known as the euro. a managed currency know as the ecu.

a freely floating exchange rate for a currency known as the euro. a single European currency managed by a European central bank.

The European Union, p. 21

1.17 The European Union is a free trade association that is based on a(n)

a. b. c. d.

economic and monetary union economic union monetary union

a commonly agreed upon list of lowered tariffs

The European Union, p. 21

1.18 Which one of the following has a single currency managed by a common central bank?

a. b. c. d.

ASEAN

European Union

World Trade Organization

The Organization for Economic Cooperation and Development

The European Union, p. 21

1.19 Which one of the following its renowned for its high-quality databases on economic and

social data?

a. b. c. d.

WTO EU OECD

World Bank

The Organization for Economic Cooperation and Development, p. 20

1.20 What is the name of the international organization that fosters monetary and financial

cooperation and serves as a bank for central banks?

a. b. c. d.

WTO EU

World Bank

Bank for International Settlements

The bank for international settlements (BIS), p. 21

1.21 Which of the following are institutional banks that provide financial support and

professional advice for developing countries?

a. b. c. d.

multilateral development banks central banks investment banks Barclays bank

Multilateral development banks, p. 20

1.22 What economic field of study explores the problems associated with a firm that arise

from a separation of ownership and control and devises ways to resolve them?

a. b. c. d.

futures and options agency theory

foreign direct investment franchising

Agency theory and corporate governance, p. 11

DIFFICULTY LEVEL: MODERATE

1.23 In the economic field of agency theory, which one of the following is viewed as an agent

with the principals who are most importantly the firm¡¯s shareholders?

a. b. c. d.

suppliers employees managers attorneys

Agency theory and corporate governance, p. 11

1.24 What do the Enron Corporation, Worldcom and Tyco have in common?

a. b. c. d.

they were part of the oil and gas industry

all three were owned by a single parent company

each one was an example of sound corporate governance all were involved in corporate scandals

Corporate scandals, p. 11

1.25 Which one of the following is the most common method of overcoming the agency

problem in developed countries outside of the U.S. and the U.K?

a. b. c. d.

concentrated ownership currency boards hostile takeovers

foreign direct investment

Concentrated ownership, p. 13

Which of the following markets is comprises the world¡¯s major banks and other financial institutions?

2.1

a. b. c. d.

Forex Market Spot Market

Interbank Market Money Market

The organization of the foreign exchange market, p. 36

2.2

When someone in the currency market can buy a currency at a low price and sell it for a higher price, it is known as

a. b. c. d.

arbitrage

the bid-ask spread hedging

interbank currency market

The organization of the foreign exchange market, p. 36

2.3

Which one of the following features is not part of the interbank foreign exchange market?

a. b. c. d.

Derivative securities such as foreign currency futures and options Trade in swaps and forward contracts Immediate exchanges of monies Non-strategic loans

The organization of the foreign exchange market, p. 36