Question 1

Which of the following changes were made to the International Monetary Fund's Articles of Agreement in the Jamaica agreement?

Accepted Answer

A)  IMF members were permitted to use the U.S. dollar as the convertible currency. 
B)  Gold was declared as a formal reserve asset for IMF members. 
C)  IMF members were permitted to sell their gold reserves at the market price. 
D)  IMF members were restricted from entering the foreign exchange market. 
A)  IMF members were permitted to use the U.S. dollar as the convertible currency. 
B)  Gold was declared as a formal reserve asset for IMF members. 
C)  IMF members were permitted to sell their gold reserves at the market price. 
D)  IMF members were restricted from entering the foreign exchange market.

Question 2

Discuss the significance of the Jamaica Agreement.

Accepted Answer

The 1976 Jamaica Agreement formalized th

Question 3

Identify the currency that was convertible to gold under the Bretton Woods system.

Accepted Answer

A)  pound 
B)  yen 
C)  euro 
D)  dollar 
A)  pound 
B)  yen 
C)  euro 
D)  dollar

Question 4

Which of the following is the reason the current foreign exchange system is sometimes thought of as a managed-float system?

Accepted Answer

A)  The exchange rates of a currency are determined by market forces. 
B)  Governments intervene frequently in the foreign exchange market. 
C)  Major currencies are allowed to freely float against each other. 
D)  Countries use a reference currency to estimate the value of their currencies. 
A)  The exchange rates of a currency are determined by market forces. 
B)  Governments intervene frequently in the foreign exchange market. 
C)  Major currencies are allowed to freely float against each other. 
D)  Countries use a reference currency to estimate the value of their currencies.

Question 5

The International Monetary Fund has been criticized for exacerbating moral hazard

Accepted Answer

A)  with its rescue programs. 
B)  by increasing the probability of debt default. 
C)  making loans to countries that are trying to reduce national debt by "playing the market." 
D)  by refusing to bail out banks that made loans to overleveraged Asian companies during the 1990s. 
A)  with its rescue programs. 
B)  by increasing the probability of debt default. 
C)  making loans to countries that are trying to reduce national debt by "playing the market." 
D)  by refusing to bail out banks that made loans to overleveraged Asian companies during the 1990s.

Question 6

Which of the following is a disadvantage of using a rigid policy of fixed exchange rates?

Accepted Answer

A)  It is likely to create high unemployment in some cases. 
B)  It will lead to inflationary economies across the world. 
C)  It is likely to bring about trade wars between nations. 
D)  It will instigate competitive devaluations and intense competition. 
A)  It is likely to create high unemployment in some cases. 
B)  It will lead to inflationary economies across the world. 
C)  It is likely to bring about trade wars between nations. 
D)  It will instigate competitive devaluations and intense competition.

Question 7

What was the World Bank's initial mission?

Accepted Answer

A)  implementing a rigid fixed exchange rate regime 
B)  promoting the gold standard across the world 
C)  providing low-interest loans to help finance the building of Europe's economy 
D)  implementing a flexible fixed exchange rate regime 
A)  implementing a rigid fixed exchange rate regime 
B)  promoting the gold standard across the world 
C)  providing low-interest loans to help finance the building of Europe's economy 
D)  implementing a flexible fixed exchange rate regime

Question 8

Gold was declared as the formal reserve asset in the Jamaica agreement of 1976.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is an exchange rate policy where the exchange rate is determined completely by market forces?

Accepted Answer

A)  managed float 
B)  fixed peg 
C)  free float 
D)  currency board 
A)  managed float 
B)  fixed peg 
C)  free float 
D)  currency board

Question 10

When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a ________ regime.

Accepted Answer

A)  currency board exchange 
B)  pegged exchange rate 
C)  fixed exchange rate 
D)  floating exchange rate 
A)  currency board exchange 
B)  pegged exchange rate 
C)  fixed exchange rate 
D)  floating exchange rate

Question 11

A ________ crisis refers to a loss of confidence in the banking system that leads to a run on banks as individuals and companies withdraw their deposits.

Accepted Answer

A)  currency 
B)  banking 
C)  foreign debt 
D)  domestic debt 
A)  currency 
B)  banking 
C)  foreign debt 
D)  domestic debt

Question 12

The United States had large and growing trade deficits between 1980 and 1985. Despite this, the value of the U.S. dollar rose during this period. Which of the following is a factor that caused this occurrence?

