Question 1

Primary commodities account for 80 percent of the exports of the developing countries.

Accepted Answer

A) True 
 B)False  False

Question 2

The inability of a country to repay all its foreign debt when it is due is known as:

Accepted Answer

A)  debt. 
B)  equity. 
C)  default. 
D)  financial rift. 
E)  sovereign lending 
A)  debt. 
B)  equity. 
C)  default. 
D)  financial rift. 
E)  sovereign lending C

Question 3

If commodity prices are _____, then the government may want to limit the _____ of the currency by _____ foreign exchange.

Accepted Answer

A)  high, depreciation, selling 
B)  high, appreciation, buying 
C)  high, depreciation, buying 
D)  high, appreciation, selling 
E)  low, appreciation, buying 
A)  high, depreciation, selling 
B)  high, appreciation, buying 
C)  high, depreciation, buying 
D)  high, appreciation, selling 
E)  low, appreciation, buying B

Question 4

The IMF never makes loans except for balance of payments support.

Accepted Answer

A) True 
 B)False

Question 5

An exchange rate shock would have much more serious economic consequences in a developed country than in a developing country.

Accepted Answer

A) True 
 B)False

Question 6

Exchange controls never lead to a shortage of foreign exchange.

Accepted Answer

A) True 
 B)False

Question 7

The World Bank does not loan money to countries but rather gives the money away in the form of grants.

Accepted Answer

A) True 
 B)False

Question 8

Inflows of debt and equity to the developing countries total about:

Accepted Answer

A)  $122 billion. 
B)  $500 billion. 
C)  $1 trillion. 
D)  $2 trillion. 
E)  $5 trillion. 
A)  $122 billion. 
B)  $500 billion. 
C)  $1 trillion. 
D)  $2 trillion. 
E)  $5 trillion.

Question 9

An exchange rate shock would tend to cause a decline in real GDP.

Accepted Answer

A) True 
 B)False

Question 10

The tendency for a financial crisis to spread to other countries in the region is known as:

Accepted Answer

A)  moral hazard. 
B)  financial contagion. 
C)  Asian flu. 
D)  ripple theory. 
E)  panic. 
A)  moral hazard. 
B)  financial contagion. 
C)  Asian flu. 
D)  ripple theory. 
E)  panic.

Question 11

Which of the following would not be a result of rising commodity prices?

Accepted Answer

A)  a depreciating currency 
B)  an appreciating currency 
C)  an increase in the supply of foreign exchange 
D)  an increase in real GDP 
E)  no change in the exchange rate 
A)  a depreciating currency 
B)  an appreciating currency 
C)  an increase in the supply of foreign exchange 
D)  an increase in real GDP 
E)  no change in the exchange rate

Question 12

An exchange rate shock would tend to increase unemployment.

Accepted Answer

A) True 
 B)False

Question 13

Increasingly, IMF lending looks more and more like lending done by the World Bank.

Accepted Answer

A) True 
 B)False

Question 14

Capital inflows in excess of outflows create a deficit in the financial account.

Accepted Answer

A) True 
 B)False

Question 15

Describe a commodity-price shock.

Accepted Answer

A commodity-price shock refers to a sudd

Question 16

Exchange rate shocks have few, if any, macroeconomic consequences.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is the term used to describe the tendency of market participants to engage in riskier behavior if they believe that they will not have to bear all of the costs of engaging in this behavior.

Accepted Answer

A)  default 
B)  sovereignty 
C)  moral hazard 
D)  dilemma behavior 
E)  political risk 
A)  default 
B)  sovereignty 
C)  moral hazard 
D)  dilemma behavior 
E)  political risk

Question 18

The combination of an exchange rate shock and IMF conditionality can cause rapid economic growth in developing countries.

Accepted Answer

A) True 
 B)False

Question 19

Briefly describe an exchange-rate shock.

Accepted Answer

An exchange-rate shock refers to a sudde

Question 20

Borrowing to intervene in the foreign exchange market will always increase long-run growth in an economy.

Accepted Answer

A) True 
 B)False

Primary commodities account for 80 percent of the exports of the developing countries.

