Question 1

Suppose that the price of copper crashes. Describe what would happen to the current account balance in Chile.

Accepted Answer

If the price of copper crashes, it would

Question 2

Intervention in the foreign exchange market would be associated with:

Accepted Answer

A)  rightward shift of the supply curve. 
B)  a leftward shift of the supply curve 
C)  a leftward shift in the demand curve. 
D)  corruption. 
E)  none of the above 
A)  rightward shift of the supply curve. 
B)  a leftward shift of the supply curve 
C)  a leftward shift in the demand curve. 
D)  corruption. 
E)  none of the above

Question 3

Which of the following would cause the exchange rate to depreciate?

Accepted Answer

A)  an increase in the supply 
B)  an increase in demand 
C)  a decrease in supply 
D)  a and b 
E)  b and c 
A)  an increase in the supply 
B)  an increase in demand 
C)  a decrease in supply 
D)  a and b 
E)  b and c

Question 4

The tendency of investors to withdraw portfolio capital from an entire region in response to perceived economic difficulties in a single country or subset of countries is known as:

Accepted Answer

A)  crawling peg 
B)  exchange rate regime 
C)  intervention 
D)  contagion 
E)  Bretton Woods system 
A)  crawling peg 
B)  exchange rate regime 
C)  intervention 
D)  contagion 
E)  Bretton Woods system

Question 5

Show how a tariff would tend to worsen the welfare of the average citizen in Latin America.

Accepted Answer

A tariff would tend to worsen the welfar

Question 6

Show and explain what would happen in a country if the inflation rate is very high and the exchange rate is floating.

Accepted Answer

When a country experiences very high inf

Question 7

What are remittances?

Accepted Answer

A)  the transfers of money from foreign workers to their home country 
B)  grants given for development aid 
C)  the profits made from FDI 
D)  interest rate paid to the IMF 
E)  a crawling peg exchange system 
A)  the transfers of money from foreign workers to their home country 
B)  grants given for development aid 
C)  the profits made from FDI 
D)  interest rate paid to the IMF 
E)  a crawling peg exchange system

Question 8

Given that _____ is relatively scarce in Latin America, the outflows of capital from the region have been historically ______.

Accepted Answer

A)  labor, large 
B)  labor, small 
C)  capital, large 
D)  capital, small 
E)  commodities, small 
A)  labor, large 
B)  labor, small 
C)  capital, large 
D)  capital, small 
E)  commodities, small

Question 9

If the exchange rate is fixed, then a commodity exporter would need to accumulate foreign exchange when commodity prices are high. Show why this is true.

Accepted Answer

This is true because when the exchange r

Question 10

Explain the concepts of absolute purchasing power parity, relative purchasing power parity, and the law of one price. Why are they relevant for Latin America?

Accepted Answer

Absolute purchasing power parity (PPP) i

Question 11

Rationing of foreign exchange is associated with:

Accepted Answer

A)  exchange controls. 
B)  floating exchange rates. 
C)  monetary policy. 
D)  fiscal policy. 
E)  none of the above 
A)  exchange controls. 
B)  floating exchange rates. 
C)  monetary policy. 
D)  fiscal policy. 
E)  none of the above

Question 12

What international institution was created at the Bretton Woods conference?

Accepted Answer

A)  the United Nations 
B)  UNCTAD 
C)  the International Court of Justice 
D)  the International Monetary Fund 
E)  the International Olympic Committee 
A)  the United Nations 
B)  UNCTAD 
C)  the International Court of Justice 
D)  the International Monetary Fund 
E)  the International Olympic Committee

Question 13

Describe the current account. Be sure to list all of its component parts. What does a typical current account look like for a Latin American nation?

Accepted Answer

The current account is a part of a count

Question 14

The buying and selling of foreign exchange used to acquire foreign assets is known as:

Accepted Answer

A)  exchange rate regime 
B)  intervention 
C)  unilateral transfers 
D)  real exchange rate 
E)  contagion 
A)  exchange rate regime 
B)  intervention 
C)  unilateral transfers 
D)  real exchange rate 
E)  contagion

Question 15

Describe several methods of exchange control. Why might a country choose to implement exchange controls?

Accepted Answer

Exchange controls refer to the regulatio

Question 16

Draw a graph showing how a fixed exchange rate is associated with a current account deficit. Next, list how the current account deficit can be offset.

Accepted Answer

A fixed exchange rate is associated with

Question 17

Which of the following is not part of the current account?

Accepted Answer

A)  FDI 
B)  exports 
C)  remittances 
D)  ODA 
E)  none of the above 
A)  FDI 
B)  exports 
C)  remittances 
D)  ODA 
E)  none of the above

Question 18

Which of these is a type of unilateral transfer?

Accepted Answer

A)  FDI 
B)  dividends from investments 
C)  IMF or World Bank loan 
D)  remittances 
E)  profits from investments 
A)  FDI 
B)  dividends from investments 
C)  IMF or World Bank loan 
D)  remittances 
E)  profits from investments

Question 19

The difference between the income from and the payments to the rest of the world constitute the balance on what?

Accepted Answer

A)  investment income 
B)  FDI 
C)  the current account 
D)  the financial account 
E)  unilateral transfers 
A)  investment income 
B)  FDI 
C)  the current account 
D)  the financial account 
E)  unilateral transfers

Question 20

Explain why Latin American nations tend to have surpluses for their balance of trade, yet deficits on their current account balance.

Accepted Answer

Latin American nations tend to have surp

Suppose that the price of copper crashes. Describe what would happen to the current account balance in Chile.

Intervention in the foreign exchange market would be associated with:

Which of the following would cause the exchange rate to depreciate?

The tendency of investors to withdraw portfolio capital from an entire region in response to perceived economic difficulties in a single country or subset of countries is known as:

Show how a tariff would tend to worsen the welfare of the average citizen in Latin America.

Show and explain what would happen in a country if the inflation rate is very high and the exchange rate is floating.

What are remittances?

Given that _ is relatively scarce in Latin America, the outflows of capital from the region have been historically __.

If the exchange rate is fixed, then a commodity exporter would need to accumulate foreign exchange when commodity prices are high. Show why this is true.

Explain the concepts of absolute purchasing power parity, relative purchasing power parity, and the law of one price. Why are they relevant for Latin America?

Rationing of foreign exchange is associated with:

What international institution was created at the Bretton Woods conference?

Describe the current account. Be sure to list all of its component parts. What does a typical current account look like for a Latin American nation?

The buying and selling of foreign exchange used to acquire foreign assets is known as:

Describe several methods of exchange control. Why might a country choose to implement exchange controls?

Draw a graph showing how a fixed exchange rate is associated with a current account deficit. Next, list how the current account deficit can be offset.

Which of the following is not part of the current account?

Which of these is a type of unilateral transfer?

The difference between the income from and the payments to the rest of the world constitute the balance on what?

Explain why Latin American nations tend to have surpluses for their balance of trade, yet deficits on their current account balance.

Latin American Economic History

Economic Growth and Latin America

Limits to Growth in Latin America

Growth and the Environment in Latin America

Latin American and Primary Commodities

Import Substitution in Latin America

Latin American Trade Policy

Financing Current-Account Deficits

Macroeconomic Policy in Latin America

Macroeconomic Stability

Poverty Inequality

Economic Policy Debates in Latin America

Filters

Exam 8: Exchange-Rate Policy

Suppose that the price of copper crashes. Describe what would happen to the current account balance in Chile.

Intervention in the foreign exchange market would be associated with:

Which of the following would cause the exchange rate to depreciate?

The tendency of investors to withdraw portfolio capital from an entire region in response to perceived economic difficulties in a single country or subset of countries is known as:

Show how a tariff would tend to worsen the welfare of the average citizen in Latin America.

Show and explain what would happen in a country if the inflation rate is very high and the exchange rate is floating.

What are remittances?

Given that _____ is relatively scarce in Latin America, the outflows of capital from the region have been historically ______.

If the exchange rate is fixed, then a commodity exporter would need to accumulate foreign exchange when commodity prices are high. Show why this is true.

Explain the concepts of absolute purchasing power parity, relative purchasing power parity, and the law of one price. Why are they relevant for Latin America?

Rationing of foreign exchange is associated with:

What international institution was created at the Bretton Woods conference?

Describe the current account. Be sure to list all of its component parts. What does a typical current account look like for a Latin American nation?

The buying and selling of foreign exchange used to acquire foreign assets is known as:

Describe several methods of exchange control. Why might a country choose to implement exchange controls?

Draw a graph showing how a fixed exchange rate is associated with a current account deficit. Next, list how the current account deficit can be offset.

Which of the following is not part of the current account?

Which of these is a type of unilateral transfer?

The difference between the income from and the payments to the rest of the world constitute the balance on what?

Explain why Latin American nations tend to have surpluses for their balance of trade, yet deficits on their current account balance.

Latin American Economic History

Economic Growth and Latin America

Limits to Growth in Latin America

Growth and the Environment in Latin America

Latin American and Primary Commodities

Import Substitution in Latin America

Latin American Trade Policy

Financing Current-Account Deficits

Macroeconomic Policy in Latin America

Macroeconomic Stability

Poverty Inequality

Economic Policy Debates in Latin America

Filters

Given that _ is relatively scarce in Latin America, the outflows of capital from the region have been historically __.