Question 1

Explain the two institutions established by the Bretton Woods agreement.

Accepted Answer

The agreement reached at Bretton Woods e...

Question 2

Most of the International Monetary Fund's loan activities since the mid-1970s have been targeted toward developing nations typically because

Accepted Answer

A)   developed nations are not willing to enact certain macroeconomic policies in return for money.
B)   developing nations are more than twice as likely to experience financial crises as developed nations.
C)   it does not have enough funds to lend to large and developed countries.
D)   only developing nations are allowed to be its beneficiaries.
E)   of relatively slow economic growth in the developed countries of Europe.F) A) and D)
G) D) and E)

Question 3

In the context of the 1997 Asian crisis, how did the International Monetary Fund's "one-size-fits-all" approach to macroeconomic policy affect South Korea?

Accepted Answer

A)   It led to a decrease in the interest rates of short-term loans.
B)   It made it difficult for companies to service their excessive short-term debt obligations.
C)   It decreased the probability of widespread corporate defaults.
D)   South Korea failed to recover from its financial crises.
E)   South Korea was forced to increase restrictions on foreign direct investment.F) C) and E)
G) All of the above

Question 4

Under the 1976 Jamaica Agreement, gold was abandoned as a reserve asset.

Accepted Answer

A) True 
 B)False

Question 5

Under the gold standard, a country in balance-of-trade equilibrium earns income from exports that is equal to the money its residents pay for imports.

Accepted Answer

A) True 
 B)False

Question 6

The International Monetary Fund has been criticized for

Accepted Answer

A)   its lack of a "one-size-fits-all" approach to macroeconomic policy.
B)   encouraging moral hazard among banks.
C)   its lack of power and authority.
D)   using external experts to gain knowledge about a country.
E)   keeping its operations open to outside scrutiny.F) A) and B)
G) A) and E)

Question 7

Discuss how uncertainty provides an argument for a fixed exchange rate system.

Accepted Answer

Speculation adds to the uncertainty surr...

Question 8

The government of an Asian country allows its currency to nominally float freely against other currencies, but the government has the right to intervene, buying and selling currency, if it believes that the currency has deviated too far from its fair value. What this country is doing is called a ________ float.

Accepted Answer

A)   fixed
B)   clean
C)   pegged
D)   dirty
E)   capitalF) C) and D)
G) A) and E)

Question 9

A country that introduces a currency board commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate.

Accepted Answer

A) True 
 B)False

Question 10

Explain why all International Monetary Fund loan packages come with conditions attached.

Accepted Answer

By 2018, the IMF had programs in around ...

Question 11

According to the noted economist Jeffrey Sachs, the International Monetary Fund should

Accepted Answer

A)   not be accountable to anyone as it is a powerful institution.
B)   bail out banks that have rash lending policies.
C)   have a "one-size-fits-all" approach to macroeconomic policy.
D)   keep its operations open to greater outside scrutiny.
E)   lend only to countries with safe credit ratings.F) B) and D)
G) A) and E)

Question 12

If Canada suffered from "fundamental disequilibrium," and its government choose not to devalue its currency, a likely consequence of this would be

Accepted Answer

A)   a persistent trade surplus.
B)   a balance-of-payments equilibrium.
C)   an increase in exports.
D)   high unemployment.
E)   deflation.F) C) and E)
G) A) and C)

Question 13

Since 1973, exchange rates have become less volatile and more predictable.

Accepted Answer

A) True 
 B)False

Question 14

Elaborate on the main criticisms of the International Monetary Fund's approach to financial crises.

Accepted Answer

One criticism is that the International ...

Question 15

The objective of establishing the World Bank was to

Accepted Answer

A)   revive the gold standard.
B)   promote general economic development.
C)   control and manage the International Monetary Fund.
D)   promote a floating exchange rate system.
E)   approve large currency devaluations.F) A) and D)
G) A) and E)

Question 16

Why were Great Britain and the United States able to finance their deficits by borrowing private money since the early 1970s?

Accepted Answer

A)   rapid development of global capital markets
B)   shortage of International Monetary Fund grants available for disbursal
C)   high interest rate charged by the International Monetary Fund
D)   establishment of currency boards in these countries
E)   decline of the Bretton Woods systemF) A) and E)
G) A) and C)

Question 17

Briefly describe the pegged exchange rate regime.

Accepted Answer

Under a pegged exchange rate regime, a c...

Question 18

Explain when a currency board would be put in place.

Accepted Answer

A currency board is introduced as a mean...

Question 19

The rise in the value of the dollar between 1980 and 1985 occurred when the United States was running a large and growing trade deficit. Explain the factors that led to this rise.

Accepted Answer

The rise in the value of the dollar betw...

Question 20

The Bretton Woods system could work only as long as the U.S. inflation rate remained low and the United States did not run a balance-of-payments deficit.

Accepted Answer

A) True 
 B)False

Exam 11: The International Monetary System

Since 1973, exchange rates have become less volatile and more predictable.

Correct Answer
verified

Why were Great Britain and the United States able to finance their deficits by borrowing private money since the early 1970s?

Correct Answer
verified

Under the gold standard, a country in balance-of-trade equilibrium earns income from exports that is equal to the money its residents pay for imports.

