Exam 14: Dealing With Financial Crises: Does the World Need a New International Financial Architecture

Multinational organizations such as the IMF have "early warning systems" that enable them to anticipate financial crises.

____________________ refers to a situation in which the financial sector is unable to allocate funds to the most productive projects.

Because of the financial crises that began in the mid-1990s, developing and emerging economies are unable to attract private capital flows.

_________________ is the potential for those who want funds for unworthy projects to be the most likely to want to borrow.

International FDI flows go mainly from developed nations to developed nations, not from developed nations to developing and emerging nations.

Allowing relatively open issuance and competition in stock and bond markets is called:

Herding behavior is when domestic institutions locate abroad, or conduct certain types of operations abroad, in order to avoid domestic regulation.

Most economists oppose capital controls on the inflows of foreign capital.

If a government requires domestic banks to lend to certain industries, creating a situation in which the firms know they will receive funding no matter how they use the funds, then the government has created a problem called:

Member countries- voting share in the International Monetary Fund is determined by how much money they provide through their quota subscription.

Even when economic fundamentals are consistent with the official exchange rate regime, a widespread perception that policymakers face internal costs that are too high to maintain the regime can lead to a crisis.

A IMF member country-s voting share is determined by its:

The imposition of lending conditions by the IMF before a loan is granted is called:

Over the past 30 years, nearly every country that liberalized capital flows experienced a financial crisis.

International FDI flows consist mainly of the combining of firms in different nations.

New investments into emerging economies are the driving force behind increases and declines in foreign direct investment.

Ex post conditionality is the imposition of IMF lending conditions after a loan has already been granted.

The corners hypothesis argues that policymakers should:

_______________ is the strengthening and growth of a nation-s financial sector institutions, payments systems, and regulatory agencies.

The composite currency of the International Monetary Fund is called: