Question 1

All of the following exchange-rate systems require international reserves to finance balance-of-payments disequilibriums except:

Accepted Answer

A)  Pegged or fixed exchange rates 
B)  Managed floating exchange rates 
C)  Adjustable pegged exchange rates 
D)  Freely floating exchange rates 
A)  Pegged or fixed exchange rates 
B)  Managed floating exchange rates 
C)  Adjustable pegged exchange rates 
D)  Freely floating exchange rates

Question 2

To the extent that adjustments in prices,interest rates,and income levels promote balance-of-payments equilibrium,the demand for international reserves decreases.

Accepted Answer

A) True 
 B)False

Question 3

All of the following are major goals of the International Monetary Fund except:

Accepted Answer

A)  Promoting international cooperation among member countries 
B)  Fostering a multilateral system of international payments 
C)  Making long-term development and reconstruction loans 
D)  Promoting exchange-rate stability and the elimination of exchange restrictions 
A)  Promoting international cooperation among member countries 
B)  Fostering a multilateral system of international payments 
C)  Making long-term development and reconstruction loans 
D)  Promoting exchange-rate stability and the elimination of exchange restrictions

Question 4

Concerning international lending risk,credit risk refers to the probability that part or all of the interest rate or principal of a loan will not be repaid.

Accepted Answer

A) True 
 B)False

Question 5

"Country risk" analysis is concerned with all of the following except:

Accepted Answer

A)  Depreciation of the borrowing country's currency 
B)  Political instability in the borrowing country 
C)  Economic growth in the borrowing country 
D)  External debt of the borrowing country 
A)  Depreciation of the borrowing country's currency 
B)  Political instability in the borrowing country 
C)  Economic growth in the borrowing country 
D)  External debt of the borrowing country

Question 6

Concerning international lending risk of commercial banks,____ is associated with possible changes in the exchange value of a nation's currency.

Accepted Answer

A)  Political risk 
B)  Country risk 
C)  Credit risk 
D)  Currency risk 
A)  Political risk 
B)  Country risk 
C)  Credit risk 
D)  Currency risk

Question 7

Under a debt-for-debt swap,a commercial bank sells its loans at a discount to a developing country government for local currency which it then uses to finance an equity investment in the debtor country.

Accepted Answer

A) True 
 B)False

Question 8

The main purpose of the International Monetary Fund is to grant long-term loans to developing nations to help them finance the development of infrastructure such as roads,dams,and bridges.

Accepted Answer

A) True 
 B)False

Question 9

The value of the SDR is tied to a currency basket consisting of the U.S.dollar,German mark,Japanese yen,French franc,and British pound.

Accepted Answer

A) True 
 B)False

Question 10

Swap agreements are generally conducted by the:

Accepted Answer

A)  Federal Reserve with foreign central banks 
B)  Federal Reserve with foreign commercial banks 
C)  U.S.Treasury with foreign central banks 
D)  U.S.Treasury with foreign commercial banks 
A)  Federal Reserve with foreign central banks 
B)  Federal Reserve with foreign commercial banks 
C)  U.S.Treasury with foreign central banks 
D)  U.S.Treasury with foreign commercial banks

Question 11

Which international reserve asset was officially phased out of the international monetary system by the United States in the early 1970s?

Accepted Answer

A)  Special drawing rights 
B)  Swap agreements 
C)  General arrangements to borrow 
D)  Gold 
A)  Special drawing rights 
B)  Swap agreements 
C)  General arrangements to borrow 
D)  Gold

Question 12

There exists a direct relationship between the degree of exchange rate flexibility and the need for international reserves.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following constitute(s) the largest component of the world's international reserves?

Accepted Answer

A)  Gold 
B)  Special drawing rights 
C)  IMF drawings 
D)  Foreign currencies 
A)  Gold 
B)  Special drawing rights 
C)  IMF drawings 
D)  Foreign currencies

Question 14

Which of the following is not a condition of the international gold standard? That a nation must:

Accepted Answer

A)  Convert gold into paper currency,and vice versa,at a stipulated rate 
B)  Permit gold to be freely imported and exported 
C)  Tolerate wide fluctuations in its exchange rate 
D)  Define its monetary unit in terms of a stipulated amount of gold 
A)  Convert gold into paper currency,and vice versa,at a stipulated rate 
B)  Permit gold to be freely imported and exported 
C)  Tolerate wide fluctuations in its exchange rate 
D)  Define its monetary unit in terms of a stipulated amount of gold

Question 15

Gold is currently the most widely used asset in the international monetary system.

Accepted Answer

A) True 
 B)False

Question 16

Concerning international lending risk,country risk refers to the risk that part or all of the interest or principal of a loan will not be repaid.

Accepted Answer

A) True 
 B)False

Question 17

Under a system of fixed exchange rates,international reserves are needed to bridge the gap between monetary receipts and monetary payments.

