Exam 21: International Lending and Financial Crises

The marginal productivity of capital increases with greater capital inflows into the borrowing country.

From the early 1980s through today, the largest net borrower in the world has been:

The 1982 debt crisis was caused in part by:

Which of the following arises when the knowledge that IMF rescue packages are possible leads lenders to be less careful about their international lending practices?

In August 1982, which of the following countries declared that it was unable to service its foreign debt and thereby triggered a long-lasting crisis in international lending?

Which of the following contributed to the Asian Crisis?

Assume that investment opportunities are less in high-wealth countries and more in low-wealth countries. Now, if all barriers to international financial transactions are removed, borrowers in _____ countries lose and lenders in _____ countries gain.

_____ refers to purchasing shares in a foreign enterprise largely owned and controlled by the investor.

Discuss IMF loans as important parts of international efforts to address financial crises. Why have these loans been controversial?

From pre-World War II years to the early 1980s, which of the following countries was the principal lender in the world?

Which of the following crises involved the use of "tesobonos"?

Which of the following can be a possible effect on a borrowing nation if the real interest rate on the loans rises?

Beginning in about 1990, lending to and investing in developing countries began to increase. One explanation for this is that:

Adding foreign financial assets to investment portfolios raises the riskiness of the entire portfolio of investments.

Standard loans of the IMF, known as stand-by arrangements, are normally to be repaid in ten years.

Which of the following countries was refused a second installment of its loan from the IMF in late 1990s for not meeting the conditions for fiscal reform as determined by the IMF?

Which of the following identifies a major force that can intensify an international financial crisis?

Discuss the motivations, beyond the temporary loss of access to future loans, that sovereign governments have to avoid defaulting on international debt.

Most long term external debt of developing countries is:

Explain how the Asian crisis of 1997 began and ended. What precipitated the crisis? What brought about an end to the crisis?