Question 1

Which of the following countries had a major financial crisis in 1994?

Accepted Answer

A)  Malaysia 
B)  Russia 
C)  Mexico 
D)  The United States 
E)  Singapore 
A)  Malaysia 
B)  Russia 
C)  Mexico 
D)  The United States 
E)  Singapore C

Question 2

The financial crises of the 1990s pointed out that small developing countries have a vulnerability to globalization in terms of _____.

Accepted Answer

A)  environment 
B)  labor standards 
C)  international capital flows 
D)  the judicial system 
E)  child labor 
A)  environment 
B)  labor standards 
C)  international capital flows 
D)  the judicial system 
E)  child labor C

Question 3

Globalization is an economic issue and does not involve political and social dimensions.

Accepted Answer

A) True 
 B)False  False

Question 4

In its most basic form, globalization has existed ever since:

Accepted Answer

A)  the creation of the Internet, which enables people to sell their products overseas. 
B)  the end of the World War II. 
C)  the creation of the International Monetary Fund (IMF), which establishes the rules for all countries to follow as they trade. 
D)  the fall of the Berlin wall, which marked the end of communism and thus the beginning of truly "global" times. 
E)  primitive societies began to engage in trade. 
A)  the creation of the Internet, which enables people to sell their products overseas. 
B)  the end of the World War II. 
C)  the creation of the International Monetary Fund (IMF), which establishes the rules for all countries to follow as they trade. 
D)  the fall of the Berlin wall, which marked the end of communism and thus the beginning of truly "global" times. 
E)  primitive societies began to engage in trade.

Question 5

What has been one the results of globalization experienced by Eastern European nations after the fall of their socialist regimes?

Accepted Answer

A)  All traces of their traditional culture have disappeared. 
B)  These countries have attracted foreign investment from industrialized countries, which have transferred cleaner technologies and improved environmental quality. 
C)  These countries have not yet adapted to capitalism, and a majority support a new movement to return to communism. 
D)  Most national forests have been destroyed by multinational companies. 
E)  Many new diseases have been introduced because of increased contact with the West. 
A)  All traces of their traditional culture have disappeared. 
B)  These countries have attracted foreign investment from industrialized countries, which have transferred cleaner technologies and improved environmental quality. 
C)  These countries have not yet adapted to capitalism, and a majority support a new movement to return to communism. 
D)  Most national forests have been destroyed by multinational companies. 
E)  Many new diseases have been introduced because of increased contact with the West.

Question 6

An increase in the supply of U.S. dollar in the foreign exchange market would cause the dollar to appreciate with respect to other currencies.

Accepted Answer

A) True 
 B)False

Question 7

There are certain variables that are so obviously related to past crises that they may serve as warning indicators of potential future crises. Identify one such variable from the following.

Accepted Answer

A)  Barriers to trade 
B)  Short-term international investment 
C)  Flexible exchange rates 
D)  Rising international reserves 
E)  Fluctuating share prices 
A)  Barriers to trade 
B)  Short-term international investment 
C)  Flexible exchange rates 
D)  Rising international reserves 
E)  Fluctuating share prices

Question 8

Which of the following is true of the crises witnessed by the southeast Asian countries in the 1990s?

Accepted Answer

A)  The crises were sparked by the conversion from a fixed exchange rate regime to a flexible exchange rate regime. 
B)  The crises occurred because Malaysia owed substantial short-term debt to foreigners. 
C)  The consumption of petroleum products grew at an uncontrolled rate in Indonesia. 
D)  Indonesia was the only country that owed a substantial long term debt to the US. 
E)  The stock prices dropped by 26 percent in Korea and by 57 percent in Malaysia. 
A)  The crises were sparked by the conversion from a fixed exchange rate regime to a flexible exchange rate regime. 
B)  The crises occurred because Malaysia owed substantial short-term debt to foreigners. 
C)  The consumption of petroleum products grew at an uncontrolled rate in Indonesia. 
D)  Indonesia was the only country that owed a substantial long term debt to the US. 
E)  The stock prices dropped by 26 percent in Korea and by 57 percent in Malaysia.

Question 9

The financial crises of the 1990s have conclusively proved that globalization causes financial crises.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following measures of globalization was not affected during the aftermath of the terrorist attacks in the United States on September 11, 2001?

Accepted Answer

A)  World trade 
B)  Global foreign direct investment 
C)  International travel and tourism 
D)  International telephone calls 
E)  Political engagement 
A)  World trade 
B)  Global foreign direct investment 
C)  International travel and tourism 
D)  International telephone calls 
E)  Political engagement

Question 11

The smaller the amount of short-term money invested in a country, the greater the potential for a crisis if investors lose confidence in the country.

Accepted Answer

A) True 
 B)False

Question 12

What happened to the so-called Asian tigers in the 1960s and 1970s?

Accepted Answer

A)  They underwent a period in which their economies turned into mild communism. 
B)  The literacy rates of these countries declined in this time period (that is, a smaller percentage of the people could read). 
C)  They all became part of the First World. 
D)  They became the most technologically advanced countries in the world. 
E)  They underwent the process of opening their economies and experienced rapid economic growth. 
A)  They underwent a period in which their economies turned into mild communism. 
B)  The literacy rates of these countries declined in this time period (that is, a smaller percentage of the people could read). 
C)  They all became part of the First World. 
D)  They became the most technologically advanced countries in the world. 
E)  They underwent the process of opening their economies and experienced rapid economic growth.

