BUSI 3250 Final Exam Questions and Answers 2023

BUSI 3250 Final Exam 1. Foreign environment: all the uncontrollable forces originating outside the home country that surround and influence the firm 2. Foreign Interactions: interaction between domestic and foreign environmental forces or between sets of foreign environmental forces 3. gross domestic product (GDP): total monetary value of all goods and services produced within a nation 4. Gross National Income (GNI): total value of all income generated by the residents of a nation, including both the domestic production of goods and services and income from abroad 5. high-income economies: GNI per capital of $12,056 or more 6. middle-income economies: GNI per capita between $995 and $12,056 7. low-income economies: GNI per capita of $995 or less 8. upper-middle income economies: GNI per capita between $3,896 and $12,055 9. lower-middle income economies: GNI per capita between $996 and $3,895 10. developing economies: lower-income nations, which have less technically developed infrastructure and lower living standards 11. developed economies: high-income industrialized nations which have high living standards and the most technically developed infrastructures 12. emerging market economies: Economies with per-capita incomes in the low to middle range that are in a transition toward developed status 13. GNI per capita: indicates how advanced an economy is but should be used with caution 14. purchasing power parity: A means of adjusting the exchange rates for two currencies so the currencies have equivalent purchasing power 15. Atlas conversion factor: The arithmetic average of the current exchange rate and the exchange rates in the 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 16. underground economy: The part of a nation's income that, because of unreporting or underreporting, is not measured by official statistics; includes production of legal and illegal good and services 17. Economic Growth Rate: The rate of change of real GDP from one year to the next 18. income distribution: a measure of how a nation's income is apportioned among its people 19. GINI index: A measure of the degree to which family income within a country is distributed equally; wide range around the world 20. private consumption: -disposable income: after-tax personal income -discretionary income: amount of income left after paying taxes and making essential purchases 21. personal consumption: ownership of goods and consumption of key materials 22. unit labor costs: total direct labor costs divided by units produced 23. Vertical Integration: production by a firm of inputs for its own manufacturing processes 24. total population: most general indicator of potential market size 25. younger populations: developing countries generally have ________ than industrial countries, due to higher birth rates 26. population density: measure of the number of inhabitants per area unit 27. population distribution: A measure of how the inhabitants are distributed over a nation's area 28. rural-to-urban shift: The movement of a nation's population from rural areas to cities 29. The Gold Standard: monetary system that defines the value of its currency in terms of a fixed amount of gold; government does not have monetary flexibility 30. Bretton Woods System: The international monetary system in place from 1945 to 1971, with par value based on gold and the U.S. dollar 31. fixed exchange rates: currency's value is tied to the value of another currency or gold 32. par value: stated value 33. reserves: Assets held by a nation's central bank, used to back up government liabilities 34. Triffin Paradox: national currency that is also a reserve currency will eventually run a deficit, leading to a lack of confidence in the reserve currency and a financial crisis 35. Special Drawing Rights (SDR): the unit of account for the IMF and other international organizations 36. The Central Reserve/National Currency Conflict: • U.S. dollar most used central reserve since end of WWII. • Holding large amounts of U.S. dollars eventually means they will lose value (Triffin paradox). • IMF would like a non-national asset to become main reserve. 37. floating exchange rates: Determined by supply and demand that allow currency values to float against one another 38. Jamaica Agreement: established flexible exchange rates among IMF members 39. Current Currency Arrangements: 1.Exchange arrangement with no separate legal tender 2. Currency board agreement 3. conventional fixed-peg arrangement 4. Stabilized arrangement 5. crawling peg 6. crawling band 7. managed floating 8. free floating exchange rates 40. crawling peg: an exchange rate that follows a path determined by a decision of the government or the central bank and is achieved in a similar way to a fixed exchange rate 41. crawling band: readjusts the country's currency to maintain fluctuation margins around a central rate 42. managed floating: The currency fluctuates, while the country's monetary authority actively intervenes on the exchange market without specifying or making public its goals and targets 43. Free Floating Exchange Rate: Determined by supply and demand of that foreign money 44. Bank for International Settlements: Institution for central bankers; operates to build cooperation in order to foster monetary and financial stability; known as most discrete financial institution in the world 45. floating currency values: the major currencies are allowed by their central banks to fluctuate freely against each other 46. reciprocal currency: quoted as dollars per unit of currency instead of in units of currency per dollar 47. spot rate: the exchange rates between two currencies for delivery within two business days 48. forward currency market: Trading market for currency contracts deliverable 30, 60, 90, or 180 days in the future 49. forward rate: The exchange rate between two currencies for delivery in the future, usually 30, 60, 90, or 180 days 50. bid price: Highest-priced buy order currently in the market 51. ask price: Lowest-priced sell order currently in the market 52. Causes of exchange rate movement: -Monetary policies -Fiscal policies -Law of one price concept -Arbitrage -Fisher effect -international fisher effect -Purchasing power parity 53. international fisher effect: says the interest rate differentials for any two currencies will reflect the expected change in their exchange rates 54. Exchange Rate Forecasting: important because exchange rates influence all aspects of business. 55. efficient market approach: assumption that current market prices fully reflect all available relevant information 56. random walk hypothesis: assumption that the unpredictability of factors suggests that the best predictor of tomorrow's prices is today's prices 57. Fundamental Approach: based on econometric models that attempt to capture the variables and their correct relationships 58. Technical Analysis: analyzes data for trends and then projects these trends forward 59. currency exchange controls: -government controls that limit the legal uses of a currency in international transactions -in general, only the relatively rich industrial countries have few or no currency exchange controls