Question 1

A flexible exchange rate system guarantees a country will not experience an exchange rate crisis.

Accepted Answer

A) True 
 B)False  False

Question 2

Which of the following is a macroeconomic factor that contributed to the financial crisis in 2007?

Accepted Answer

A) Global saving and investment imbalances 
B) Financial market innovation 
C) Deeper levels of integration across financial markets 
D) Challenges and failures in financial regulation 
A) Global saving and investment imbalances 
B) Financial market innovation 
C) Deeper levels of integration across financial markets 
D) Challenges and failures in financial regulation A

Question 3

Exchange rates and banking systems are often the variables through which the contagion effects of a crisis are spread from one country to another.

Accepted Answer

A) True 
 B)False  True

Question 4

A fixed exchange rate system crisis may be accompanied or followed by

Accepted Answer

A) unexpected gains of international reserves. 
B) revaluation of a currency. 
C) devaluation of a currency. 
D) gains in comparative advantage. 
E) deflationary pressures within the country. 
A) unexpected gains of international reserves. 
B) revaluation of a currency. 
C) devaluation of a currency. 
D) gains in comparative advantage. 
E) deflationary pressures within the country.

Question 5

Current research suggests that countries that adopt a pegged exchange rate may be more vulnerable to an exchange rate crisis.

Accepted Answer

A) True 
 B)False

Question 6

What are the benefits of capital mobility?

Accepted Answer

The benefits include that inve

Question 7

All of the following involve a moral hazard problem except

Accepted Answer

A) an individual driving carelessly after buying a comprehensive insurance policy for a Ford Pinto. 
B) the IMF bailing Mexico out of a financial crisis,with promises to do the same for other nations that might face financial problems. 
C) making regular visits to your doctor because you know that you have full healthcare coverage. 
D) the requirement of banking institutions that owners invest a substantial portion of their own capital in their bank. 
E) membership in FDIC (Federal Deposit Insurance Corporation)by your local bank. 
A) an individual driving carelessly after buying a comprehensive insurance policy for a Ford Pinto. 
B) the IMF bailing Mexico out of a financial crisis,with promises to do the same for other nations that might face financial problems. 
C) making regular visits to your doctor because you know that you have full healthcare coverage. 
D) the requirement of banking institutions that owners invest a substantial portion of their own capital in their bank. 
E) membership in FDIC (Federal Deposit Insurance Corporation)by your local bank.

Question 8

Deficits financed by borrowed money lead to inflation,and in a fixed or crawling peg exchange rate system,this leads to the real exchange rate being undervalued.

Accepted Answer

A) True 
 B)False

Question 9

The international institution that serves as a lender of last resort is called the

Accepted Answer

A) IBRD. 
B) WTO. 
C) IMF. 
D) World Bank. 
E) GATT. 
A) IBRD. 
B) WTO. 
C) IMF. 
D) World Bank. 
E) GATT.

Question 10

Financial capital is highly volatile,and technological advances have reinforced this volatility.

Accepted Answer

A) True 
 B)False

Question 11

The most common type of macroeconomic imbalance is overly expansionary fiscal policies that create large government budget deficits,often financed by a high growth rate of the money supply.

Accepted Answer

A) True 
 B)False

Question 12

Unlike a banking crisis,an exchange rate crisis rarely results in a deep recession.

Accepted Answer

A) True 
 B)False

Question 13

The main policy advice given by the IMF to East Asian countries facing the financial crises of 1997/1998 was

Accepted Answer

A) raising their domestic interest rates to stabilize the collapsing currencies. 
B) using their monetary and fiscal policies alone. 
C) use capital controls. 
D) adopting a flexible exchange rate system. 
E) adopting a fixed exchange rate system. 
A) raising their domestic interest rates to stabilize the collapsing currencies. 
B) using their monetary and fiscal policies alone. 
C) use capital controls. 
D) adopting a flexible exchange rate system. 
E) adopting a fixed exchange rate system.

Question 14

All of the following are symptoms of definite and indefinite macroeconomic imbalances except

Accepted Answer

A) large budget deficits. 
B) an overvalued currency. 
C) a current account deficit. 
D) the discovery of emerging markets by financial investors who want to diversify their portfolios. 
E) inflationary pressures. 
A) large budget deficits. 
B) an overvalued currency. 
C) a current account deficit. 
D) the discovery of emerging markets by financial investors who want to diversify their portfolios. 
E) inflationary pressures.

Question 15

Which of the following was NOT one of the causes of the Asian financial crises of 1997 and 1998?

Accepted Answer

A) A current account deficit and financial account surpluses 
B) The use of exports as an engine of economic growth by the countries involved 
C) China's 1994 devaluation of its fixed exchange rate 
D) The appreciation of the U.S.dollar and depreciation of the Japanese yen 
E) Crony capitalism 
A) A current account deficit and financial account surpluses 
B) The use of exports as an engine of economic growth by the countries involved 
C) China's 1994 devaluation of its fixed exchange rate 
D) The appreciation of the U.S.dollar and depreciation of the Japanese yen 
E) Crony capitalism

Question 16

A large and growing current account deficit can be an indicator of a potential crisis.

Accepted Answer

A) True 
 B)False

Question 17

If the banking sector borrows internationally and lends locally,how does this intensify a financial crisis?

