Question 1

Why would a country adopt floating exchange rates?

Accepted Answer

A) Floating exchange rates allow a government the freedom to pursue its own monetary policies. 
B) Floating exchange rates reduce the likelihood of abrupt changes in currency values. 
C) Floating exchange rates are beneficial for borrowers of foreign funds. 
D) Floating exchange rates make international trade less risky. 
A) Floating exchange rates allow a government the freedom to pursue its own monetary policies. 
B) Floating exchange rates reduce the likelihood of abrupt changes in currency values. 
C) Floating exchange rates are beneficial for borrowers of foreign funds. 
D) Floating exchange rates make international trade less risky.

Question 2

Which of these steps usually comes first in a currency crisis?

Accepted Answer

A) The government offers substantially higher interest rates. 
B) The government devalues its currency. 
C) Investors begin to sell a nation's currency. 
D) The government faces some difficulty in maintaining a fixed exchange rate. 
A) The government offers substantially higher interest rates. 
B) The government devalues its currency. 
C) Investors begin to sell a nation's currency. 
D) The government faces some difficulty in maintaining a fixed exchange rate.

Question 3

What type of country would be the strongest supporter of adopting the euro?

Accepted Answer

A) A large country with a very protectionist trade policy 
B) A large country with a moderately liberal trade policy 
C) A small country with a very liberal trade policy 
D) A small country with a very protectionist trade policy 
A) A large country with a very protectionist trade policy 
B) A large country with a moderately liberal trade policy 
C) A small country with a very liberal trade policy 
D) A small country with a very protectionist trade policy

Question 4

Which of the following events precipitated the Mexican currency crisis of 1994?

Accepted Answer

A) The end of the Cold War 
B) The narrow election victory of the incumbent party 
C) Recession in the United States 
D) The signing of the new World Trade Organization agreement 
A) The end of the Cold War 
B) The narrow election victory of the incumbent party 
C) Recession in the United States 
D) The signing of the new World Trade Organization agreement

Question 5

Explain how an international monetary regime depends on interactions among the governments of the world's major economies.

Accepted Answer

Answers will vary.Students may discuss h

Question 6

Why did the European currency crisis of 1992 occur?

Accepted Answer

A) Germany raised its interest rates to combat inflation,which led investors to question whether other European countries would keep their currencies pegged to the Deutschemark. 
B) West and East Germany reunited after the Cold War ended,which led investors to question whether the country could support the Deutschemark,so they sold the currency and bought U.S.dollars. 
C) Sweden raised its interest rates to 500 percent to reduce inflation,which led investors to dump their other currencies and buy Swedish krona. 
D) A housing bubble collapsed in Italy,sparking a financial crisis throughout the region. 
A) Germany raised its interest rates to combat inflation,which led investors to question whether other European countries would keep their currencies pegged to the Deutschemark. 
B) West and East Germany reunited after the Cold War ended,which led investors to question whether the country could support the Deutschemark,so they sold the currency and bought U.S.dollars. 
C) Sweden raised its interest rates to 500 percent to reduce inflation,which led investors to dump their other currencies and buy Swedish krona. 
D) A housing bubble collapsed in Italy,sparking a financial crisis throughout the region.

Question 7

Which of the following countries was one of the first to suffer from the 1992 European currency crisis?

Accepted Answer

A) Germany 
B) United Kingdom 
C) Belgium 
D) Greece 
A) Germany 
B) United Kingdom 
C) Belgium 
D) Greece

Question 8

What determines the value of a currency? What government policies can be used to influence this value?

Accepted Answer

Answers will vary.Students may answer th

Question 9

Why did the Argentine currency crisis of 2001 occur?

Accepted Answer

A) The Argentine president continued to let the peso float in order to maintain political support for his party. 
B) The end of the Cold War led to too many imports from former communist countries. 
C) Argentina's beef exports increased so much that it led to a shortage of currency. 
D) Argentina had pegged the peso to the dollar and could not easily change its policy. 
A) The Argentine president continued to let the peso float in order to maintain political support for his party. 
B) The end of the Cold War led to too many imports from former communist countries. 
C) Argentina's beef exports increased so much that it led to a shortage of currency. 
D) Argentina had pegged the peso to the dollar and could not easily change its policy.

Question 10

What did the classical gold standard era and the Bretton Woods System have in common?

Accepted Answer

A) They shared the flexibility to adjust exchange rates when currency crises occurred. 
B) The world's major powers cooperated in maintaining the system. 
C) In both cases a major power (the United States and Soviet Union,respectively)opted out of the system. 
D) Both were created in response to devastating wars. 
A) They shared the flexibility to adjust exchange rates when currency crises occurred. 
B) The world's major powers cooperated in maintaining the system. 
C) In both cases a major power (the United States and Soviet Union,respectively)opted out of the system. 
D) Both were created in response to devastating wars.

Question 11

How did domestic interests and international conditions affect the adoption of the euro?

