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Introduction to International Finance Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Page 1

Question 1 1. Predict the effect on the exchange rate when the Federal Reserve uses monetary policy to increase income or available money.

Question 2 2. When expansionary monetary policy leads to a decrease in interest rates, the exchange rate _____.

Question 3 3. What is true about contractionary monetary or fiscal policy?

Question 4 4. Deduce the effects of having a higher exchange rate for the U.S. dollar on foreign currencies and imports.

Question 5 5. How can a fiscal policy affect exchange rates?

Page 2

Question 6 6. When are exchange rates determined by demand and supply forces?

Question 7 7. If the American dollar rose in value in relation to the Japanese Yen, what would likely be the effect?

Question 8 8. Which of the following statements is true?

Question 9 9. What is the rate at which one currency is converted in another called?

Question 10 10. If more Americans want to suddenly purchase goods in Mexico, what likely happens?

Page 3

Question 11 11. An increase in the value of a domestic currency will mainly affect _____.

Question 12 12. Identify the situation where a weak currency, or lower exchange rate, can be beneficial.

Question 13 13. What would you expect if there is an increase in exchange rate?

Question 14 14.

Consider a scenario where there has been a decrease in the exchange rate of the American dollar.

How will the inflation and import prices vary?

Question 15 15. When the American dollar buys more than its equivalent in another currency, it is considered to be _____ the other currency.

Page 4

Question 16 16. If a bank wants to conduct business where there is low taxes and little regulation, where would it go?

Question 17 17. How does an affiliate bank and a subsidiary bank differ?

Question 18 18. What type of bank is located in a foreign country and is used by your domestic bank to help their customers conduct business in the foreign country?

Question 19 19. What's the best explanation of a letter of credit?

Question 20 20. Why would a business choose an Offshore Banking Center?

Page 5

Question 21 21. What is the primary mission of the World Bank?

Question 22 22. What is the best explanation of monetary policy?

Question 23 23. Which of the following is one of the primary goals of the IMF?

Question 24 24. Why is a negative balance of payment bad for a country?

Question 25 25. How do loans for infrastructure, health, and education help further economic development?

Introduction to International Finance Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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