QUESTION The objective of establishing the World Bank was to: A. revive the gold standard. B. promote general economic development. C. control and manage the International Monetary Fund. D. promote a floating exchange rate system. E. approve large currency devaluations. ANSWER B
Date: September 3rd, 2020
QUESTION The architects of the Bretton Woods agreement built limited flexibility into the fixed exchange rate system in order to: A. avoid high unemployment. B. facilitate competitive currency devaluations. C. widen balance-of-payments gap between countries. D. increase money supply and thereby price inflation. E. avoid balance-of-trade equilibrium between countries. ANSWER A
Date: September 3rd, 2020
QUESTION An aspect of the Bretton Woods agreement was a commitment not to use: A. the system of fixed exchange rates. B. devaluation as a weapon of competitive trade policy. C. gold as a measure to fix the value of currencies. D. funds from the International Monetary Fund and the World Bank. E. the U.S. […]
Date: September 3rd, 2020
QUESTION Under a fixed exchange rate regime, what would be the result if a country rapidly increased its money supply by printing currency? A. It would lead to an increase in the worth of the currency. B. The prices of imports would become more attractive in the country. C. The country’s goods would be highly […]
Date: September 3rd, 2020
QUESTION Which of the following observations is true of the Bretton Woods agreement? A. The participating countries were required to exchange their currencies for gold. B. Devaluation was accepted as a tool of competitive trade policy. C. The agreement called for a system of floating exchange rates. D. For weak currencies, devaluation of up to […]
Date: September 3rd, 2020
QUESTION Without currency devaluation, a country in “fundamental disequilibrium” would experience: A. a persistent trade surplus. B. a balance-of-payments equilibrium. C. an increase in exports. D. high unemployment. E. deflation. ANSWER D
Date: September 3rd, 2020
QUESTION Which of the following was the initial mission of the World Bank? A. Maintaining order in the international monetary system B. Financing the building of Europe’s economy by providing low-interest loans C. Taking over as the successor to the International Monetary Fund D. Reviving the gold standard system E. Enforcement of the floating exchange […]
Date: September 3rd, 2020
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
Date: September 3rd, 2020
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
Date: September 3rd, 2020
QUESTION Under a currency board system, the government has the absolute authority to set interest rates. Indicate whether the statement is true or false. ANSWER FALSE Currency boards have their drawbacks. Under a currency board system, government lacks the ability to set interest rates.
Date: September 3rd, 2020