Correct Answer
verified

Explain when a currency board would be put in place.

Correct Answer
verified
A currency board is introduced as a mean...
View Answer

The rise in the value of the dollar between 1980 and 1985 occurred when the United States was running a large and growing trade deficit. Explain the factors that led to this rise.

Correct Answer
verified
The rise in the value of the dollar betw...
View Answer

The Bretton Woods system could work only as long as the U.S. inflation rate remained low and the United States did not run a balance-of-payments deficit.

Correct Answer
verified

Elaborate on the main criticisms of the International Monetary Fund's approach to financial crises.

Correct Answer
verified
One criticism is that the International ...
View Answer

In the context of the 1997 Asian crisis, how did the International Monetary Fund's "one-size-fits-all" approach to macroeconomic policy affect South Korea?

Correct Answer
verified

Most of the International Monetary Fund's loan activities since the mid-1970s have been targeted toward developing nations typically because

Correct Answer
verified

The objective of establishing the World Bank was to

Correct Answer
verified

Discuss how uncertainty provides an argument for a fixed exchange rate system.

Correct Answer
verified
Speculation adds to the uncertainty surr...
View Answer

Under the 1976 Jamaica Agreement, gold was abandoned as a reserve asset.

Correct Answer
verified

Briefly describe the pegged exchange rate regime.

Correct Answer
verified
Under a pegged exchange rate regime, a c...
View Answer

A country that introduces a currency board commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate.

Correct Answer
verified

Correct Answer
verified

The International Monetary Fund has been criticized for

Correct Answer
verified

Explain why all International Monetary Fund loan packages come with conditions attached.

Correct Answer
verified
By 2018, the IMF had programs in around ...
View Answer

According to the noted economist Jeffrey Sachs, the International Monetary Fund should

Correct Answer
verified

If Canada suffered from "fundamental disequilibrium," and its government choose not to devalue its currency, a likely consequence of this would be

Correct Answer
verified

Explain the two institutions established by the Bretton Woods agreement.

Correct Answer
verified
The agreement reached at Bretton Woods e...
View Answer

Exam 11: The International Monetary System

Since 1973, exchange rates have become less volatile and more predictable.

Correct AnswerverifiedShow Answer

Why were Great Britain and the United States able to finance their deficits by borrowing private money since the early 1970s?

Correct AnswerverifiedShow Answer

Under the gold standard, a country in balance-of-trade equilibrium earns income from exports that is equal to the money its residents pay for imports.

Correct AnswerverifiedShow Answer

Explain when a currency board would be put in place.

Correct AnswerverifiedA currency board is introduced as a mean...View AnswerShow Answer

The rise in the value of the dollar between 1980 and 1985 occurred when the United States was running a large and growing trade deficit. Explain the factors that led to this rise.

Correct AnswerverifiedThe rise in the value of the dollar betw...View AnswerShow Answer

The Bretton Woods system could work only as long as the U.S. inflation rate remained low and the United States did not run a balance-of-payments deficit.

Correct AnswerverifiedShow Answer

Elaborate on the main criticisms of the International Monetary Fund's approach to financial crises.

Correct AnswerverifiedOne criticism is that the International ...View AnswerShow Answer

In the context of the 1997 Asian crisis, how did the International Monetary Fund's "one-size-fits-all" approach to macroeconomic policy affect South Korea?

Correct AnswerverifiedShow Answer

Most of the International Monetary Fund's loan activities since the mid-1970s have been targeted toward developing nations typically because

Correct AnswerverifiedShow Answer

The objective of establishing the World Bank was to

Correct AnswerverifiedShow Answer

Discuss how uncertainty provides an argument for a fixed exchange rate system.

Correct AnswerverifiedSpeculation adds to the uncertainty surr...View AnswerShow Answer

Under the 1976 Jamaica Agreement, gold was abandoned as a reserve asset.

Correct AnswerverifiedShow Answer

Briefly describe the pegged exchange rate regime.

Correct AnswerverifiedUnder a pegged exchange rate regime, a c...View AnswerShow Answer

A country that introduces a currency board commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The International Monetary Fund has been criticized for

Correct AnswerverifiedShow Answer

Explain why all International Monetary Fund loan packages come with conditions attached.

Correct AnswerverifiedBy 2018, the IMF had programs in around ...View AnswerShow Answer

According to the noted economist Jeffrey Sachs, the International Monetary Fund should

Correct AnswerverifiedShow Answer

If Canada suffered from "fundamental disequilibrium," and its government choose not to devalue its currency, a likely consequence of this would be

Correct AnswerverifiedShow Answer

Explain the two institutions established by the Bretton Woods agreement.

Correct AnswerverifiedThe agreement reached at Bretton Woods e...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
A currency board is introduced as a mean...
View Answer

Correct Answer
verified
The rise in the value of the dollar betw...
View Answer

Correct Answer
verified

Correct Answer
verified
One criticism is that the International ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Speculation adds to the uncertainty surr...
View Answer

Correct Answer
verified

Correct Answer
verified
Under a pegged exchange rate regime, a c...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
By 2018, the IMF had programs in around ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The agreement reached at Bretton Woods e...
View Answer