QUESTION Which of the following describes a country when the income its residents earn from exports is equal to the money its residents pay to other countries for imports? A. A currency crisis B. Balance-of-trade equilibrium C. Balance-of-payments deficit D. Balance-of-trade surplus E. Fiscal deficit ANSWER B
QUESTION Which of the following was responsible for the World Bank shifting its focus from Europe to third-world nations? A. The Great Depression B. The Jamaica agreement C. World War II D. The Marshall Plan E. The Bretton Woods agreement ANSWER D
QUESTION In terms of the gold standard, the amount of currency needed to purchase one ounce of gold was referred to as the: A. gold to bond ratio. B. gold reserve ratio. C. gold mix ratio. D. gold par value. E. gold net value. ANSWER D
QUESTION How does the International Monetary Fund (IMF) provide loans to deficit-laden countries? A. It prints the required currencies, thereby increasing money supply in those countries. B. It acts as a market, buying goods from these countries and selling them to developed countries. C. A pool of gold and currencies contributed by its members provides […]
QUESTION Which of the following is a reason for the emergence of the gold standard? A. Expansion in the volume of international trade due to the Industrial Revolution B. Inability of governments to convert gold into paper currency on demand at a fixed rate C. Widening gap between the developed and the developing nations D. […]
QUESTION Which term was not defined in the International Monetary Fund’s Articles of Agreement but was intended to apply to countries that had suffered permanent adverse shifts in the demand for their products? A. Competitive disadvantage B. Capital flight C. Fundamental disequilibrium D. Break-even point E. Diseconomies of scale ANSWER C
QUESTION Which of the following statements is true about the gold standard? A. Given a common gold standard, the value of any currency in units of any other currency was easy to determine. B. Establishing a gold standard seemed impractical as the volume of international trade expanded in the wake of the Industrial Revolution. C. […]
QUESTION Which of the following observations about the International Development Association (IDA) scheme of the World Bank is true? A. Money is raised through bond sales in the international capital market. B. Borrowers have up to 50 years to repay at an interest rate of less than 1 percent a year. C. IDA loans go […]
QUESTION Which of the following was a reason that led to the collapse of the gold standard in 1939? A. Difficulty and complexity in using the gold standard to determine the exchange rate B. Agreement by governments to convert paper currency into gold on demand at a fixed rate C. A cycle of competitive currency […]
QUESTION Which of the following refers to the institutional arrangements that govern exchange rates? A. Generally accepted accounting principles B. General agreement on tariffs and trade C. International monetary system D. General agreement on trade in services E. Financial management information system ANSWER C