Question 1

"Hot money" refers to

Accepted Answer

A)  bond and derivative funds. 
B)  private capital that can be withdrawn at the first hint of trouble. 
C)  public capital that cannot be easily withdrawn. 
D)  money obtained through drugs and illegal activities. 
E)  money hidden in secret foreign bank accounts.

Question 2

Discuss and analyze how the large debt burdens in sub-Saharan Africa were accumulated in response to internal and external dynamics.

Accepted Answer

The answer of Discuss and analyze how the large debt...

Question 3

Asia was the largest recipient of capital inflows,accounting for almost _____ of total flows to all developing countries in the first half of the 1990s.

Accepted Answer

A)  10% 
B)  30% 
C)  50% 
D)  70% 
E)  90%

Question 4

The same network of business-government relations in Asia that created the moral hazard problem in the first place also weakened the incentives that governments had to develop and enforce effective prudential regulations.

Accepted Answer

A) True 
 B)False

Question 5

Discuss the pros and cons of China's status as a large lender to the United States.What can the United Sates do to reduce its vulnerability?

Accepted Answer

The answer of Discuss the pros and cons of China's...

Question 6

IMF assistance in the Asian financial crisis of the 1990s was conditional upon economic reform.What were these reforms and how did they affect Thailand and Indonesia differently?

Accepted Answer

The answer of IMF assistance in the Asian financial crisis...

Question 7

Historical evidence suggests that more volatile capital flows have not been associated with lower economic growth rates over the long run.

Accepted Answer

A) True 
 B)False

Question 8

The financial crisis and macroeconomic stabilization precipitated deep recessions throughout Asia in 1998.The country that was the worst hit was

Accepted Answer

A)  South Korea. 
B)  Indonesia. 
C)  Thailand. 
D)  Malaysia. 
E)  Taiwan.

Question 9

The results from the initial debt-reduction programs were disappointing.Debt-service burdens actually increased for the poorest countries in spite of reducing foreign debt by around

Accepted Answer

A)  $10 billion. 
B)  $30 billion. 
C)  $60 billion. 
D)  $90 billion. 
E)  $150 billion.

Question 10

The Chiang Mai Initiative was a regional body

Accepted Answer

A)  proposed by the Chinese as a kind of Asian Monetary Fund. 
B)  that was enthusiastically endorsed by East Asian governments. 
C)  proposed by the US but failed to attract support from China. 
D)  was rejected by the Japanese who were wary of American ambitions. 
E)  proposed by the Japanese as a kind of Asian Monetary Fund.

Question 11

During the Asian financial crisis in 1997-1998,the IMF granted South Korea,Indonesia,Thailand and Malaysia

Accepted Answer

A)  $ 17 billion. 
B)  $ 57 billion. 
C)  $ 77 billion. 
D)  $ 117 billion. 
E)  $ 157 billion.

Question 12

Weaknesses in the Asian financial systems in the late 1990s was caused by

Accepted Answer

A)  appreciating currencies and popping real estate bubbles. 
B)  depreciating currencies and popping real estate bubbles. 
C)  appreciating currencies and real estate booms. 
D)  international debt-service difficulties began to generate domestic debt-servicing difficulties. 
E)  foreign banks, which had loaned heavily to Asian banks, agreeing to continue to roll over existing loans.

Question 13

East Asian economies have been able to run persistent current account surpluses because their governments

Accepted Answer

A)  pegged their currencies to the dollar at overvalued exchange rates and engaged in sterilized money supply intervention. 
B)  pegged their currencies to the dollar at competitive exchange rates and let their money supply increase to match current account surpluses. 
C)  pegged their currencies to the dollar at competitive exchange rates and decrease their money supply. 
D)  pegged their currencies to the yen at undervalued exchange rates and engaged in currency speculation. 
E)  pegged their currencies to the renminbi at competitive exchange rates and engaged in sterilized intervention.

Question 14

According to Oatley,Bretton Woods II arguably played a key role in the development of the global financial crisis of 2008-2009 because

Accepted Answer

A)  the demand for US government debt instruments drove up interest rates. 
B)  high interest rates burst the real estate bubbles in US and Europe. 
C)  the demand for US government debt instruments drove down interest rates. 
D)  low interest rates drove down the values of commercial real estate in US and Europe. 
E)  it undermined the Asian savings glut and US economic sovereignty.

