Question 1

Increasingly the _____ has been acting as macroeconomic police of the world economy,insisting that countries seeking significant borrowings adopt certain macroeconomic policies.

Accepted Answer

A)   ECOSOC
B)   IMF
C)   UN
D)   World Bank

Question 2

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 3

What is international monetary system? What are the major trading currencies?

Accepted Answer

The international monetary system refers...

Question 4

Which of the following is a disadvantage of using a rigid policy of fixed exchange rates?

Accepted Answer

A)   It is likely to create high unemployment in some cases.
B)   It will lead to inflationary economies across the world.
C)   It is likely to bring about trade wars between nations.
D)   It will instigate competitive devaluations and intense competition.

Question 5

Exchange rates are determined by the government under a pure "free float" system.

Accepted Answer

A) True 
 B)False

Question 6

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,two...

Question 7

Which of the following observations 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 Pound as the official reference currency against gold.
C)   The agreement established a floating system of monetary exchange.
D)   Two multinational institutions,World Economic Forum and WTO,were formed under the agreement.

Question 8

A dirty float refers to a situation in which _____.

Accepted Answer

A)   a set of currencies are fixed against each other at some mutually agreed on exchange rate
B)   many countries join hands to form a monetary system and an exchange rate
C)   more than one foreign currency is used as the formal reference for a country's currency
D)   a country tries to hold its currency against an important reference currency without a formal pegged rate

Question 9

A country's trade balance is in surplus when _____

Accepted Answer

A)   its exports are more than its imports
B)   it experiences negative inflation
C)   its exports equal the imports
D)   the prices of commodities are low in the country

Question 10

Discuss the significance of the Jamaica Agreement.

Accepted Answer

The 1976 Jamaica Agreement formalized th...

Question 11

A country valuates its currency without attaching it to a reference currency under the pegged exchange rate regime.

Accepted Answer

A) True 
 B)False

Question 12

A country that introduces a currency board commits itself to converting its domestic currency on demand into _____.

Accepted Answer

A)   another currency at a fixed exchange rate
B)   gold or silver at a fixed exchange rate
C)   gold or silver at a floating exchange rate
D)   another currency at a floating exchange rate

Question 13

Under a _____ exchange rate regime,a country will attach the value of its currency to that of a major currency.

Accepted Answer

A)   managed float
B)   pegged
C)   free float
D)   currency board

Question 14

The gold standard called for fixed exchange rates against the U.S.dollar.

Accepted Answer

A) True 
 B)False

Question 15

Under a currency board system,_____.

Accepted Answer

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

Question 16

Which of the following observations is true of the current system of foreign exchange market?

Accepted Answer

A)   Most of the currencies can be converted to gold in the current system of foreign exchange.
B)   The current system is driven by fixed exchange rates.
C)   Currencies float freely against others in the current system.
D)   The current system is a combination of government intervention and speculative activity.

Question 17

A foreign debt crisis is a situation in which a country cannot service its foreign debt obligations.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is a common criticism against IMF?

Accepted Answer

A)   IMF lacks any real mechanism for accountability.
B)   It is hesitant to help banks when they are in crisis.
C)   IMF has not intervened to resolve the Asian crisis.
D)   It did not try to resolve the Mexican currency crisis.

Question 19

The value of U.S dollar increased between 1980 and 1985 despite running a growing trade deficit.

Accepted Answer

A) True 
 B)False

Question 20

A 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

Exam 11: The International Monetary System

Increasingly the _____ has been acting as macroeconomic police of the world economy,insisting that countries seeking significant borrowings adopt certain macroeconomic policies.

Correct AnswerverifiedShow Answer

Under a currency board system,_____.

Correct AnswerverifiedShow Answer

Discuss the significance of the Jamaica Agreement.

Correct AnswerverifiedThe 1976 Jamaica Agreement formalized th...View AnswerShow Answer

A foreign debt crisis is a situation in which a country cannot service its foreign debt obligations.

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,two...View AnswerShow Answer

A country's trade balance is in surplus when _____

Correct AnswerverifiedShow Answer

The gold standard called for fixed exchange rates against the U.S.dollar.

Correct AnswerverifiedShow Answer

What is international monetary system? What are the major trading currencies?

Correct AnswerverifiedThe international monetary system refers...View AnswerShow Answer

Which of the following observations is true of the current system of foreign exchange market?

Correct AnswerverifiedShow Answer

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

A country valuates its currency without attaching it to a reference currency under the pegged exchange rate regime.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following is a common criticism against IMF?

Correct AnswerverifiedShow Answer

Under a _____ exchange rate regime,a country will attach the value of its currency to that of a major currency.

Correct AnswerverifiedShow Answer

Exchange rates are determined by the government under a pure "free float" system.

Correct AnswerverifiedShow Answer

Which of the following is a disadvantage of using a rigid policy of fixed exchange rates?

Correct AnswerverifiedShow Answer

A dirty float refers to a situation in which _____.

Correct AnswerverifiedShow Answer

A pegged exchange rate means that the value of a currency is _____.

Correct AnswerverifiedShow Answer

A country that introduces a currency board commits itself to converting its domestic currency on demand into _____.

Correct AnswerverifiedShow Answer

The value of U.S dollar increased between 1980 and 1985 despite running a growing trade deficit.

Correct AnswerverifiedShow Answer

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The 1976 Jamaica Agreement formalized th...
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At the Bretton Woods meeting in 1944,two...
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The international monetary system refers...
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