Deck 10: The Globalization of International Finance

Question 1

Which strategy are governments likely to employ to fight inflation?

A)restrictive monetary policy
B)loose monetary policy
C)restrictive fiscal policy
D)loose fiscal policy

Answer 1

A

Question 2

When national markets are increasingly transnationalized through the worldwide integration of capital flows, we might describe them as which of the following?

A)intertwined
B)global
C)financial
D)fiscal

Answer 2

B

Question 3

Which concept refers to the selling of one currency (or product)and purchasing of another to make a profit on changing exchange rates?

A)monetary policy
B)fiscal policy
C)arbitrage
D)money laundering

Answer 3

C

Question 4

What is the likely motivation of a country that is letting the value of its currency decline?

A)stimulating production
B)stimulating consumption
C)stimulating exports of its goods
D)stimulating imports from abroad

Question 5

Where are the two largest stock market exchanges located?

A)Japan and Germany
B)China
C)the United States
D)the United Kingdom

Question 6

What determines the purchasing power of a currency relative to another under floating exchange rates?

A)central banks
B)multinational corporations
C)market forces
D)the World Bank

Question 7

Which of the following represents a problem that plagues cryptocurrencies such as Bitcoin or Ethereum?

A)Cryptocurrencies are not liquid.
B)Cryptocurrencies are not easily exchanged.
C)Cryptocurrencies cannot be used to purchase goods.
D)Prices of cryptocurrencies may fluctuate for no reason other than flows of speculative investment.

Question 8

Which vague term that is used in a multitude of ways can be broadly defined as the increased integration of markets, trade, finance, and technology?

A)geo-economics
B)geopolitics
C)globalization
D)internationalization

Question 9

What dominant economic approach of the Bretton Woods system combined open international markets with domestic state intervention to attain such goals as full employment and social welfare?

A)laissez-faire capitalism
B)embedded liberalism
C)regulated capitalism
D)social liberalism

Question 10

When a mobster sets up a flower shop we might surmise that he or she does so to pursue which activity?

A)arbitrage
B)money laundering
C)gardening
D)devaluation

Question 11

What does the Federal Reserve engage in when it "prints money"?

A)fiscal policy
B)monetary policy
C)globalization of finance
D)laissez-faire economy

Question 12

What are the three basic steps of money laundering?

A)placement, layering, and integration
B)placement, layering, and injection
C)creation, diffusion, and dispersion
D)integration, dispersion, and injection

Question 13

What statistic or calculation summarizes a country's financial transactions with the external world?

A)balance of payments
B)regression coefficient
C)debt ratio
D)credit rating

Question 14

Which concept refers to the relationship between geography and the economic conditions and behavior of states that define their levels of production, trade, and consumption of goods and services?

A)geo-economics
B)geopolitics
C)geoscience
D)international political economy

Question 15

If Canada and the United States agreed to exchange their currencies at a 1:1 rate (CAD $1.00 = USD $1.00)), that would be an example of which of the following?

A)fixed exchange rate
B)floating exchange rate
C)pegged currency
D)money market

Question 16

Some scholars argue that globalization is a euphemism for which of the following?

A)exploitation
B)capitalism
C)trade
D)interdependence

Question 17

Which type of policy do states engage in when their central banks change the money supply to manage the national economy and control inflation?

A)monetary policy
B)fiscal policy
C)exchange rate policy
D)centralized policy

Question 18

What does a government engage in when it taxes businesses or individuals?

A)fiscal policy
B)monetary policy
C)devaluation
D)arbitrage

Question 19

Which of the following refers to the distribution of strategic military and political power?

A)geo-economics
B)geopolitics
C)territorialism
D)topographic distribution

Question 20

Which concept describes the financial procedures used to calculate the value of currencies and credits when capital is transferred across borders through trade, investment, foreign aid, and loans?

A)monetary policy
B)foreign investment
C)international currency trading
D)international monetary system

Question 21

Who believes that by controlling the growth of the money supply, governments can regulate their nations' economic activity and control inflation?

A)advocates of exchange rate policy
B)advocates of fiscal policy
C)advocates of commercial liberalism
D)advocates of monetary policy

Question 22

What is the outcome of very high inflation or hyperinflation?

A)The nation will have a balance of trade surplus.
B)The nation's exchange rate increases compared to other currencies.
C)Arbitrage of that nation's currency increases.
D)The currency of the nation becomes basically worthless.

Question 23

Which of the following is the largest and the best know-known cryptocurrency?

A)Ethereum
B)Bitcoin
C)NEO
D)Ripple

Question 24

Which of the following refers to reserve assets used to settle international accounts?

A)international liquidity
B)international reserves
C)cryptocurrencies
D)deposited assets

Question 25

What are the lessons learned from the global economic collapse of the 1930s?

A)The major economies could not maintain their fixed exchange rate regime.
B)The resultant flexible regime was highly unstable.
C)There were speculative attacks on currencies and currency devaluations.
D)All of these are true.

