Question 1

The World Bank was established at the at Bretton Woods conference to

Accepted Answer

A)   establish an international monetary system.
B)   promote general economic development.
C)   establish the gold standard across the world.
D)   fund the initiatives of the United Nations.E) A) and B)
F) A) and C)

Question 2

The international monetary system refers to the institutional arrangements that govern

Accepted Answer

A)   microeconomic parameters.
B)   exchange rates.
C)   gross domestic produce.
D)   foreign direct investment.E) All of the above
F) B) and C)

Question 3

Interest rates adjust automatically under a strict currency board system.

Accepted Answer

A) True 
 B)False

Question 4

When a country tries to hold the value of its currency within some range against an important reference currency such as the U.S. dollar without adopting a formal pegged rate, it is referred to as a

Accepted Answer

A)   gold standard.
B)   pegged float.
C)   dirty float.
D)   currency peg.E) A) and B)
F) A) and C) C

Question 5

A country that introduces a currency board commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate.

Accepted Answer

A) True 
 B)False

Question 6

Gold par value refers to the

Accepted Answer

A)   ratio of the price of gold in a currency to the price of gold in U.S. dollars.
B)   amount of a currency needed to purchase one ounce of gold.
C)   ratio of price of gold in a currency to the price of gold in euros.
D)   amount of gold required to equal the reference currency that a nation is using.E) None of the above
F) B) and C) B

Question 7

Countries that require substantial loans from the International Monetary Fund to survive will ________ due to IMF-mandated economic policies.

Accepted Answer

A)   benefit from a sharp expansion of demand in the long term
B)   endure a sharp contraction of demand in the long term
C)   benefit from a sharp expansion of demand in the short term
D)   endure a sharp contraction of demand in the short termE) B) and D)
F) A) and B)

Question 8

Present the common arguments that favor fixed exchange rates.

Accepted Answer

The case for fixed exchange rates revolv...

Question 9

A country is said to be in balance-of-trade equilibrium when

Accepted Answer

A)   it has the potential to produce all goods that its residents want without engaging in foreign trade.
B)   the income its residents earn from exports is equal to the money its residents pay for imports.
C)   the country imports all goods that its residents want by engaging in foreign trade.
D)   it has the potential to balance the production and procurement of the basic amenities that it needs.E) None of the above
F) All of the above

Question 10

World Bank offers low-interest loans to risky customers whose credit rating is often poor.

Accepted Answer

A) True 
 B)False

Question 11

Under a currency board system

Accepted Answer

A)   inflation rates are maintained at a high level.
B)   countries issue domestic notes at will.
C)   interest rates remain constant.
D)   the government lacks the ability to set interest rates.E) A) and B)
F) A) and C)

Question 12

Which of the following statements is true of the Bretton Woods agreement?

Accepted Answer

A)   All countries agreed to fix the value of their currency in terms of gold under the agreement.
B)   The system accepted the British pound as the official reference currency against gold.
C)   The agreement established a floating system of monetary exchange.
D)   Two multinational institutions, the World Economic Forum and WTO, were formed under the agreement.E) C) and D)
F) None of the above

Question 13

Adopting a pegged exchange rate regime increases the inflationary pressures in a country.

Accepted Answer

A) True 
 B)False

Question 14

Exchange rates are ________ under a pure "free float" system.

Accepted Answer

A)   completely balanced
B)   determined by market forces
C)   wildly variable and unpredictable
D)   determined by the governmentE) All of the above
F) B) and C) B

Question 15

The Asian economic crisis and the global financial crisis of 2008-2009 were caused by

Accepted Answer

A)   high inflation rates.
B)   excessive debt.
C)   low inflation rates.
D)   a huge trade surplus.E) A) and D)
F) C) and D)

Question 16

Do you think businesses can influence government policies? Explain your answer.

Accepted Answer

As major players in the international tr...

Question 17

Pegged exchange rate means that the value of a currency is

Accepted Answer

A)   fixed against other currencies based on an agreement.
B)   not determined by free market forces.
C)   fixed relative to a reference currency.
D)   independent of the valuations of other currencies.E) A) and B)
F) A) and C)

Question 18

Identify the multinational institutions that were established at the Bretton Woods agreement. What were their roles in the international monetary system?

Accepted Answer

At the Bretton Woods meeting in 1944, tw...

Question 19

Prior to the introduction of the euro, many EU countries participated in a ________ system, in which the values of a set of currencies are fixed against each other at some mutually agreed upon exchange rate.

Accepted Answer

A)   floating exchange rate
B)   currency board
C)   fixed exchange rate
D)   pegged exchange rateE) All of the above
F) B) and C)

Question 20

Explain the events that led to the failure of the Bretton Woods system of fixed exchange rates.

Accepted Answer

The Bretton Woods system started to fall...

Exam 11: The International Monetary System

The World Bank was established at the at Bretton Woods conference to

Correct AnswerverifiedShow Answer

The international monetary system refers to the institutional arrangements that govern

Correct AnswerverifiedShow Answer

Interest rates adjust automatically under a strict currency board system.

Correct AnswerverifiedShow Answer

When a country tries to hold the value of its currency within some range against an important reference currency such as the U.S. dollar without adopting a formal pegged rate, it is referred to as a

Correct AnswerverifiedC

A country that introduces a currency board commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate.

Correct AnswerverifiedShow Answer

Gold par value refers to the

Correct AnswerverifiedB

Countries that require substantial loans from the International Monetary Fund to survive will ________ due to IMF-mandated economic policies.

Correct AnswerverifiedShow Answer

Present the common arguments that favor fixed exchange rates.

Correct AnswerverifiedThe case for fixed exchange rates revolv...View AnswerShow Answer

A country is said to be in balance-of-trade equilibrium when

Correct AnswerverifiedShow Answer

World Bank offers low-interest loans to risky customers whose credit rating is often poor.

Correct AnswerverifiedShow Answer

Under a currency board system

Correct AnswerverifiedShow Answer

Which of the following statements is true of the Bretton Woods agreement?

Correct AnswerverifiedShow Answer

Adopting a pegged exchange rate regime increases the inflationary pressures in a country.

Correct AnswerverifiedShow Answer

Exchange rates are ________ under a pure "free float" system.

Correct AnswerverifiedB

The Asian economic crisis and the global financial crisis of 2008-2009 were caused by

Correct AnswerverifiedShow Answer

Do you think businesses can influence government policies? Explain your answer.

Correct AnswerverifiedAs major players in the international tr...View AnswerShow Answer

Pegged exchange rate means that the value of a currency is

Correct AnswerverifiedShow Answer

Identify the multinational institutions that were established at the Bretton Woods agreement. What were their roles in the international monetary system?

Correct AnswerverifiedAt the Bretton Woods meeting in 1944, tw...View AnswerShow Answer

Prior to the introduction of the euro, many EU countries participated in a ________ system, in which the values of a set of currencies are fixed against each other at some mutually agreed upon exchange rate.

Correct AnswerverifiedShow Answer

Explain the events that led to the failure of the Bretton Woods system of fixed exchange rates.

Correct AnswerverifiedThe Bretton Woods system started to fall...View AnswerShow Answer

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C

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B

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The case for fixed exchange rates revolv...
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B

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As major players in the international tr...
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At the Bretton Woods meeting in 1944, tw...
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The Bretton Woods system started to fall...
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