The inability of a country to repay all its foreign debt when it is due is known as:

If commodity prices are ___, then the government may want to limit the _ of the currency by ___ foreign exchange.

The IMF never makes loans except for balance of payments support.

An exchange rate shock would have much more serious economic consequences in a developed country than in a developing country.

Exchange controls never lead to a shortage of foreign exchange.

The World Bank does not loan money to countries but rather gives the money away in the form of grants.

Inflows of debt and equity to the developing countries total about:

An exchange rate shock would tend to cause a decline in real GDP.

The tendency for a financial crisis to spread to other countries in the region is known as:

Which of the following would not be a result of rising commodity prices?

An exchange rate shock would tend to increase unemployment.

Increasingly, IMF lending looks more and more like lending done by the World Bank.

Capital inflows in excess of outflows create a deficit in the financial account.

Describe a commodity-price shock.

Exchange rate shocks have few, if any, macroeconomic consequences.

Which of the following is the term used to describe the tendency of market participants to engage in riskier behavior if they believe that they will not have to bear all of the costs of engaging in this behavior.

The combination of an exchange rate shock and IMF conditionality can cause rapid economic growth in developing countries.

Briefly describe an exchange-rate shock.

Borrowing to intervene in the foreign exchange market will always increase long-run growth in an economy.

Introduction: An Overview of the World Economy

Why Countries Trade

Comparative Advantage and the Production Possibilities Frontier

Factor Endowments and the Commodity Composition of Trade

Intra-Industry Trade

The Firm in the World Economy

International Factor Movements

Tariffs

Nontariff Distortions to Trade

International Trade Policy

Regional Economic Arrangements

International Trade and Economic Growth

National Income Accounting and the Balance of Payments

Exchange Rates and Their Determination: A Basic Model

Money, Interest Rates, and the Exchange Rate

Open Economy Macroeconomics

Macroeconomic Policy and Floating Exchange Rates

Fixed Exchange Rates and Currency Unions

International Monetary Arrangements

Filters

Exam 20: Capital Flows and the Developing Countries

Primary commodities account for 80 percent of the exports of the developing countries.

The inability of a country to repay all its foreign debt when it is due is known as:

If commodity prices are _____, then the government may want to limit the _____ of the currency by _____ foreign exchange.

The IMF never makes loans except for balance of payments support.

An exchange rate shock would have much more serious economic consequences in a developed country than in a developing country.

Exchange controls never lead to a shortage of foreign exchange.

The World Bank does not loan money to countries but rather gives the money away in the form of grants.

Inflows of debt and equity to the developing countries total about:

An exchange rate shock would tend to cause a decline in real GDP.

The tendency for a financial crisis to spread to other countries in the region is known as:

Which of the following would not be a result of rising commodity prices?

An exchange rate shock would tend to increase unemployment.

Increasingly, IMF lending looks more and more like lending done by the World Bank.

Capital inflows in excess of outflows create a deficit in the financial account.

Describe a commodity-price shock.

Exchange rate shocks have few, if any, macroeconomic consequences.

Which of the following is the term used to describe the tendency of market participants to engage in riskier behavior if they believe that they will not have to bear all of the costs of engaging in this behavior.

The combination of an exchange rate shock and IMF conditionality can cause rapid economic growth in developing countries.

Briefly describe an exchange-rate shock.

Borrowing to intervene in the foreign exchange market will always increase long-run growth in an economy.

Introduction: An Overview of the World Economy

Why Countries Trade

Comparative Advantage and the Production Possibilities Frontier

Factor Endowments and the Commodity Composition of Trade

Intra-Industry Trade

The Firm in the World Economy

International Factor Movements

Tariffs

Nontariff Distortions to Trade

International Trade Policy

Regional Economic Arrangements

International Trade and Economic Growth

National Income Accounting and the Balance of Payments

Exchange Rates and Their Determination: A Basic Model

Money, Interest Rates, and the Exchange Rate

Open Economy Macroeconomics

Macroeconomic Policy and Floating Exchange Rates

Fixed Exchange Rates and Currency Unions

International Monetary Arrangements

Filters

If commodity prices are ___, then the government may want to limit the _ of the currency by ___ foreign exchange.