Accepted Answer

A)  The United States attracted heavy inflows of capital from foreign investors during this period. 
B)  Banks in the United States offered low interest rates to investors during this period. 
C)  Markets across the world witnessed strong economies during this period. 
D)  Developed countries in Europe maintained trade equilibrium and supplied goods to underdeveloped countries. 
A)  The United States attracted heavy inflows of capital from foreign investors during this period. 
B)  Banks in the United States offered low interest rates to investors during this period. 
C)  Markets across the world witnessed strong economies during this period. 
D)  Developed countries in Europe maintained trade equilibrium and supplied goods to underdeveloped countries.

Question 13

The agreement reached at Bretton Woods established the

Accepted Answer

A)  International Monetary Fund. 
B)  World Economic Forum. 
C)  United Nations. 
D)  International Atomic Energy Agency. 
A)  International Monetary Fund. 
B)  World Economic Forum. 
C)  United Nations. 
D)  International Atomic Energy Agency.

Question 14

Currencies of countries with currency boards will become uncompetitive and overvalued if

Accepted Answer

A)  local inflation rates remain higher than the inflation rate in the country to which the currency is pegged. 
B)  the country to which the currency is pegged experiences a trade deficit. 
C)  local inflation rates are lower than the inflation rate in the country to which the currency is pegged. 
D)  the country to which the currency is pegged experiences a trade surplus. 
A)  local inflation rates remain higher than the inflation rate in the country to which the currency is pegged. 
B)  the country to which the currency is pegged experiences a trade deficit. 
C)  local inflation rates are lower than the inflation rate in the country to which the currency is pegged. 
D)  the country to which the currency is pegged experiences a trade surplus.

Question 15

Which of the following statements is true of pegged exchange rates?

Accepted Answer

A)  A pegged exchange rate allows a country's currency to be determined by market forces. 
B)  A pegged exchange rate weakens the monetary discipline of a country. 
C)  Pegged exchange rates are popular among many of the world's smaller nations. 
D)  Adopting a pegged exchange rate regime increases inflationary pressures in a country. 
A)  A pegged exchange rate allows a country's currency to be determined by market forces. 
B)  A pegged exchange rate weakens the monetary discipline of a country. 
C)  Pegged exchange rates are popular among many of the world's smaller nations. 
D)  Adopting a pegged exchange rate regime increases inflationary pressures in a country.

Question 16

Which of the following statements is true of the gold standard?

Accepted Answer

A)  The gold standard was adopted only by the smaller nations of the world. 
B)  Currencies were pegged to gold under the gold standard. 
C)  Convertibility to gold was not guaranteed under the gold standard. 
D)  The gold standard was not helpful in maintaining balance-of-trade equilibrium. 
A)  The gold standard was adopted only by the smaller nations of the world. 
B)  Currencies were pegged to gold under the gold standard. 
C)  Convertibility to gold was not guaranteed under the gold standard. 
D)  The gold standard was not helpful in maintaining balance-of-trade equilibrium.

Question 17

What will happen if a country increases its money supply rapidly under a fixed exchange rate regime?

Accepted Answer

A)  Imports will become less attractive in that country. 
B)  The country will face negative inflation. 
C)  The trade deficit would widen in that country. 
D)  The country's products will become more attractive in world markets. 
A)  Imports will become less attractive in that country. 
B)  The country will face negative inflation. 
C)  The trade deficit would widen in that country. 
D)  The country's products will become more attractive in world markets.

Question 18

A country that introduces a currency board commits itself to converting its domestic currency on demand into

Accepted Answer

A)  another currency at a fixed exchange rate. 
B)  gold or silver at a fixed exchange rate. 
C)  gold or silver at a floating exchange rate. 
D)  another currency at a floating exchange rate. 
A)  another currency at a fixed exchange rate. 
B)  gold or silver at a fixed exchange rate. 
C)  gold or silver at a floating exchange rate. 
D)  another currency at a floating exchange rate.

Question 19

Which of the following is an advantage of using the gold standard?