Question 13

Without the presence of international organizations such as the World Bank, the United Nations, and the WTO, transfers of funds from rich to poor countries would not exist in an ongoing manner.

Accepted Answer

A) True 
 B)False

Question 14

Globalization had to be put into effect to revive developed economies after the financial crises of the 1990s.

Accepted Answer

A) True 
 B)False

Question 15

To counteract the depreciation of national currency against the U.S. dollar, the central bank of a country can intervene in the foreign exchange market. Which of the following imposes a restriction on this ability of the central banks to maintain the fixed exchange rate?

Accepted Answer

A)  The central banks have a limited amount of international reserve. 
B)  The central banks have a limited amount of domestic currency. 
C)  Unrestricted sale of foreign currency will cause inflation in the domestic economy. 
D)  The supply of dollars is perfectly elastic in the foreign exchange market. 
E)  The central banks need to maintain a certain amount of its assets in the form of gold. 
A)  The central banks have a limited amount of international reserve. 
B)  The central banks have a limited amount of domestic currency. 
C)  Unrestricted sale of foreign currency will cause inflation in the domestic economy. 
D)  The supply of dollars is perfectly elastic in the foreign exchange market. 
E)  The central banks need to maintain a certain amount of its assets in the form of gold.

Question 16

Which of the following resulted in the financial crisis in 2007-08?

Accepted Answer

A)  Falling international reserves 
B)  Short-term investments made by China in the US 
C)  Lack of transparency 
D)  Bad loans on U.S. mortgages 
E)  Fixed rates of interest 
A)  Falling international reserves 
B)  Short-term investments made by China in the US 
C)  Lack of transparency 
D)  Bad loans on U.S. mortgages 
E)  Fixed rates of interest

Question 17

Average growth of per capita GDP of the post-1980 globalizers increased from 1.4 percent per year in the 1960s to _____ percent in the 1990s.

Accepted Answer

A)  6.4 
B)  5.0 
C)  3.5 
D)  7.8 
E)  2.9 
A)  6.4 
B)  5.0 
C)  3.5 
D)  7.8 
E)  2.9

Question 18

Countries that enjoy long distance flows of goods, capital, and services as well as information and perceptions that accompany market exchanges would be categorized under _____ globalization.

Accepted Answer

A)  ethical 
B)  cultural 
C)  social 
D)  economic 
E)  political 
A)  ethical 
B)  cultural 
C)  social 
D)  economic 
E)  political

Question 19

Suppose, before the Asian financial crisis, the Thai baht was fixed against the dollar at a rate of 26 bahts for one U.S. dollar. If the exchange rate were allowed to float freely, the market would then set the rate at 35 bahts for one dollar. Under these circumstances, we say that the baht was:

Accepted Answer

A)  about to appreciate. 
B)  fixed below its par value. 
C)  overvalued. 
D)  undervalued. 
E)  revalued. 
A)  about to appreciate. 
B)  fixed below its par value. 
C)  overvalued. 
D)  undervalued. 
E)  revalued.

Question 20

Which of the following is a measure of political globalization (one of the three categories used by the KOF Swiss Economic Institute)?

Accepted Answer

A)  Participation in U.N. peace missions 
B)  Spread of ideas 
C)  Flow of information 
D)  Limits on externalities 
E)  Progressive taxation 
A)  Participation in U.N. peace missions 
B)  Spread of ideas 
C)  Flow of information 
D)  Limits on externalities 
E)  Progressive taxation

Exam 18: Globalization

Which of the following countries had a major financial crisis in 1994?

The financial crises of the 1990s pointed out that small developing countries have a vulnerability to globalization in terms of _____.

Globalization is an economic issue and does not involve political and social dimensions.

In its most basic form, globalization has existed ever since:

What has been one the results of globalization experienced by Eastern European nations after the fall of their socialist regimes?

An increase in the supply of U.S. dollar in the foreign exchange market would cause the dollar to appreciate with respect to other currencies.

There are certain variables that are so obviously related to past crises that they may serve as warning indicators of potential future crises. Identify one such variable from the following.

Which of the following is true of the crises witnessed by the southeast Asian countries in the 1990s?

The financial crises of the 1990s have conclusively proved that globalization causes financial crises.

Which of the following measures of globalization was not affected during the aftermath of the terrorist attacks in the United States on September 11, 2001?

The smaller the amount of short-term money invested in a country, the greater the potential for a crisis if investors lose confidence in the country.

What happened to the so-called Asian tigers in the 1960s and 1970s?

Without the presence of international organizations such as the World Bank, the United Nations, and the WTO, transfers of funds from rich to poor countries would not exist in an ongoing manner.

Globalization had to be put into effect to revive developed economies after the financial crises of the 1990s.

To counteract the depreciation of national currency against the U.S. dollar, the central bank of a country can intervene in the foreign exchange market. Which of the following imposes a restriction on this ability of the central banks to maintain the fixed exchange rate?

Which of the following resulted in the financial crisis in 2007-08?

Average growth of per capita GDP of the post-1980 globalizers increased from 1.4 percent per year in the 1960s to _____ percent in the 1990s.

Countries that enjoy long distance flows of goods, capital, and services as well as information and perceptions that accompany market exchanges would be categorized under _____ globalization.

Suppose, before the Asian financial crisis, the Thai baht was fixed against the dollar at a rate of 26 bahts for one U.S. dollar. If the exchange rate were allowed to float freely, the market would then set the rate at 35 bahts for one dollar. Under these circumstances, we say that the baht was:

Which of the following is a measure of political globalization (one of the three categories used by the KOF Swiss Economic Institute)?

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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