Question 1

Did the Bank of England intervene and perform its Lender of Last Resort responsibility to end the panic in August 2007?

Accepted Answer

A)  Yes 
B)  No 
C)  Yes, only after a bank run and under pressure from the British financial industry 
D)  No, since such support would present a moral hazard problem 
E)  No, despite intense pressure from the chancellor of the exchequer. 
A)  Yes 
B)  No 
C)  Yes, only after a bank run and under pressure from the British financial industry 
D)  No, since such support would present a moral hazard problem 
E)  No, despite intense pressure from the chancellor of the exchequer.

Question 2

Asset trades that deal with equity instruments are best described as

Accepted Answer

A)  share of stock. 
B)  exchange rate. 
C)  bonds. 
D)  bank deposits. 
E)  factors. 
A)  share of stock. 
B)  exchange rate. 
C)  bonds. 
D)  bank deposits. 
E)  factors.

Question 3

Explain how Eurobanks played a role in the Iranian Hostage Crisis in 1979.

Accepted Answer

When American hostages were ta

Question 4

How well has the international capital market perform?

Accepted Answer

International portfo

Question 5

The purpose of the Basel Committee was to:

Accepted Answer

A)  achieve a better coordination of the surveillance exercised by national authorities over the international banking system. 
B)  achieve a better coordination of domestic banking systems. 
C)  achieve a better coordination between brokers and investment bankers. 
D)  achieve a better coordination between bond holder and bon issuers. 
E)  manipulate bank rates for more leverage profits. 
A)  achieve a better coordination of the surveillance exercised by national authorities over the international banking system. 
B)  achieve a better coordination of domestic banking systems. 
C)  achieve a better coordination between brokers and investment bankers. 
D)  achieve a better coordination between bond holder and bon issuers. 
E)  manipulate bank rates for more leverage profits.

Question 6

After Bretton Woods period, countries chose to control

Accepted Answer

A)  fixed exchange rate only. 
B)  monetary policy oriented toward domestic goals only. 
C)  freedom of international capital movements only. 
D)  fixed exchange rate and freedom of international capital movements. 
E)  fixed exchange rate and monetary policy oriented toward domestic goals. 
A)  fixed exchange rate only. 
B)  monetary policy oriented toward domestic goals only. 
C)  freedom of international capital movements only. 
D)  fixed exchange rate and freedom of international capital movements. 
E)  fixed exchange rate and monetary policy oriented toward domestic goals.

Question 7

What do you expect would be the effects of 9/11 on the size of the Eurocurrency markets?

Accepted Answer

Will increase due to fear that

Question 8

Complete the following table.

Accepted Answer

The answer of Complete the following table.  ...

Question 9

Credit Suisse, Goldman Sachs, and Lazard Freres are examples of

Accepted Answer

A)  commercial banks. 
B)  corporations. 
C)  non-bank financial institutions, such as insurance companies, pension funds, and mutual funds. This includes investment banks, which specialize in underwriting sales of stocks and bonds by corporations and in some cases governments. 
D)  central banks and other government agencies. 
E)  non-profit organizations. 
A)  commercial banks. 
B)  corporations. 
C)  non-bank financial institutions, such as insurance companies, pension funds, and mutual funds. This includes investment banks, which specialize in underwriting sales of stocks and bonds by corporations and in some cases governments. 
D)  central banks and other government agencies. 
E)  non-profit organizations.

Question 10

What is securitization?

Accepted Answer

The term refers to financial instrument

Question 11

Using international asset trade, countries can

Accepted Answer

A)  never really eliminate all risk. 
B)  eliminate all risk. 
C)  actually increase their risk in some cases. 
D)  eliminate all their risk except for emerging markets. 
E)  never really diversify their holdings. 
A)  never really eliminate all risk. 
B)  eliminate all risk. 
C)  actually increase their risk in some cases. 
D)  eliminate all their risk except for emerging markets. 
E)  never really diversify their holdings.

Question 12

The Eurodollar market's early growth was stimulated by the Cold War between the United States and U.S.S.R. Why?

Accepted Answer

A)  Soviets feared the U.S. might confiscate dollars place in American banks if conditions of Cold War were to worsen. 
B)  The United States didn't feel safe holding as many dollars in American banks. 
C)  The Cold War did not stimulate the Eurodollar market's early growth. 
D)  Developing technologies required larger money transfers than central banks could handle. 
E)  Soviets developed a new banking system with new allies developed during the tension. 
A)  Soviets feared the U.S. might confiscate dollars place in American banks if conditions of Cold War were to worsen. 
B)  The United States didn't feel safe holding as many dollars in American banks. 
C)  The Cold War did not stimulate the Eurodollar market's early growth. 
D)  Developing technologies required larger money transfers than central banks could handle. 
E)  Soviets developed a new banking system with new allies developed during the tension.

Question 13

The international capital market is:

Accepted Answer

A)  the international currency exchange. 
B)  a market in which capital assets are exchanged for services. 
C)  the market that is subject to intense regulation and must file a report to the Basel committee on a biannual basis. 
D)  not really a single market, but a group of closely interconnected markets in which asset exchanges with some international dimension take place. 
E)  an organization of fiscal policies that dictate international trade. 
A)  the international currency exchange. 
B)  a market in which capital assets are exchanged for services. 
C)  the market that is subject to intense regulation and must file a report to the Basel committee on a biannual basis. 
D)  not really a single market, but a group of closely interconnected markets in which asset exchanges with some international dimension take place. 
E)  an organization of fiscal policies that dictate international trade.

Question 14

Explain why, according to Feldstein and Horioka, one should expect that domestic investment rates diverge widely from saving rates.