Accepted Answer

Answers will vary.Students may discuss t

Question 12

In the late nineteenth century,which effect of a change in the gold standard would have been desired by the Populists?

Accepted Answer

A) A change to using the gold standard would have reduced currency instability and encouraged more international trade. 
B) A change to using a silver standard would have allowed an appreciation of the dollar,thus helping exporters. 
C) A change to using a silver standard would have allowed a devaluation of the dollar,thus helping exporters. 
D) A change to using a silver standard would have increased imports and made manufacturing cheaper. 
A) A change to using the gold standard would have reduced currency instability and encouraged more international trade. 
B) A change to using a silver standard would have allowed an appreciation of the dollar,thus helping exporters. 
C) A change to using a silver standard would have allowed a devaluation of the dollar,thus helping exporters. 
D) A change to using a silver standard would have increased imports and made manufacturing cheaper.

Question 13

A currency crisis in 1997 and 1998 spread quickly throughout ________,which eventually led to at least two governments falling from the resulting economic recessions.

Accepted Answer

A) Latin America 
B) Europe 
C) Africa 
D) East Asia 
A) Latin America 
B) Europe 
C) Africa 
D) East Asia

Question 14

Monetary policy is the government's ability to:

Accepted Answer

A) borrow and spend. 
B) raise tax revenues. 
C) regulate imports and exports. 
D) affect the economy by manipulating the money supply. 
A) borrow and spend. 
B) raise tax revenues. 
C) regulate imports and exports. 
D) affect the economy by manipulating the money supply.

Question 15

What is a commodity standard?

Accepted Answer

A) A widely accepted model for the production of goods 
B) An agreement on trade that sets the standard for the exchange of goods 
C) When a government uses a paper currency whose value is close to a universal standard unit 
D) When governments use a good with a value of its own as the basic underlying monetary unit 
A) A widely accepted model for the production of goods 
B) An agreement on trade that sets the standard for the exchange of goods 
C) When a government uses a paper currency whose value is close to a universal standard unit 
D) When governments use a good with a value of its own as the basic underlying monetary unit

Why would a country adopt floating exchange rates?

Which of these steps usually comes first in a currency crisis?

What type of country would be the strongest supporter of adopting the euro?

Which of the following events precipitated the Mexican currency crisis of 1994?

Explain how an international monetary regime depends on interactions among the governments of the world's major economies.

Why did the European currency crisis of 1992 occur?

Which of the following countries was one of the first to suffer from the 1992 European currency crisis?

What determines the value of a currency? What government policies can be used to influence this value?

Why did the Argentine currency crisis of 2001 occur?

What did the classical gold standard era and the Bretton Woods System have in common?

How did domestic interests and international conditions affect the adoption of the euro?

In the late nineteenth century,which effect of a change in the gold standard would have been desired by the Populists?

A currency crisis in 1997 and 1998 spread quickly throughout ________,which eventually led to at least two governments falling from the resulting economic recessions.

Monetary policy is the government's ability to:

What is a commodity standard?

What Shaped Our World

Understanding Interests, interactions, and Institutions

Why Are There Wars

Domestic Politics and War

International Institutions and War

Violence by Nonstate Actors: Civil War and Terrorism

International Trade

International Financial Relations

Development: Causes of the Wealth and Poverty of Nations

International Law and Norms

Human Rights

The Global Environment

The Future of International Politics

Introduction

Foundations, War, and Peace

International Political Economy, Transnational Politics, and Looking Ahead

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Exam 9: International Monetary Relations

Why would a country adopt floating exchange rates?

Which of these steps usually comes first in a currency crisis?

What type of country would be the strongest supporter of adopting the euro?

Which of the following events precipitated the Mexican currency crisis of 1994?

Explain how an international monetary regime depends on interactions among the governments of the world's major economies.

Why did the European currency crisis of 1992 occur?

Which of the following countries was one of the first to suffer from the 1992 European currency crisis?

What determines the value of a currency? What government policies can be used to influence this value?

Why did the Argentine currency crisis of 2001 occur?

What did the classical gold standard era and the Bretton Woods System have in common?

How did domestic interests and international conditions affect the adoption of the euro?

In the late nineteenth century,which effect of a change in the gold standard would have been desired by the Populists?

A currency crisis in 1997 and 1998 spread quickly throughout ________,which eventually led to at least two governments falling from the resulting economic recessions.

Monetary policy is the government's ability to:

What is a commodity standard?

What Shaped Our World

Understanding Interests, interactions, and Institutions

Why Are There Wars

Domestic Politics and War

International Institutions and War

Violence by Nonstate Actors: Civil War and Terrorism

International Trade

International Financial Relations

Development: Causes of the Wealth and Poverty of Nations

International Law and Norms

Human Rights

The Global Environment

The Future of International Politics

Introduction

Foundations, War, and Peace

International Political Economy, Transnational Politics, and Looking Ahead

Filters