Question 1

Describe the role of the World Bank in the international community.How does the World Bank contribute to the overall stability of the global monetary system?

Accepted Answer

The World Bank was established by the 19...

Question 2

The major problem with the _______________ was that no multinational institution could stop countries from engaging in competitive devaluations.

Accepted Answer

A)  metal standard
B)  federal reserve standard
C)  premium standard
D)  gold standard
E)  global trade systemF) A) and C)
G) C) and D)

Question 3

The partial collapse of the European Monetary System occurred in

Accepted Answer

A)  1980.
B)  2001.
C)  1992.
D)  1998.
E)  1973F) C) and D)
G) B) and E)

Question 4

What is the difference between a free floating exchange rate and a managed or dirty float system?

Accepted Answer

In a free floating system ther...

Question 5

The ______________ exchange rate regime that followed the collapse of the fixed exchange rate system was formalized in January 1976 when IMF members met in Jamaica and agreed to the rules for the international system that are in place today.

Accepted Answer

A)  floating
B)  quasi-fixed
C)  open
D)  closed
E)  managedF) A) and E)
G) D) and E)

Question 6

The Bretton Woods system of fixed exchange rates was established in 1944.The central currency of this system was the

Accepted Answer

A)  French Franc.
B)  German Deutsche Mark.
C)  U.S.Dollar.
D)  British Pound.
E)  Swiss FrancF) C) and D)
G) A) and E)

Question 7

There is some evidence that adopting a pegged exchange rate regime

Accepted Answer

A)  reduces unemployment in a country.
B)  moderates inflationary pressure in a country.
C)  increases global GNP.
D)  decreases global GNP.
E)  increases GNI growth within the countryF) D) and E)
G) None of the above

Question 8

______________ also adds to the uncertainty surrounding future currency movements that characterizes floating exchange rate regimes.

Accepted Answer

A)  The impracticality of the gold standard
B)  Monetary policy autonomy
C)  Trade balance Adjustments
D)  Speculation
E)  Market forcesF) C) and E)
G) None of the above

Question 9

It is argued that a _______________ exchange rate regime gives countries monetary policy autonomy.

Accepted Answer

A)  restricted
B)  forward
C)  fixed
D)  floating
E)  managed floatF) A) and B)
G) C) and D)

Question 10

The three main elements of the Jamaica Agreement were

Accepted Answer

A)  the International Monetary Fund was established; gold was abandoned as a reserve asset; and floating rates were declared unacceptable.
B)  floating rates were declared acceptable; gold was abandoned as a reserve asset; and total annual IMF quotas were increased to $41 billion.
C)  floating rates were declared unacceptable; the International Monetary Fund was abolished; and the World Bank was established.
D)  fixed rates were declared acceptable, gold was accepted as a reserve asset; and the total annual IMF quotas were increased to $41 billion.
E)  all of these answers are correctF) C) and E)
G) B) and C) B

Question 11

One of the changes that was a result of Canada's return to the gold standard in 1926 was that

Accepted Answer

A)  chartered banks could no longer hold gold in their reserves
B)  the price of gold was allowed to fluctuate according to demand and supply
C)  gold mining was made a monopoly of the government
D)  the Canadian dollar was devalued to reflect the price of gold
E)  currency provided by the chartered banks lost its status as legal tender.F) C) and D)
G) A) and E)

Question 12

Under the Bretton Woods system, if a country developed a permanent deficit in its balance of trade that could not be corrected by domestic policy, the World Bank would agree to currency devaluation.

Accepted Answer

A) True 
 B)False  False

Question 13

Institutional arrangements that countries adopt to govern exchange rates refers to

Accepted Answer

A)  floating interest rate.
B)  international exchange rate.
C)  fixed inflation rate.
D)  dirty float.
E)  international monetary systemF) B) and E)
G) All of the above

Question 14

Advocates of a ________________ exchange rate regime argue that removal of the obligation to maintain exchange rate parity restores monetary control to a government.

