Question 1

The so-called General Arrangements to Borrow provide a permanent increase in the supply of international reserves.

Accepted Answer

A) True 
 B)False

Question 2

Concerning international lending risk,currency risk is the risk of asset losses due to changing currency values.

Accepted Answer

A) True 
 B)False

Question 3

"Country risk" analysis is concerned with all of the following except:

Accepted Answer

A)  Depreciation of the borrowing country's currency 
B)  Political instability in the borrowing country 
C)  Economic growth in the borrowing country 
D)  External debt of the borrowing country 
A)  Depreciation of the borrowing country's currency 
B)  Political instability in the borrowing country 
C)  Economic growth in the borrowing country 
D)  External debt of the borrowing country

Question 4

All of the following exchange-rate systems require international reserves to finance balance-of-payments disequilibriums except:

Accepted Answer

A)  Pegged or fixed exchange rates 
B)  Managed floating exchange rates 
C)  Adjustable pegged exchange rates 
D)  Freely floating exchange rates 
A)  Pegged or fixed exchange rates 
B)  Managed floating exchange rates 
C)  Adjustable pegged exchange rates 
D)  Freely floating exchange rates

Question 5

With floating exchange rates,countries require sizable amounts of international reserves for the stabilization of exchange rates.

Accepted Answer

A) True 
 B)False

Question 6

The U.S.gold outflow that began in the late 1940s and continued through the 1960s was due in part to:

Accepted Answer

A)  Crawling pegged exchange rates 
B)  Freely floating exchange rates 
C)  An undervalued dollar 
D)  An overvalued dollar 
A)  Crawling pegged exchange rates 
B)  Freely floating exchange rates 
C)  An undervalued dollar 
D)  An overvalued dollar

Question 7

The Federal Reserve's swap network represents:

Accepted Answer

A)  Efforts to stabilize only the value of the dollar 
B)  Efforts to stabilize only the value of foreign currencies 
C)  Long-term borrowing among countries 
D)  Short-term borrowing among countries 
A)  Efforts to stabilize only the value of the dollar 
B)  Efforts to stabilize only the value of foreign currencies 
C)  Long-term borrowing among countries 
D)  Short-term borrowing among countries

Question 8

Which of the following assets makes use of the basket valuation technique?

Accepted Answer

A)  Swap agreements 
B)  Oil facility 
C)  Buffer stock facility 
D)  Special drawing rights 
A)  Swap agreements 
B)  Oil facility 
C)  Buffer stock facility 
D)  Special drawing rights

Question 9

In 1975 the official price of gold was abolished as the unit of account for the international monetary system.As a result,gold was demonetized as an international reserve asset.

Accepted Answer

A) True 
 B)False

Question 10

Foreign currencies constitute the smallest component of the world's international reserves.

Accepted Answer

A) True 
 B)False

Question 11

Figure 17.1 Foreign Exchange Market  
-Refer to Figure 17.1.Under a floating exchange rate system,the exchange rate would rise to $4 and U.S.monetary authorities would have to supply 4 million pounds to the foreign exchange market in exchange for dollars to maintain this rate.

Accepted Answer

A) True 
 B)False

Question 12

The purpose of international reserves is to finance:

Accepted Answer

A)  Short-term surpluses in the balance of payments 
B)  Long-term surpluses in the balance of payments 
C)  Short-term deficits in the balance of payments 
D)  Long-term deficits in the balance of payments 
A)  Short-term surpluses in the balance of payments 
B)  Long-term surpluses in the balance of payments 
C)  Short-term deficits in the balance of payments 
D)  Long-term deficits in the balance of payments

Question 13

A main purpose of the International Monetary Fund is to make loans of foreign currencies to member countries which are experiencing current-account surpluses.

Accepted Answer

A) True 
 B)False

Question 14

Gold is currently the most widely used asset in the international monetary system.

Accepted Answer

A) True 
 B)False

Question 15

Concerning international lending risk,credit risk refers to the probability that part or all of the interest rate or principal of a loan will not be repaid.

Accepted Answer

A) True 
 B)False

Question 16

Figure 17.1 Foreign Exchange Market  
-Refer to Figure 17.1.If the exchange rate was allowed to rise to $4 per pound,U.S.monetary authorities would have to supply 6 million pounds to the foreign exchange market in exchange for dollars to maintain this rate.

Accepted Answer

A) True 
 B)False

Question 17

When exchange rates are fixed by central bankers,international reserves are necessary for financing payments imbalances and the stabilization of exchange rates.

Accepted Answer

A) True 
 B)False

Question 18

In response to the international debt problem,the United States set up a special fund in 1986 to help make up for lost oil revenues.Under the plan,the United States would make more money available as world oil prices fell.This plan was designed to help:

Accepted Answer

A)  Argentina 
B)  Saudi Arabia 
C)  Mexico 
D)  Brazil 
A)  Argentina 
B)  Saudi Arabia 
C)  Mexico 
D)  Brazil

Question 19

An advantage of international reserves is that they allow countries to sustain temporary balance-of-payments deficits until acceptable adjustment measures can operate to correct the disequilibrium.

Accepted Answer

A) True 
 B)False

Question 20

Gold constitutes the largest component of the world's international reserves.