Accepted Answer

The borrowed funds have to be

Question 18

Which one of the following countries refused to accept the IMF conditions during the East Asian financial crisis?

Accepted Answer

A) South Korea 
B) Indonesia 
C) Malaysia 
D) Thailand 
E) Singapore 
A) South Korea 
B) Indonesia 
C) Malaysia 
D) Thailand 
E) Singapore

Question 19

Small devaluations are usually sufficient to stem capital flight.

Accepted Answer

A) True 
 B)False

Question 20

An exchange rate crisis is caused by

Accepted Answer

A) a sudden and an unexpected collapse in the value of a nation's currency. 
B) the inability of the IMF to predict the immediate collapse of the currency of a country. 
C) the adoption of a flexible exchange rate system by a country or group of countries. 
D) the adoption of a fixed exchange rate system by a country or group of countries. 
E) Both C and D are correct. 
A) a sudden and an unexpected collapse in the value of a nation's currency. 
B) the inability of the IMF to predict the immediate collapse of the currency of a country. 
C) the adoption of a flexible exchange rate system by a country or group of countries. 
D) the adoption of a fixed exchange rate system by a country or group of countries. 
E) Both C and D are correct.

A flexible exchange rate system guarantees a country will not experience an exchange rate crisis.

Which of the following is a macroeconomic factor that contributed to the financial crisis in 2007?

Exchange rates and banking systems are often the variables through which the contagion effects of a crisis are spread from one country to another.

A fixed exchange rate system crisis may be accompanied or followed by

Current research suggests that countries that adopt a pegged exchange rate may be more vulnerable to an exchange rate crisis.

What are the benefits of capital mobility?

All of the following involve a moral hazard problem except

Deficits financed by borrowed money lead to inflation,and in a fixed or crawling peg exchange rate system,this leads to the real exchange rate being undervalued.

The international institution that serves as a lender of last resort is called the

Financial capital is highly volatile,and technological advances have reinforced this volatility.

The most common type of macroeconomic imbalance is overly expansionary fiscal policies that create large government budget deficits,often financed by a high growth rate of the money supply.

Unlike a banking crisis,an exchange rate crisis rarely results in a deep recession.

The main policy advice given by the IMF to East Asian countries facing the financial crises of 1997/1998 was

All of the following are symptoms of definite and indefinite macroeconomic imbalances except

Which of the following was NOT one of the causes of the Asian financial crises of 1997 and 1998?

A large and growing current account deficit can be an indicator of a potential crisis.

If the banking sector borrows internationally and lends locally,how does this intensify a financial crisis?

Which one of the following countries refused to accept the IMF conditions during the East Asian financial crisis?

Small devaluations are usually sufficient to stem capital flight.

An exchange rate crisis is caused by

The United States in a Global Economy

International Economic Institutions Since World War Ii

Comparative Advantage and the Gains From Trade

Comparative Advantage and Factor Endowments

Beyond Comparative Advantage

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Trade and the Balance of Payments

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

The United States in the World Economy

The European Union: Many Markets Into One

Trade and Policy Reform in Latin America

Export-Oriented Growth in East Asia

The Bric Countries in the World Economy

Filters

Exam 12: International Financial Crises

A flexible exchange rate system guarantees a country will not experience an exchange rate crisis.

Which of the following is a macroeconomic factor that contributed to the financial crisis in 2007?

Exchange rates and banking systems are often the variables through which the contagion effects of a crisis are spread from one country to another.

A fixed exchange rate system crisis may be accompanied or followed by

Current research suggests that countries that adopt a pegged exchange rate may be more vulnerable to an exchange rate crisis.

What are the benefits of capital mobility?

All of the following involve a moral hazard problem except

Deficits financed by borrowed money lead to inflation,and in a fixed or crawling peg exchange rate system,this leads to the real exchange rate being undervalued.

The international institution that serves as a lender of last resort is called the

Financial capital is highly volatile,and technological advances have reinforced this volatility.

The most common type of macroeconomic imbalance is overly expansionary fiscal policies that create large government budget deficits,often financed by a high growth rate of the money supply.

Unlike a banking crisis,an exchange rate crisis rarely results in a deep recession.

The main policy advice given by the IMF to East Asian countries facing the financial crises of 1997/1998 was

All of the following are symptoms of definite and indefinite macroeconomic imbalances except

Which of the following was NOT one of the causes of the Asian financial crises of 1997 and 1998?

A large and growing current account deficit can be an indicator of a potential crisis.

If the banking sector borrows internationally and lends locally,how does this intensify a financial crisis?

Which one of the following countries refused to accept the IMF conditions during the East Asian financial crisis?

Small devaluations are usually sufficient to stem capital flight.

An exchange rate crisis is caused by

The United States in a Global Economy

International Economic Institutions Since World War Ii

Comparative Advantage and the Gains From Trade

Comparative Advantage and Factor Endowments

Beyond Comparative Advantage

The Theory of Tariffs and Quotas

Commercial Policy

International Trade and Labor and Environmental Standards

Trade and the Balance of Payments

Exchange Rates and Exchange Rate Systems

An Introduction to Open Economy Macroeconomics

The United States in the World Economy

The European Union: Many Markets Into One

Trade and Policy Reform in Latin America

Export-Oriented Growth in East Asia

The Bric Countries in the World Economy

Filters