Question 1

What agreement has been reached to reduce the moral hazard problem and what does it require?

Accepted Answer

The Basel Capital Accord,which

Question 2

A financial crisis brought on by volatile capital flows

Accepted Answer

A) is usually inevitable given underlying conditions. 
B) does not happen to countries with strong international positions. 
C) is often preceded by capital inflows and an increase in foreign liabilities. 
D) is usually the result of high budget deficits. 
A) is usually inevitable given underlying conditions. 
B) does not happen to countries with strong international positions. 
C) is often preceded by capital inflows and an increase in foreign liabilities. 
D) is usually the result of high budget deficits.

Question 3

Which of the following does not occur in resolving a debt crisis?

Accepted Answer

A) Debts are restructured 
B) Repayment periods are shortened 
C) Interest rates are reduced 
D) Some partial debt forgiveness 
A) Debts are restructured 
B) Repayment periods are shortened 
C) Interest rates are reduced 
D) Some partial debt forgiveness

Question 4

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. 
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.

Question 5

A crisis caused by sudden capital flight

Accepted Answer

A) is easy to resolve with capital controls. 
B) might be lessened if investor confidence can be increased. 
C) has a clear and unique equilibrium outcome. 
D) can be corrected through currency devaluation. 
A) is easy to resolve with capital controls. 
B) might be lessened if investor confidence can be increased. 
C) has a clear and unique equilibrium outcome. 
D) can be corrected through currency devaluation.

Question 6

A financial crisis brought on by macroeconomic imbalances

Accepted Answer

A) is usually inevitable given underlying conditions. 
B) often happens to countries with strong international positions. 
C) is often preceded by capital inflows and an increase in foreign liabilities. 
D) is usually the result of fragility in the banking sector. 
A) is usually inevitable given underlying conditions. 
B) often happens to countries with strong international positions. 
C) is often preceded by capital inflows and an increase in foreign liabilities. 
D) is usually the result of fragility in the banking sector.

Question 7

All of the following are possible outcomes of a financial crisis except

Accepted Answer

A) bank failings and disintermediation. 
B) a recession. 
C) an increase in domestic consumption. 
D) depreciation or devaluation of a currency. 
A) bank failings and disintermediation. 
B) a recession. 
C) an increase in domestic consumption. 
D) depreciation or devaluation of a currency.

Question 8

Economists agree that the free movement of capital is desirable.

Accepted Answer

A) True 
 B)False

Question 9

When a country borrows from the IMF

Accepted Answer

A) it receives all the funds from the loan at once. 
B) it receives funds in tranches, each dependent on the completion of reform targets. 
C) it is free of conditions. 
D) it can be any amount that the country requests. 
A) it receives all the funds from the loan at once. 
B) it receives funds in tranches, each dependent on the completion of reform targets. 
C) it is free of conditions. 
D) it can be any amount that the country requests.

Question 10

Which of the following is NOT a characteristic of a financial crisis caused by macroeconomic imbalances?

Accepted Answer

A) Crises can be unpredictable. 
B) Crises can be predictable. 
C) Crises can by expansionary fiscal policies accompanied by high budget deficits. 
D) Crises can be caused by budget surpluses. 
A) Crises can be unpredictable. 
B) Crises can be predictable. 
C) Crises can by expansionary fiscal policies accompanied by high budget deficits. 
D) Crises can be caused by budget surpluses.

Question 11

Explain how the global financial crisis of 2007-2009 was the result of macroeconomic imbalances.

Accepted Answer

Beginning with the rise of house prices

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

It is relatively easy to prescribe a cure for financial crises that result from inconsistent macroeconomic policies.

Accepted Answer

A) True 
 B)False

Question 14

How did the global supply of savings impact the formation of the housing bubble?

Accepted Answer

Interest rates were

Question 15

A temporary limitation on capital flows may help stop a financial crisis that has begun.

Accepted Answer

A) True 
 B)False

Question 16

The financial crisis that started in 2007 was unusual because it started in an advanced economy,the United States.

