1.Which of the following factors favors international market integration even in the presence of barriers to international capital mobility?

A)   Small investors are generally well diversified internationally.

B)   Multinational corporations borrow and lend internationally.

C)   The U.S. central bank (the Fed) insures international market liquidity.

D)   The international banking system is primarily regulated by the World Bank.

2.International market integration requires significant international capital mobility. In terms of volume of transactions, what has happened to international capital flows over the past two decades?

A)   International capital flows have increased modestly.

B)   International capital flows have decreased slightly since the breakup of the Soviet Union.

C)   As a percent of domestic gross domestic product (GDP), international capital flows have remained constant.

D)   International capital flows have increased dramatically.

3.Which of the following is NOT a factor that favors international market integration?

A)   Governments borrow and lend internationally.

B)   International tax laws are determined by the International Monetary Fund (IMF).

C)   Multinational corporations have operations in many different markets.

D)   Many institutional investors diversify internationally.

1.Which of the following factors favors international market integration even in the presence of barriers to international capital mobility?

A)   Small investors are generally well diversified internationally.

B)   Multinational corporations borrow and lend internationally.

C)   The U.S. central bank (the Fed) insures international market liquidity.

D)   The international banking system is primarily regulated by the World Bank.

The correct answer was B)

Multinational corporations borrow and lend on an international scale. This tends to promote international capital mobility and forces international competition in the credit markets.

2.International market integration requires significant international capital mobility. In terms of volume of transactions, what has happened to international capital flows over the past two decades?

A)   International capital flows have increased modestly.

B)   International capital flows have decreased slightly since the breakup of the Soviet Union.

C)   As a percent of domestic gross domestic product (GDP), international capital flows have remained constant.

D)   International capital flows have increased dramatically.

The correct answer was D)

The past two decades have witnessed large increases in the volume of international capital flows.

3.Which of the following is NOT a factor that favors international market integration?

A)   Governments borrow and lend internationally.

B)   International tax laws are determined by the International Monetary Fund (IMF).

C)   Multinational corporations have operations in many different markets.

D)   Many institutional investors diversify internationally.

The correct answer was B)

There is little in the way of uniform international tax law. Further, the IMF does not determine tax law. The other factors listed promote market integration.