Question 15

As a result of the HIPC initiative,the World Bank argues the foreign debt of the HIPC countries were comparable to foreign debt burdens in other developing countries at

Accepted Answer

A)  debt-to-export ratios at about 142% and debt to GDP ratios at about 35%. 
B)  debt-to-export ratios at about 130% and debt to GDP ratios at about 30%. 
C)  debt-to-export ratios at about 122% and debt to GDP ratios at about 25%. 
D)  debt-to-export ratios at about 112% and debt to GDP ratios at about 35%. 
E)  debt-to-export ratios at about 102% and debt to GDP ratios at about 25%.

Question 16

"Moral hazard" in the field of international political economy is when

Accepted Answer

A)  banks have an incentive to make safer loans than they would make in the absence of a guarantee of a government bailout. 
B)  banks charge higher interest rates to high risk borrowers. 
C)  the practice of lending heavily to high risk borrowers makes a systemic financial crisis more destructive. 
D)  financial institutions have close ties to governments, sometimes through personal relationships. 
E)  banks believe that the government will bail them out if they suffer large losses on the loans they have made.

Question 17

Policies that East Asia governments adopted to reduce the likelihood that they would experience another crisis at home contributed to the development of an even larger crisis abroad.

Accepted Answer

A) True 
 B)False

Question 18

Under the Multilateral Debt Relief Initiative (2006)the cost of debt cancellations ($50 billion)

Accepted Answer

A)  was financed through contributions to multilateral lenders by the advanced industrial countries. 
B)  was financed through contributions to advanced industrial countries by the multilateral lenders. 
C)  was financed by taking away resources from new development projects. 
D)  was entirely financed by the IMF and the African Development Fund (ADF). 
E)  was not linked to the high degree of conditionality under the HIPC initiative.

Question 19

Discuss and analyze how the African debt crisis was similar or different from the debt crises in Latin America and Asia? Did the IMF and World Bank manage it differently?

Accepted Answer

The answer of Discuss and analyze how the African debt...

Question 20

Heavy dependence on short-term capital required the continual rollover of foreign liabilities.

Accepted Answer

A) True 
 B)False

Exam 15: Developing Countries and International Finance II: a Decade of Crises

"Hot money" refers to

Discuss and analyze how the large debt burdens in sub-Saharan Africa were accumulated in response to internal and external dynamics.

Asia was the largest recipient of capital inflows,accounting for almost _____ of total flows to all developing countries in the first half of the 1990s.

The same network of business-government relations in Asia that created the moral hazard problem in the first place also weakened the incentives that governments had to develop and enforce effective prudential regulations.

Discuss the pros and cons of China's status as a large lender to the United States.What can the United Sates do to reduce its vulnerability?

IMF assistance in the Asian financial crisis of the 1990s was conditional upon economic reform.What were these reforms and how did they affect Thailand and Indonesia differently?

Historical evidence suggests that more volatile capital flows have not been associated with lower economic growth rates over the long run.

The financial crisis and macroeconomic stabilization precipitated deep recessions throughout Asia in 1998.The country that was the worst hit was

The results from the initial debt-reduction programs were disappointing.Debt-service burdens actually increased for the poorest countries in spite of reducing foreign debt by around

The Chiang Mai Initiative was a regional body

During the Asian financial crisis in 1997-1998,the IMF granted South Korea,Indonesia,Thailand and Malaysia

Weaknesses in the Asian financial systems in the late 1990s was caused by

East Asian economies have been able to run persistent current account surpluses because their governments

According to Oatley,Bretton Woods II arguably played a key role in the development of the global financial crisis of 2008-2009 because

As a result of the HIPC initiative,the World Bank argues the foreign debt of the HIPC countries were comparable to foreign debt burdens in other developing countries at

"Moral hazard" in the field of international political economy is when

Policies that East Asia governments adopted to reduce the likelihood that they would experience another crisis at home contributed to the development of an even larger crisis abroad.

Under the Multilateral Debt Relief Initiative (2006) the cost of debt cancellations ($50 billion)

Discuss and analyze how the African debt crisis was similar or different from the debt crises in Latin America and Asia? Did the IMF and World Bank manage it differently?

Heavy dependence on short-term capital required the continual rollover of foreign liabilities.