Accepted Answer

A) True 
 B)False

The so-called General Arrangements to Borrow provide a permanent increase in the supply of international reserves.

Concerning international lending risk,currency risk is the risk of asset losses due to changing currency values.

"Country risk" analysis is concerned with all of the following except:

All of the following exchange-rate systems require international reserves to finance balance-of-payments disequilibriums except:

With floating exchange rates,countries require sizable amounts of international reserves for the stabilization of exchange rates.

The U.S.gold outflow that began in the late 1940s and continued through the 1960s was due in part to:

The Federal Reserve's swap network represents:

Which of the following assets makes use of the basket valuation technique?

In 1975 the official price of gold was abolished as the unit of account for the international monetary system.As a result,gold was demonetized as an international reserve asset.

Foreign currencies constitute the smallest component of the world's international reserves.

Figure 17.1 Foreign Exchange Market -Refer to Figure 17.1.Under a floating exchange rate system,the exchange rate would rise to $4 and U.S.monetary authorities would have to supply 4 million pounds to the foreign exchange market in exchange for dollars to maintain this rate.

The purpose of international reserves is to finance:

A main purpose of the International Monetary Fund is to make loans of foreign currencies to member countries which are experiencing current-account surpluses.

Gold is currently the most widely used asset in the international monetary system.

Concerning international lending risk,credit risk refers to the probability that part or all of the interest rate or principal of a loan will not be repaid.

Figure 17.1 Foreign Exchange Market -Refer to Figure 17.1.If the exchange rate was allowed to rise to $4 per pound,U.S.monetary authorities would have to supply 6 million pounds to the foreign exchange market in exchange for dollars to maintain this rate.

When exchange rates are fixed by central bankers,international reserves are necessary for financing payments imbalances and the stabilization of exchange rates.

In response to the international debt problem,the United States set up a special fund in 1986 to help make up for lost oil revenues.Under the plan,the United States would make more money available as world oil prices fell.This plan was designed to help:

An advantage of international reserves is that they allow countries to sustain temporary balance-of-payments deficits until acceptable adjustment measures can operate to correct the disequilibrium.

Gold constitutes the largest component of the world's international reserves.

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange-Rate Determination

Mechanisms of International Adjustment

Exchange-Rate Adjustments and the Balance of Payments

Exchange-Rate Systems and Currency Crises

Macroeconomic Policy in an Open Economy

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Exam 17: International Banking: Reserves, Debt, and Risk

The so-called General Arrangements to Borrow provide a permanent increase in the supply of international reserves.

Concerning international lending risk,currency risk is the risk of asset losses due to changing currency values.

"Country risk" analysis is concerned with all of the following except:

All of the following exchange-rate systems require international reserves to finance balance-of-payments disequilibriums except:

With floating exchange rates,countries require sizable amounts of international reserves for the stabilization of exchange rates.

The U.S.gold outflow that began in the late 1940s and continued through the 1960s was due in part to:

The Federal Reserve's swap network represents:

Which of the following assets makes use of the basket valuation technique?

In 1975 the official price of gold was abolished as the unit of account for the international monetary system.As a result,gold was demonetized as an international reserve asset.

Foreign currencies constitute the smallest component of the world's international reserves.

Figure 17.1 Foreign Exchange Market -Refer to Figure 17.1.Under a floating exchange rate system,the exchange rate would rise to $4 and U.S.monetary authorities would have to supply 4 million pounds to the foreign exchange market in exchange for dollars to maintain this rate.

The purpose of international reserves is to finance:

A main purpose of the International Monetary Fund is to make loans of foreign currencies to member countries which are experiencing current-account surpluses.

Gold is currently the most widely used asset in the international monetary system.

Concerning international lending risk,credit risk refers to the probability that part or all of the interest rate or principal of a loan will not be repaid.

Figure 17.1 Foreign Exchange Market -Refer to Figure 17.1.If the exchange rate was allowed to rise to $4 per pound,U.S.monetary authorities would have to supply 6 million pounds to the foreign exchange market in exchange for dollars to maintain this rate.

When exchange rates are fixed by central bankers,international reserves are necessary for financing payments imbalances and the stabilization of exchange rates.

In response to the international debt problem,the United States set up a special fund in 1986 to help make up for lost oil revenues.Under the plan,the United States would make more money available as world oil prices fell.This plan was designed to help:

An advantage of international reserves is that they allow countries to sustain temporary balance-of-payments deficits until acceptable adjustment measures can operate to correct the disequilibrium.

Gold constitutes the largest component of the world's international reserves.

The International Economy and Globalization

Foundations of Modern Trade Theory: Comparative Advantage

Sources of Comparative Advantage

Tariffs

Nontariff Trade Barriers

Trade Regulations and Industrial Policies

Trade Policies for the Developing Nations

Regional Trading Arrangements

International Factor Movements and Multinational Enterprises

The Balance of Payments

Foreign Exchange

Exchange-Rate Determination

Mechanisms of International Adjustment

Exchange-Rate Adjustments and the Balance of Payments

Exchange-Rate Systems and Currency Crises

Macroeconomic Policy in an Open Economy

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