Accepted Answer

A) True 
 B)False

Question 18

"Owned" international reserves consist of:

Accepted Answer

A)  Special drawing rights 
B)  Oil facility 
C)  IMF drawings 
D)  Reciprocal currency arrangements 
A)  Special drawing rights 
B)  Oil facility 
C)  IMF drawings 
D)  Reciprocal currency arrangements

Question 19

With floating exchange rates,countries require sizable amounts of international reserves for the stabilization of exchange rates.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a main central bank function of the International Monetary Fund?

Accepted Answer

A)  The conduct of open market operations 
B)  The issuance of gold certificates 
C)  The provision of monetary policy for member nations 
D)  The granting of loans to member nations 
A)  The conduct of open market operations 
B)  The issuance of gold certificates 
C)  The provision of monetary policy for member nations 
D)  The granting of loans to member nations

All of the following exchange-rate systems require international reserves to finance balance-of-payments disequilibriums except:

To the extent that adjustments in prices,interest rates,and income levels promote balance-of-payments equilibrium,the demand for international reserves decreases.

All of the following are major goals of the International Monetary Fund except:

Concerning international lending risk,credit risk refers to the probability that part or all of the interest rate or principal of a loan will not be repaid.

"Country risk" analysis is concerned with all of the following except:

Concerning international lending risk of commercial banks,____ is associated with possible changes in the exchange value of a nation's currency.

Under a debt-for-debt swap,a commercial bank sells its loans at a discount to a developing country government for local currency which it then uses to finance an equity investment in the debtor country.

The main purpose of the International Monetary Fund is to grant long-term loans to developing nations to help them finance the development of infrastructure such as roads,dams,and bridges.

The value of the SDR is tied to a currency basket consisting of the U.S.dollar,German mark,Japanese yen,French franc,and British pound.

Swap agreements are generally conducted by the:

Which international reserve asset was officially phased out of the international monetary system by the United States in the early 1970s?

There exists a direct relationship between the degree of exchange rate flexibility and the need for international reserves.

Which of the following constitute(s) the largest component of the world's international reserves?

Which of the following is not a condition of the international gold standard? That a nation must:

Gold is currently the most widely used asset in the international monetary system.

Concerning international lending risk,country risk refers to the risk that part or all of the interest or principal of a loan will not be repaid.

Under a system of fixed exchange rates,international reserves are needed to bridge the gap between monetary receipts and monetary payments.

"Owned" international reserves consist of:

With floating exchange rates,countries require sizable amounts of international reserves for the stabilization of exchange rates.

Which of the following is a main central bank function of the International Monetary Fund?

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance-of-payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance-of-payments

Exchange Rate Systems and Currency Crises

Macroeconomic Policy in an Open-economy

Filters

Exam 17: International Banking: Reserves, Debt, and Risk

All of the following exchange-rate systems require international reserves to finance balance-of-payments disequilibriums except:

To the extent that adjustments in prices,interest rates,and income levels promote balance-of-payments equilibrium,the demand for international reserves decreases.

All of the following are major goals of the International Monetary Fund except:

Concerning international lending risk,credit risk refers to the probability that part or all of the interest rate or principal of a loan will not be repaid.

"Country risk" analysis is concerned with all of the following except:

Concerning international lending risk of commercial banks,____ is associated with possible changes in the exchange value of a nation's currency.

Under a debt-for-debt swap,a commercial bank sells its loans at a discount to a developing country government for local currency which it then uses to finance an equity investment in the debtor country.

The main purpose of the International Monetary Fund is to grant long-term loans to developing nations to help them finance the development of infrastructure such as roads,dams,and bridges.

The value of the SDR is tied to a currency basket consisting of the U.S.dollar,German mark,Japanese yen,French franc,and British pound.

Swap agreements are generally conducted by the:

Which international reserve asset was officially phased out of the international monetary system by the United States in the early 1970s?

There exists a direct relationship between the degree of exchange rate flexibility and the need for international reserves.

Which of the following constitute(s) the largest component of the world's international reserves?

Which of the following is not a condition of the international gold standard? That a nation must:

Gold is currently the most widely used asset in the international monetary system.

Concerning international lending risk,country risk refers to the risk that part or all of the interest or principal of a loan will not be repaid.

Under a system of fixed exchange rates,international reserves are needed to bridge the gap between monetary receipts and monetary payments.

"Owned" international reserves consist of:

With floating exchange rates,countries require sizable amounts of international reserves for the stabilization of exchange rates.

Which of the following is a main central bank function of the International Monetary Fund?

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance-of-payments

Foreign Exchange

Exchange Rate Determination

Mechanisms of International Adjustment

Exchange Rate Adjustments and the Balance-of-payments

Exchange Rate Systems and Currency Crises

Macroeconomic Policy in an Open-economy

Filters