Accepted Answer

The decisions of corporations to invest

Question 15

In the United States, which of the following safety precautions has the government not taken to reduce Bank failures?

Accepted Answer

A)  implemented deposits insurance 
B)  bank reserve requirements 
C)  capital requirements and asset restrictions 
D)  required bank examination 
E)  forcibly closing poorly run banks 
A)  implemented deposits insurance 
B)  bank reserve requirements 
C)  capital requirements and asset restrictions 
D)  required bank examination 
E)  forcibly closing poorly run banks

Question 16

The case where people purposely act in a careless way, for example, driving recklessly because they are insured, is called:

Accepted Answer

A)  asymmetric information. 
B)  risk aversion. 
C)  moral hazard. 
D)  bounded rationality. 
E)  thrill-seeking. 
A)  asymmetric information. 
B)  risk aversion. 
C)  moral hazard. 
D)  bounded rationality. 
E)  thrill-seeking.

Question 17

As a country begins to liberalize its capital account, what would you expect to happen to the difference between the interest rates for similar assets in this country and another country with open capital markets?

Accepted Answer

A)  get larger 
B)  get smaller 
C)  stay the same 
D)  it depends on the existing exchange rate 
E)  exponential divergence 
A)  get larger 
B)  get smaller 
C)  stay the same 
D)  it depends on the existing exchange rate 
E)  exponential divergence

Question 18

If a country chooses to have a monetary policy oriented toward domestic goals and a fixed exchange rate, then

Accepted Answer

A)  it can have the freedom of international capital movements. 
B)  it cannot have the freedom of international capital movements. 
C)  it cannot balance its current account. 
D)  it cannot have fiscal policy oriented toward domestic goals. 
E)  it cannot control money supply growth. 
A)  it can have the freedom of international capital movements. 
B)  it cannot have the freedom of international capital movements. 
C)  it cannot balance its current account. 
D)  it cannot have fiscal policy oriented toward domestic goals. 
E)  it cannot control money supply growth.

Question 19

Banks in the U.S.

Accepted Answer

A)  face rules against lending too large a fraction of their assets to a single private customer only. 
B)  face rules against lending too large a fraction of their assets to a single private customer or to a single foreign government borrower. 
C)  face rules against lending too large a fraction of their assets to a single foreign government borrower only. 
D)  face rules against lending to too many foreign organizations and corporations. 
E)  face rules against lending to other banks. 
A)  face rules against lending too large a fraction of their assets to a single private customer only. 
B)  face rules against lending too large a fraction of their assets to a single private customer or to a single foreign government borrower. 
C)  face rules against lending too large a fraction of their assets to a single foreign government borrower only. 
D)  face rules against lending to too many foreign organizations and corporations. 
E)  face rules against lending to other banks.

Question 20

Besides world trade growth, what can explain the growth of international banking since the 1960s?

Accepted Answer

A)  war in the Middle East 
B)  government focus on banking regulation. 
C)  an increase in world travel. 
D)  the emergence of developing countries like China. 
E)  desire of depositors to hold currencies outside the jurisdiction of the countries that issue them 
A)  war in the Middle East 
B)  government focus on banking regulation. 
C)  an increase in world travel. 
D)  the emergence of developing countries like China. 
E)  desire of depositors to hold currencies outside the jurisdiction of the countries that issue them

Exam 21: Financial Globalization: Opportunity and Crisis

Did the Bank of England intervene and perform its Lender of Last Resort responsibility to end the panic in August 2007?

Asset trades that deal with equity instruments are best described as

Explain how Eurobanks played a role in the Iranian Hostage Crisis in 1979.

How well has the international capital market perform?

The purpose of the Basel Committee was to:

After Bretton Woods period, countries chose to control

What do you expect would be the effects of 9/11 on the size of the Eurocurrency markets?

Complete the following table.

Credit Suisse, Goldman Sachs, and Lazard Freres are examples of

What is securitization?

Using international asset trade, countries can

The Eurodollar market's early growth was stimulated by the Cold War between the United States and U.S.S.R. Why?

The international capital market is:

Explain why, according to Feldstein and Horioka, one should expect that domestic investment rates diverge widely from saving rates.

In the United States, which of the following safety precautions has the government not taken to reduce Bank failures?

The case where people purposely act in a careless way, for example, driving recklessly because they are insured, is called:

As a country begins to liberalize its capital account, what would you expect to happen to the difference between the interest rates for similar assets in this country and another country with open capital markets?

If a country chooses to have a monetary policy oriented toward domestic goals and a fixed exchange rate, then

Banks in the U.S.

Besides world trade growth, what can explain the growth of international banking since the 1960s?

Introduction

World Trade: An Overview

Labor Productivity and Comparative Advantage: The Ricardian Model

Specific Factors and Income Distribution

Resources and Trade: The Heckscher-Ohlin Model

The Standard Trade Model

External Economies of Scale and the International Location of Production

Firms in the Global Economy: Export Decisions, Outsourcing, and Multinational Enterprises

The Instruments of Trade Policy

The Political Economy of Trade Policy

Trade Policy in Developing Countries

Controversies in Trade Policy

National Income Accounting and the Balance of Payments

Exchange Rates and the Foreign Exchange Market: An Asset Approach

Money, Interest Rates, and Exchange Rates

Price Levels and the Exchange Rate in the Long Run

Output and the Exchange Rate in the Short Run

Fixed Exchange Rates and Foreign Exchange Intervention

International Monetary Systems: An Historical Overview

Optimum Currency Areas and the European Experience

Developing Countries: Growth, Crisis, and Reform

Filters