Accepted Answer

A)  The standard makes sure that goods are not priced out from markets due to inflation. 
B)  The standard does not require a commitment from a nation to maintain its currency's value. 
C)  The standard effectively prevents the devaluation of currencies across the world. 
D)  The standard contains a powerful mechanism for achieving balance-of-trade equilibrium by all countries. 
A)  The standard makes sure that goods are not priced out from markets due to inflation. 
B)  The standard does not require a commitment from a nation to maintain its currency's value. 
C)  The standard effectively prevents the devaluation of currencies across the world. 
D)  The standard contains a powerful mechanism for achieving balance-of-trade equilibrium by all countries.

Question 20

A ________ means the value of a currency is fixed relative to a reference currency.

Accepted Answer

A)  pegged exchange rate 
B)  floating exchange rate 
C)  managed float system 
D)  fixed exchange rate 
A)  pegged exchange rate 
B)  floating exchange rate 
C)  managed float system 
D)  fixed exchange rate

Which of the following changes were made to the International Monetary Fund's Articles of Agreement in the Jamaica agreement?

Discuss the significance of the Jamaica Agreement.

Identify the currency that was convertible to gold under the Bretton Woods system.

Which of the following is the reason the current foreign exchange system is sometimes thought of as a managed-float system?

The International Monetary Fund has been criticized for exacerbating moral hazard

Which of the following is a disadvantage of using a rigid policy of fixed exchange rates?

What was the World Bank's initial mission?

Gold was declared as the formal reserve asset in the Jamaica agreement of 1976.

Which of the following is an exchange rate policy where the exchange rate is determined completely by market forces?

When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a ________ regime.

A ________ crisis refers to a loss of confidence in the banking system that leads to a run on banks as individuals and companies withdraw their deposits.

The United States had large and growing trade deficits between 1980 and 1985. Despite this, the value of the U.S. dollar rose during this period. Which of the following is a factor that caused this occurrence?

The agreement reached at Bretton Woods established the

Currencies of countries with currency boards will become uncompetitive and overvalued if

Which of the following statements is true of pegged exchange rates?

Which of the following statements is true of the gold standard?

What will happen if a country increases its money supply rapidly under a fixed exchange rate regime?

A country that introduces a currency board commits itself to converting its domestic currency on demand into

Which of the following is an advantage of using the gold standard?

A ________ means the value of a currency is fixed relative to a reference currency.

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and R&D

Global Human Resource Management

Accounting and Finance in the International Business

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Exam 11: The International Monetary System

Which of the following changes were made to the International Monetary Fund's Articles of Agreement in the Jamaica agreement?

Discuss the significance of the Jamaica Agreement.

Identify the currency that was convertible to gold under the Bretton Woods system.

Which of the following is the reason the current foreign exchange system is sometimes thought of as a managed-float system?

The International Monetary Fund has been criticized for exacerbating moral hazard

Which of the following is a disadvantage of using a rigid policy of fixed exchange rates?

What was the World Bank's initial mission?

Gold was declared as the formal reserve asset in the Jamaica agreement of 1976.

Which of the following is an exchange rate policy where the exchange rate is determined completely by market forces?

When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a ________ regime.

A ________ crisis refers to a loss of confidence in the banking system that leads to a run on banks as individuals and companies withdraw their deposits.

The United States had large and growing trade deficits between 1980 and 1985. Despite this, the value of the U.S. dollar rose during this period. Which of the following is a factor that caused this occurrence?

The agreement reached at Bretton Woods established the

Currencies of countries with currency boards will become uncompetitive and overvalued if

Which of the following statements is true of pegged exchange rates?

Which of the following statements is true of the gold standard?

What will happen if a country increases its money supply rapidly under a fixed exchange rate regime?

A country that introduces a currency board commits itself to converting its domestic currency on demand into

Which of the following is an advantage of using the gold standard?

A ________ means the value of a currency is fixed relative to a reference currency.

Globalization

National Differences in Political, Economic, and Legal Systems

National Differences in Economic Development

Differences in Culture

Ethics, Corporate Social Responsibility, and Sustainability

International Trade Theory

Government Policy and International Trade

Foreign Direct Investment

Regional Economic Integration

The Foreign Exchange Market

The Global Capital Market

The Strategy of International Business

The Organization of International Business

Entry Strategy and Strategic Alliances

Exporting, Importing, and Countertrade

Global Production and Supply Chain Management

Global Marketing and R&D

Global Human Resource Management

Accounting and Finance in the International Business

Filters