Classical

Advanced Questions - Section 2

46:  

A nation wishing to reduce its current account deficit would be advised to

A.

engage in more government spending

B.

reduce government taxes

C.

increase private investment spending

D.

decrease domestic consumption spending

 
 

Option: D

Explanation :

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47:  

Which financial instrument provides a buyer the right to purchase or sell a fixed amount of currency at a prearranged price, within a few days to a couple of years

A.

letter of credit

B.

foreign currency option

C.

cable transfer

D.

bill of exchange

 
 

Option: B

Explanation :

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48:  

A ____ is a regional trading bloc in which member countries eliminate internal trade barriers but maintain existing barriers against countries that are not members

A.

free trade area

B.

customs union

C.

common market

D.

monetary union

 
 

Option: A

Explanation :

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49:  

The largest volume of foreign exchange trading takes place in

A.

China

B.

Germany

C.

the United Kingdom

D.

the United States

 
 

Option: C

Explanation :

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50:  

Multinational corporations face problems since they

A.

cannot benefit from the advantage of comparative advantage

B.

may raise political problems in countries where their subsidiaries operate

C.

can only invest at home, but not overseas

D.

can only invest overseas, but not at home

 
 

Option: B

Explanation :

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