Accepted Answer

A) True 
 B)False

Question 17

Consider the following two statements. I. The East Asian financial crisis was an example of macroeconomic imbalances.
II) The Latin American debt crisis was an example of macroeconomic imbalances.

Accepted Answer

A) Both statements are true. 
B) I is true, and II is false. 
C) I is false and II is true. 
D) Both statements are false. 
A) Both statements are true. 
B) I is true, and II is false. 
C) I is false and II is true. 
D) Both statements are false.

Question 18

Which of the following was NOT a cause or a characteristic of the 1994/95 Mexican peso crisis?

Accepted Answer

A) An overvalued exchange rate 
B) An inflow of large foreign portfolio capital 
C) The inability of the IMF, the world bank, and the NAFTA member countries (i.e., the United States and Canada)to predict the looming financial crisis 
D) Shifts by the world capital markets toward more conservative and risk-averse investments because of interest and exchange rate movements around the world 
A) An overvalued exchange rate 
B) An inflow of large foreign portfolio capital 
C) The inability of the IMF, the world bank, and the NAFTA member countries (i.e., the United States and Canada)to predict the looming financial crisis 
D) Shifts by the world capital markets toward more conservative and risk-averse investments because of interest and exchange rate movements around the world

Question 19

Tax systems in developing countries tend to be efficient and reliable.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

The borrowed funds have to be

What agreement has been reached to reduce the moral hazard problem and what does it require?

A financial crisis brought on by volatile capital flows

Which of the following does not occur in resolving a debt crisis?

An exchange rate crisis is caused by

A crisis caused by sudden capital flight

A financial crisis brought on by macroeconomic imbalances

All of the following are possible outcomes of a financial crisis except

Economists agree that the free movement of capital is desirable.

When a country borrows from the IMF

Which of the following is NOT a characteristic of a financial crisis caused by macroeconomic imbalances?

Explain how the global financial crisis of 2007-2009 was the result of macroeconomic imbalances.

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

It is relatively easy to prescribe a cure for financial crises that result from inconsistent macroeconomic policies.

How did the global supply of savings impact the formation of the housing bubble?

A temporary limitation on capital flows may help stop a financial crisis that has begun.

The financial crisis that started in 2007 was unusual because it started in an advanced economy,the United States.

Consider the following two statements. I. The East Asian financial crisis was an example of macroeconomic imbalances. II) The Latin American debt crisis was an example of macroeconomic imbalances.

Which of the following was NOT a cause or a characteristic of the 1994/95 Mexican peso crisis?

Tax systems in developing countries tend to be efficient and reliable.

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

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

China and India in the World Economy

Filters

Exam 12: International Financial Crises

What agreement has been reached to reduce the moral hazard problem and what does it require?

A financial crisis brought on by volatile capital flows

Which of the following does not occur in resolving a debt crisis?

An exchange rate crisis is caused by

A crisis caused by sudden capital flight

A financial crisis brought on by macroeconomic imbalances

All of the following are possible outcomes of a financial crisis except

Economists agree that the free movement of capital is desirable.

When a country borrows from the IMF

Which of the following is NOT a characteristic of a financial crisis caused by macroeconomic imbalances?

Explain how the global financial crisis of 2007-2009 was the result of macroeconomic imbalances.

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

It is relatively easy to prescribe a cure for financial crises that result from inconsistent macroeconomic policies.

How did the global supply of savings impact the formation of the housing bubble?

A temporary limitation on capital flows may help stop a financial crisis that has begun.

The financial crisis that started in 2007 was unusual because it started in an advanced economy,the United States.

Consider the following two statements. I. The East Asian financial crisis was an example of macroeconomic imbalances. II) The Latin American debt crisis was an example of macroeconomic imbalances.

Which of the following was NOT a cause or a characteristic of the 1994/95 Mexican peso crisis?

Tax systems in developing countries tend to be efficient and reliable.

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

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

China and India in the World Economy

Filters