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Multiple Choice Quiz
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1
When foreign exchange traders hear news of political disruption in major countries, they:
A)do as little as possible until the situation stabilizes.
B)frequently buy U.S. dollars.
C)make little or no adjustment in their trading patterns.
D)frequently sell U.S. dollars.
2
The U.S. move to cease its willingness to exchange currencies for gold:
A)was foreseen at the Bretton Woods Conference.
B)caused currency exchange markets to remain closed for several days.
C)extended the gold exchange standard.
D)was welcomed by European governments.
3
When the euro began to circulate in 1999, many experts forecast that it would be an extremely strong currency which would supplant the U.S. dollar as the world's most important currency. The beginning exchange rate was 1 euro = $1.14 U.S. What happened between 1999 and 2003 was that
A)the experts were proven to be correct.
B)the euro fell to 1 euro = $0.50 U.S.
C)the euro fell to 1 euro = $0.79 U.S. and then regained strength to about par with the dollar by the end of 2002 and continued to strengthen into 2006.
D)the euro flopped and was removed from circulation.
4
Dividends on American company stock owned by a foreign resident:
A)must be paid.
B)is a debit in the American BOP account.
C)is a credit in the American BOP account.
D)is not a BOP account item
5
10 Special drawing rights (SDRs) are:
A)widely used among the developing nations.
B)used by OECD member countries.
C)more stable than any single currency.
D)issued to all IMF member countries except for several newer members.





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