B. amount of a currency needed to purchase one ounce of gold. A country's trade balance is in surplus when: A. its exports are more than its imports. In the face of unpredictable movements in exchange rates, businesses should: A. pursue strategies that will reduce their economic exposure. Governments intervene frequently in the foreign exchange market. The agreement reached at Bretton Woods established the _____. This is an example of a _____ system. he value of U.S dollar increased between 1980 and 1985: A. despite running a growing trade deficit. Countries that receive loans from the IMF are required to do what? Currencies were pegged to gold under the gold standard. All countries agreed to fix the value of their currency in terms of gold under the agreement. Of the total amount owed to IMF as on May 31, the 10 biggest borrowing countries, including Portugal, Greece, Ukraine, Ireland and Pakistan, owed $72.4 billion, or nearly 86% of the total amount lent. Under a _____ exchange rate regime, a country will attach the value of its currency to that of a major currency. Which of the following is an advantage of using the gold standard? A dirty float refers to a situation in which: D. a country tries to hold its currency against an important reference currency without a formal pegged rate. It describes how SAPs are being implemented and what results they have produced over the past 20 years. Currencies of countries with currency boards will become uncompetitive and overvalued if: A. local inflation rates remain higher than the inflation rate in the country to which the currency is pegged.

Which of the following changes were made to the International Monetary Fund's Articles of Agreement in the Jamaica agreement? Which of the following arguments is against the use of fixed exchange rates?

Which of the following observations is true of the Bretton Woods agreement? Which of the following is a disadvantage of using a rigid policy of fixed exchange rates? A country is said to be in balance-of-trade equilibrium when: A. the income its residents earn from exports is equal to the money its residents pay to other countries for imports. A _____ is a situation in which a country cannot service its foreign debt obligations. D. endure a sharp contraction of demand in the short term. A. The great virtue claimed for a _____ is that it imposes monetary discipline on a country and leads to low inflation. A _____ means the value of a currency is fixed relative to a reference currency. -key point is that voting is rare in IMF, operates on the concept of consensus -US holds about 17% of votes, and some veto rights but far from full control -countries that vote along the lines of the US are more likely to receive a IMF program -IMF lending programs often used by members of SC to bribe votes in the UN general assembly The _____ refers to the institutional arrangements that govern exchange rates. Which of the following will help a company hedge against currency fluctuations? causes of crises are varied and complex, and can be domestic, external

Prior to the introduction of the euro, many EU countries participated in a _____. International Development Association loans: C. are funded through subscriptions from wealthy members. B. the income its residents earn from exports is equal to the money its residents pay for imports. During early globalization efforts, outsourcing was typically confined to _____ activities. The Asian economic crisis and the global financial of 2008-2009 crisis were caused by _____. moral hazard (safety net makes people more reckless), commitment problems (prior to laon, IMF and borrow agree best policy to stabilize economy, but incentives change and countries can't commit. C. IMF members were permitted to sell their gold reserves at the market price.

Excessive expansion of domestic borrowing. B. The United States had large and growing trade deficit between 1980 and 1985. 'Articles of agreement' signed by 29 governments 1945, begins operation 1947, created alongside World Bank in 1945 as overlapping finance arms of the UN, Linked to 'gold exchange' currency system, - early 1980s Sovereign Debt crisis- Latin America, Sub-Saharan Africa, -promote international monetary cooperation, 1, board of governors. B. political leadership from members normally finance ministers or central bank, Raymond main points on US power in the IMF, -key point is that voting is rare in IMF, operates on the concept of consensus, -it was meant to be influenced by the US from the beginning onwards, -Excecutive board has power to stop informal practices. Contracting out manufacturing allows companies to reduce economic exposure because: C. it allows companies to shift suppliers from country to country. Which of the following observations is true of the current system of the foreign exchange market? The international monetary system refers to the institutional arrangements that govern _____. C. trade imbalances can be adjusted by using floating exchange rates. Which of the following statements is true of the gold standard? When the foreign exchange market determines the relative value of a currency, we say that the country is adhering to a _____ regime. D. Dispersing production to different geographic locations. Which of the following is a function of World Bank? What will happen if a country increases its money supply rapidly under fixed exchange rate regime? The monetary autonomy argument is supported by the advocates of _____. This article also gives a short analysis of the roles of the World Bank, the IMF and the local political elites in this process. The rise in the value of the dollar between 1985 and 1988: Advocates of a _____ argue that removal of the obligation to maintain exchange rate parity would restore monetary control to a government. D. Worsening of U.S. foreign trade position. United States attracted heavy inflows of capital from foreign investors during this period.

