Question 1

Selling foreign exchange to keep the currency from depreciating may allow a country to grow faster with less inflation.

Accepted Answer

A) True 
 B)False

Question 2

A country can borrow up to 37.5 percent of its quota with the IMF without any conditionality.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following would be associated with a breakdown of exchange controls?

Accepted Answer

A)  an appreciating currency 
B)  a depreciating currency 
C)  lower prices 
D)  higher real GDP 
E)  no change in fiscal policy 
A)  an appreciating currency 
B)  a depreciating currency 
C)  lower prices 
D)  higher real GDP 
E)  no change in fiscal policy

Question 4

In some cases, IMF conditionality puts the institution in the position of virtually dictating a country's macroeconomic policy.

Accepted Answer

A) True 
 B)False

Question 5

If the demand for foreign exchange is _____ then the government may need to _____ foreign exchange to keep the exchange rate from _____ .

Accepted Answer

A)  increasing, sell, appreciating 
B)  increasing, sell, depreciating 
C)  increasing, buy, depreciating 
D)  decreasing, buy, depreciating 
E)  decreasing, sell, appreciating 
A)  increasing, sell, appreciating 
B)  increasing, sell, depreciating 
C)  increasing, buy, depreciating 
D)  decreasing, buy, depreciating 
E)  decreasing, sell, appreciating

Question 6

If a country has to ration foreign exchange, which class of goods would tend to get priority in terms of access to foreign exchange?

Accepted Answer

A)  toys 
B)  cars 
C)  food 
D)  air conditioners 
E)  sports equipment 
A)  toys 
B)  cars 
C)  food 
D)  air conditioners 
E)  sports equipment

Question 7

Exports of commodities can lead to an appreciating currency that makes it more difficult for the country to export other types of products.

Accepted Answer

A) True 
 B)False

Question 8

The macroeconomic adjustments that the IMF asks countries to make in order to obtain loans is known as:

Accepted Answer

A)  marginality. 
B)  debt conditions. 
C)  conditionality. 
D)  sovereignty. 
E)  default. 
A)  marginality. 
B)  debt conditions. 
C)  conditionality. 
D)  sovereignty. 
E)  default.

Question 9

The demand for primary commodities is usually _____ .

Accepted Answer

A)  elastic 
B)  inelastic 
C)  unit elastic 
D)  perfectly inelastic 
E)  not influenced by prices. 
A)  elastic 
B)  inelastic 
C)  unit elastic 
D)  perfectly inelastic 
E)  not influenced by prices.

Question 10

A _____ debt/export ratio will make it _____ for a country to make payments on its debt.

Accepted Answer

A)  low, hard 
B)  high, easy 
C)  low, easy 
D)  negative, impossible 
E)  None of the above 
A)  low, hard 
B)  high, easy 
C)  low, easy 
D)  negative, impossible 
E)  None of the above

Question 11

Government borrowing from commercial banks is known as:

Accepted Answer

A)  equity. 
B)  sovereign lending. 
C)  financial lending. 
D)  official development assistance. 
E)  IMF conditionality. 
A)  equity. 
B)  sovereign lending. 
C)  financial lending. 
D)  official development assistance. 
E)  IMF conditionality.

Question 12

Exports and imports account for _____ and _____ of the collective GDPs of the developing countries.

Accepted Answer

A)  9, 10 
B)  14, 15 
C)  31, 29 
D)  42.6, 58.2 
E)  50, 50 
A)  9, 10 
B)  14, 15 
C)  31, 29 
D)  42.6, 58.2 
E)  50, 50

Question 13

The IMF has evolved from the center of the world's monetary system to an economic development institution.

Accepted Answer

A) True 
 B)False

Question 14

If the real exchange rate is appreciating, then a country's exports are becoming:

Accepted Answer

A)  cheaper. 
B)  more expensive. 
C)  less expensive. 
D)  unobtainable. 
E)  more abundant. 
A)  cheaper. 
B)  more expensive. 
C)  less expensive. 
D)  unobtainable. 
E)  more abundant.

Question 15

In an exchange control system, the government becomes the only legal buyer and seller of foreign exchange.