Question 26

Which of the following advocates for free markets and the removal of barriers to the flow of trade and capital as a path to prosperity?

A)globalization
B)commercial liberalism
C)Bretton Woods
D)arbitrage

Question 27

What does foreign direct investment refer to?

A)purchasing significant amounts of a foreign country's currency
B)purchasing substantial shares of a foreign company's stock or setting up production facilities in another country
C)the purchase of large amounts of overseas goods
D)sales of military armaments to foreign governments

Question 28

Which British economist played a crucial role at the Bretton Woods conference?

A)Adam Smith
B)Winston Churchill
C)Erwin Rommell
D)John Maynard Keynes

Question 29

Approximately how many banking crises have occurred in the world since the demise of the Bretton Woods system?

A)7
B)34
C)71
D)151

Question 30

Which characteristics do the least-globalized nations tend to share?

A)They are the largest in economic size.
B)They are the richest and most powerful.
C)They are the least-developed and most autocratic.
D)They are the smallest and most dependent on trade.

Question 31

The Bretton Woods system was based on what system of exchange rates?

A)fixed-but-adjustable
B)fixed
C)floating
D)unified

Question 32

28. The Economic Stimulus Act of 2008, in which the government attempted to stimulate the economy by sending taxpayers $600 or $1,200, is an example of which of the following?

A)monetary policy
B)exchange rate
C)fiscal policy
D)money supply

Question 33

What term refers to financial entities outside of the formal banking structure that engage in lending and credit-issuing activities?

A)credit unions
B)shadow banks
C)quasi-banks
D)lending houses

Question 34

In 1971, the United States unilaterally terminated convertibility of the USU.S. dollar to gold, effectively bringing the Bretton Woods system to an end. What was the newly emerged system based on?

A)floating exchange rates
B)fixed exchange rates
C)pegged currencies
D)fixed-but-adjustable exchange rates

Question 35

What organizations were created to bolster financial and monetary relations under the Bretton Woods system?

A)Liberal International Economic Order and GATT
B)GATT and WTO
C)World Bank and International Monetary Fund
D)International Monetary Fund and WTO

Question 36

In 1944, 44 of the states allied against the Axis powers met to devise new rules and institutions that would govern international trade and monetary relations. Where did these negotiations take place?

A)Dayton, Ohio
B)Bretton Woods, N.H.
C)Helsinki, Finland
D)Munich, Germany

Question 37

What condition precipitated the end of the Bretton Woods era?

A)mercantilism
B)dollar overhang
C)imperial overstretch
D)embedded liberalism

Question 38

The extent of globalization across the globe varies. Which countries are among the most global?

A)European countries
B)Asian countries
C)North American countries
D)African countries

Question 39

What were exchange rates pegged to under the Bretton Woods monetary regime?

A)pound sterling and United States dollar
B)United States dollar
C)gold
D)United States dollar and gold

Question 40

Even in a world with floating exchange rates, states have some ability to control the value of their currency. What is an advantage of having a weak currency?

A)Exporting industries benefit from a weak currency as their goods are cheaper for foreigners to purchase.
B)Traveling citizens benefit from a weak currency as they can purchase more goods abroad.
C)Consumers benefit from a weak currency as they can afford to buy more imports.
D)There are no advantages to a weak currency.

Question 41

In what ways can private investors affect a currency's value? In what ways can a government's central bank affect the value of the state's currency? How are the role and the interests of the government different from that of a private investor?

Question 42

Describe the Bretton Woods system. Why did the United States leave the Bretton Woods system and adopt floating exchange rates to determine currency values?

Question 43

Describe the economic crisis of 2008. Describe the four stages of the crisis. What have been the impacts of the crisis?

Question 44

What countries were primarily affected by the 2008 financial crisis?

A)developing countries
B)developed countries
C)countries of the Global South
D)African countries

Question 45

What was the first phase of the Crisis of 2008?

A)overtrading
B)capital controls
C)displacement
D)underinflation

Question 46

What are some of the positive and negative consequences to globalization? Why would autocratic regimes tend to refuse to integrate into the global economy more so than democratic regimes? Explain your answer.

Question 47

What are cryptocurrencies? How do they function and what concerns do they raise? In your opinion, do cryptocurrencies have a future in international finance?

Question 48

What currency is held in large amounts by governments for the purpose of settling international debts and supporting the value of their national currency?

A)pegged currency
B)regional currency
C)cryptocurrency
D)reserve currency

Question 49

Which country passed the United States as the largest global economy (in terms of purchasing power parity), raising questions about USU.S. leadership?

A)China
B)Japan
C)Russia
D)the European Union

Question 50

The austerity measures taken to address the 2008 financial crisis were counterproductive. Some also argue that they led to which of the following?

A)populism and nationalism
B)undermining of the dollar as reserve currency
C)return to fixed exchange rate
D)return of multipolarity