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BUSI 3250 Final Exam (Ch. 7-9) Questions With Answers 100- Correct
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10/10/24, 9:00 PMBUSI 3250 Final Exam (Ch. 7-9)
Jeremiah
Terms in this set (96)
all the uncontrollable forces originating outside the home country that surround and
Foreign environment
influence the firm
interaction between domestic and foreign environmental forces or between sets of
Foreign Interactions
foreign environmental forces
gross domestic product (GDP) total monetary value of all goods and services produced within a nation
total value of all income generated by the residents of a nation, including both the
Gross National Income (GNI)
domestic production of goods and services and income from abroad
high-income economies GNI per capital of $12,056 or more
middle-income economies GNI per capita between $995 and $12,056
low-income economies GNI per capita of $995 or less
upper-middle income economies GNI per capita between $3,896 and $12,055
lower-middle income economies GNI per capita between $996 and $3,895
lower-income nations, which have less technically developed infrastructure and
developing economies
lower living standards
high-income industrialized nations which have high living standards and the most
developed economies
technically developed infrastructures
Economies with per-capita incomes in the low to middle range that are in a transition
emerging market economies
toward developed status
GNI per capita indicates how advanced an economy is but should be used with caution
A means of adjusting the exchange rates for two currencies so the currencies have
purchasing power parity
equivalent purchasing power
The arithmetic average of the current exchange rate and the exchange rates in the
Atlas conversion factor two preceding years, adjusted by the ratio of domestic inflation to the combined
inflation rates of the euro zone, Japan, the United Kingdom, and the United States
The part of a nation's income that, because of unreporting or underreporting, is not
underground economy measured by official statistics; includes production of legal and illegal good and
income distribution a measure of how a nation's income is apportioned among its people
A measure of the degree to which family income within a country is distributed
GINI index
equally; wide range around the world
-disposable income: after-tax personal income
private consumption
-discretionary income: amount of income left after paying taxes and making essential
purchases
personal consumption ownership of goods and consumption of key materials
unit labor costs total direct labor costs divided by units produced
Vertical Integration production by a firm of inputs for its own manufacturing processes
services
total population most general indicator of potential market size
Economic Growth Rate The rate of change of real GDP from one year to the next
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developing countries generally have _____ than industrial countries, due to higher
younger populations
birth rates
population density measure of the number of inhabitants per area unit
population distribution A measure of how the inhabitants are distributed over a nation's area
rural-to-urban shift The movement of a nation's population from rural areas to cities
monetary system that defines the value of its currency in terms of a fixed amount of
The Gold Standard
gold; government does not have monetary flexibility
The international monetary system in place from 1945 to 1971, with par value based
Bretton Woods System
on gold and the U.S. dollar
fixed exchange rates currency's value is tied to the value of another currency or gold
par value stated value
reserves Assets held by a nation's central bank, used to back up government liabilities
national currency that is also a reserve currency will eventually run a deficit, leading
Triffin Paradox
to a lack of confidence in the reserve currency and a financial crisis
Special Drawing Rights (SDR) the unit of account for the IMF and other international organizations
• U.S. dollar most used central reserve since end of WWII.
The Central Reserve/National Currency • Holding large amounts of U.S. dollars eventually means they will lose value (Triffin
Conflict paradox).
• IMF would like a non-national asset to become main reserve.
Determined by supply and demand that allow currency values to float against one
floating exchange rates
another
Jamaica Agreement established flexible exchange rates among IMF members
1. Exchange arrangement with no separate legal tender
2. Currency board agreement
3. conventional fixed-peg arrangement
4. Stabilized arrangement
Current Currency Arrangements
5. crawling peg
6. crawling band
7. managed floating
8. free floating exchange rates
an exchange rate that follows a path determined by a decision of the government or
crawling peg
the central bank and is achieved in a similar way to a fixed exchange rate
The currency fluctuates, while the country's monetary authority actively intervenes
managed floating
on the exchange market without specifying or making public its goals and targets
Free Floating Exchange Rate Determined by supply and demand of that foreign money
Institution for central bankers; operates to build cooperation in order to foster
Bank for International Settlements monetary and financial stability; known as most discrete financial institution in the
world
the major currencies are allowed by their central banks to fluctuate freely against
floating currency values
each other
reciprocal currency quoted as dollars per unit of currency instead of in units of currency per dollar
spot rate the exchange rates between two currencies for delivery within two business days
crawling band
forward currency market readjusts the country's
Trading market currency
for currency to maintain
contracts fluctuation
deliverable 30, 60,margins around
90, or 180 daysa incentral rate
the future
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