Accepted Answer

A) True 
 B)False

Question 16

Describe what the term "Dutch disease" means.

Accepted Answer

Dutch disease refers to the negative imp

Question 17

Borrowing by a country in the form of bonds or bank loans is known as:

Accepted Answer

A)  equity. 
B)  securitization. 
C)  debt. 
D)  formula lending. 
E)  sovereign default 
A)  equity. 
B)  securitization. 
C)  debt. 
D)  formula lending. 
E)  sovereign default

Question 18

Developing countries are typically labor abundant relative to developed countries.

Accepted Answer

A) True 
 B)False

Question 19

MNCs never pay any attention to the real exchange rate when deciding where to locate production facilities in the world economy.

Accepted Answer

A) True 
 B)False

Question 20

Briefly describe why capital flows to developing countries and the different forms it takes.

Accepted Answer

Capital flows to developing countries fo

Selling foreign exchange to keep the currency from depreciating may allow a country to grow faster with less inflation.

A country can borrow up to 37.5 percent of its quota with the IMF without any conditionality.

Which of the following would be associated with a breakdown of exchange controls?

In some cases, IMF conditionality puts the institution in the position of virtually dictating a country's macroeconomic policy.

If the demand for foreign exchange is ___ then the government may need to _ foreign exchange to keep the exchange rate from ___ .

If a country has to ration foreign exchange, which class of goods would tend to get priority in terms of access to foreign exchange?

Exports of commodities can lead to an appreciating currency that makes it more difficult for the country to export other types of products.

The macroeconomic adjustments that the IMF asks countries to make in order to obtain loans is known as:

The demand for primary commodities is usually _____ .

A _ debt/export ratio will make it _ for a country to make payments on its debt.

Government borrowing from commercial banks is known as:

Exports and imports account for _ and _ of the collective GDPs of the developing countries.

The IMF has evolved from the center of the world's monetary system to an economic development institution.

If the real exchange rate is appreciating, then a country's exports are becoming:

In an exchange control system, the government becomes the only legal buyer and seller of foreign exchange.

Describe what the term "Dutch disease" means.

Borrowing by a country in the form of bonds or bank loans is known as:

Developing countries are typically labor abundant relative to developed countries.

MNCs never pay any attention to the real exchange rate when deciding where to locate production facilities in the world economy.

Briefly describe why capital flows to developing countries and the different forms it takes.

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

Selling foreign exchange to keep the currency from depreciating may allow a country to grow faster with less inflation.

A country can borrow up to 37.5 percent of its quota with the IMF without any conditionality.

Which of the following would be associated with a breakdown of exchange controls?

In some cases, IMF conditionality puts the institution in the position of virtually dictating a country's macroeconomic policy.

If the demand for foreign exchange is _____ then the government may need to _____ foreign exchange to keep the exchange rate from _____ .

If a country has to ration foreign exchange, which class of goods would tend to get priority in terms of access to foreign exchange?

Exports of commodities can lead to an appreciating currency that makes it more difficult for the country to export other types of products.

The macroeconomic adjustments that the IMF asks countries to make in order to obtain loans is known as:

The demand for primary commodities is usually _____ .

A _____ debt/export ratio will make it _____ for a country to make payments on its debt.

Government borrowing from commercial banks is known as:

Exports and imports account for _____ and _____ of the collective GDPs of the developing countries.

The IMF has evolved from the center of the world's monetary system to an economic development institution.

If the real exchange rate is appreciating, then a country's exports are becoming:

In an exchange control system, the government becomes the only legal buyer and seller of foreign exchange.

Describe what the term "Dutch disease" means.

Borrowing by a country in the form of bonds or bank loans is known as:

Developing countries are typically labor abundant relative to developed countries.

MNCs never pay any attention to the real exchange rate when deciding where to locate production facilities in the world economy.

Briefly describe why capital flows to developing countries and the different forms it takes.

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 the demand for foreign exchange is ___ then the government may need to _ foreign exchange to keep the exchange rate from ___ .

A _ debt/export ratio will make it _ for a country to make payments on its debt.

Exports and imports account for _ and _ of the collective GDPs of the developing countries.