1. Which of the following is true of the gold standard as the international monetary system?
The gold standard allowed countries to observe lax monetary policies.
The volume of paper currency could not exceed the gold reserves.
The countries could just print money to combat economic downturns.
The gold standard provided for the devaluation of the currency to prevent the large-scale economic downturn.
The gold standard tied the currencies of all the countries to the U.S. dollar.
_____ refers to a main currency that many countries and institutions hold as part of their foreign exchange reserves.
Reserve currency
Float
Trade deficit
Exchange rate
Bank reserve
The _____ removed gold as the primary reserve asset of the IMF.
Jamaica Agreement
Basel Convention
Bonn Agreement
Smithsonian Agreement
Bretton Woods Agreement
The _____ are often called the Bretton Woods Institutions.
Asian Development Bank and EBRD
Inter-American Development Bank and AFDB
World Trade Organization and GATT
World Bank and the IMF
West African Development Bank and BDEAC
A Special Drawing Right (SDR) refers to:
an international monetary reserve asset issued by the IMF.
the main currency that many countries and institutions hold as part of their foreign exchange reserves.
a fast-disbursing loan facility with low conditionality aimed at reassuring investors by injecting liquidity.
a system where currencies float against one another with governments intervening only to stabilize their currencies at set target exchange rates.
a negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange
Which of the following is true of the economic policies that have to be implemented by a country in order to avail loans by the IMF?
Increasing government borrowing
Lowering interest rates to stabilize the currency
Allowing failing firms to go bankrupt
Nationalization of the country’s assets
Presence of regulated markets
Rapid Credit Facility refers to:
a system in which currencies float against one another with governments intervening only to stabilize their currencies at set target exchange rates.
a negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange.
an international monetary reserve asset issued by the IMF.
the main currency that many countries and institutions hold as part of their foreign exchange reserves.
a system of disbursing loans which is front-loaded and has low conditionality.
The central purpose of the World Bank is to:
promote foreign direct investment into developing countries by insuring investors against political risk.
promote sustainable private sector development primarily by financing private sector projects and companies located in the developing world.
promote exchange stability, to maintain orderly exchange arrangements among members, and to avoid competitive exchange depreciation.
promote economic and social progress in developing countries by helping raise productivity so that their people may live a better and fuller life.
provide facilities for the conciliation and arbitration of investment disputes between member countries and individual investors.
The _____ focuses on improving the foreign direct investment of developing countries.
International Bank for Reconstruction and Development
International Development Association
Multilateral Investment Guarantee Agency
International Finance Corporation
International Centre for Settlement of Investment Disputes
Which of the following is an issue on which the World Bank has been criticized?
The shifting of the World Bank from being an international welfare organization to a “lender of last resort.”
The bank’s lending policies which often reward macroeconomic inefficiency in the underdeveloped world.
The attempt of the bank to focus on local initiatives rather than large projects.
It entertains too many alternative perspectives on development, which jeopardizes its main objectives.
It has allowed itself to be dominated and controlled by developing nations.