A.

B. This system of conditionality is designed to promote national ownership of strong and effective policies.

The monetary autonomy argument holds that: A. each country should be allowed to choose its own inflation rate. A. benefit from a sharp expansion of demand in the long term B. endure a sharp contraction of demand in the long term C. … D. government lacks the ability to set interest rates. Exchange rates are _____ under a pure "free float" system. C. Pegged exchange rates are popular among many of the world's smaller nations. NewsRescue Below is a brief background of the events that led many countries to accept SAPs. Which of the following statements is true of pegged exchange rates?

_____ exchange rates were declared as acceptable in the Jamaica agreement of the International Monetary Fund. B. Which of the following is the reason why the current foreign-exchange system is sometimes thought of as a managed-float system? D. permitted to sell their own gold reserves at the market price. A. D. The current system is a combination of government intervention and speculative activity. Which of the following is a factor that caused this occurrence? International Monetary Fund members were _____ in the Jamaica agreement. These policy adjustments are conditions for IMF loans and serve to ensure that the country will be able to repay the IMF. It is followed by Central America (11 countries), Asia (nine), Europe (seven) and the European Union (six). Countries that require substantial loans from the International Monetary Fund to survive will _____ due to IMF-mandated economic policies.

Moral hazard arises when people behave recklessly because: C. they know they will be saved if things go wrong. Under a pegged exchange rate regime, a country: B. will peg the value of its currency to that of a major currency. IMFs' DEBTORS

The International Monetary Fund has been criticized for exacerbating moral hazard: A _____ refers to a loss of confidence in the banking system that leads to a run on banks as individuals and companies withdraw their deposits. Increasingly the _____ has been acting as macroeconomic police of the world economy, insisting that countries seeking significant borrowings adopt certain macroeconomic policies. A pegged exchange rate means that the value of a currency is: C. fixed relative to a reference currency. The world's four major trading currencies, the Japanese yen, the U.S. dollar, the British pound, and the European Union's euro are all free to float against each other. It is likely to create high unemployment in some cases. Despite this, the value of U.S. dollar rose during this period. After World War II, the world's major industrial nations arranged their currencies against each other at a mutually agreed on exchange rate. C. Lending money to governments for development. Which of the following is an exchange rate policy where the exchange rate is determined completely by market forces? B. a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of the currency. Countries that receive loans from the IMF are required to adopt specific economic policies to attain stabilization.

D. a speculative attack on the exchange value. Trade deficits can be corrected through changes in exchange rates. B.

Which of the following is a factor that initiated the collapse of the fixed exchange rate system? A. argue that floating rates help adjust trade imbalances. Which of the following arguments is in favor of floating exchange rates? The World Bank was established at the at Bretton Woods conference to: Identify the currency that was convertible to gold under the Bretton Woods system. Which of the following arguments strengthen the idea of floating exchange rates? It is difficult if not impossible to get adequate insurance coverage for exchange rates that: C. might occur several years in the future. D. Governments can restore monetary control by removing the obligation to maintain exchange rate parity. A. IMF lacks any real mechanism for accountability. Each country has the freedom to choose its own inflation rate. When a country tries to hold the value of their currency within some range against an important reference currency such as the U.S. dollar without adopting a formal pegged rate, it is referred to as a _____. _____ are popular among many of the world's smaller nations. A country that introduces a currency board commits itself to converting its domestic currency on demand into: A. another currency at a fixed exchange rate. D. The standard contains a powerful mechanism for achieving balance-of-trade equilibrium by all countries.

When a country borrows from the IMF, its government agrees to adjust its economic policies to overcome the problems that led it to seek financial aid. In the 1990s, most of the borrowing by the companies who invested in Asian countries had been in _____. Countries that require substantial loans from the International Monetary Fund to survive will _____ due to IMF-mandated economic policies.

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