Accepted Answer

A)  fixed
B)  floating
C)  narrow
D)  forward
E)  managed floatF) B) and C)
G) B) and E)

Question 15

Monetary policy autonomy and automatic trade balance adjustments are the two main elements of the case for fixed exchange rates.

Accepted Answer

A) True 
 B)False

Question 16

What is a pegged exchange rate? How does it work? What is the advantage of a pegged exchange rate regime?

Accepted Answer

Under a pegged exchange rate regime a co...

Question 17

Under a pegged exchange rate regime, a country will peg the value of its currency to

Accepted Answer

A)  an index of world currencies maintained by the World Bank.
B)  that of a major currency.
C)  an index of "peer nation" currencies.
D)  an index of its historic currency rates.
E)  the index of its major trading partners' currenciesF) None of the above
G) A) and C)

Question 18

______ can lead to inflation, which puts downward pressure on fixed exchange rates.

Accepted Answer

A)  Monetary restrictions
B)  Monetary standard
C)  Sporadic trade balance adjustments
D)  Monetary policy control
E)  Monetary expansionF) D) and E)
G) None of the above E

Question 19

The acronym IMF stands for

Accepted Answer

A)  International Monopoly Function.
B)  Interval Monetary Fluctuations.
C)  Interagency Monetary Function.
D)  International Monetary Fund.
E)  International Monetary FormationF) All of the above
G) B) and E)

Question 20

Fixed exchange rates are seen as a mechanism for achieving the following two objectives

Accepted Answer

A)  controlling inflation and economic discipline.
B)  controlling unemployment and political discipline.
C)  controlling economic stability and increasing gross national product.
D)  controlling political stability and economic discipline.
E)  controlling currency speculation and trade imbalancesF) A) and B)
G) C) and D)

Exam 10: The Global Monetary System

Describe the role of the World Bank in the international community.How does the World Bank contribute to the overall stability of the global monetary system?

Correct AnswerverifiedThe World Bank was established by the 19...View AnswerShow Answer

The major problem with the _______________ was that no multinational institution could stop countries from engaging in competitive devaluations.

Correct AnswerverifiedShow Answer

The partial collapse of the European Monetary System occurred in

Correct AnswerverifiedShow Answer

What is the difference between a free floating exchange rate and a managed or dirty float system?

Correct AnswerverifiedIn a free floating system ther...View AnswerShow Answer

The ______________ exchange rate regime that followed the collapse of the fixed exchange rate system was formalized in January 1976 when IMF members met in Jamaica and agreed to the rules for the international system that are in place today.

Correct AnswerverifiedShow Answer

The Bretton Woods system of fixed exchange rates was established in 1944.The central currency of this system was the

Correct AnswerverifiedShow Answer

There is some evidence that adopting a pegged exchange rate regime

Correct AnswerverifiedShow Answer

______________ also adds to the uncertainty surrounding future currency movements that characterizes floating exchange rate regimes.

Correct AnswerverifiedShow Answer

It is argued that a _______________ exchange rate regime gives countries monetary policy autonomy.

Correct AnswerverifiedShow Answer

The three main elements of the Jamaica Agreement were

Correct AnswerverifiedB

One of the changes that was a result of Canada's return to the gold standard in 1926 was that

Correct AnswerverifiedShow Answer

Under the Bretton Woods system, if a country developed a permanent deficit in its balance of trade that could not be corrected by domestic policy, the World Bank would agree to currency devaluation.

Correct AnswerverifiedFalse

Institutional arrangements that countries adopt to govern exchange rates refers to

Correct AnswerverifiedShow Answer

Advocates of a ________________ exchange rate regime argue that removal of the obligation to maintain exchange rate parity restores monetary control to a government.

Correct AnswerverifiedShow Answer

Monetary policy autonomy and automatic trade balance adjustments are the two main elements of the case for fixed exchange rates.

Correct AnswerverifiedShow Answer

What is a pegged exchange rate? How does it work? What is the advantage of a pegged exchange rate regime?

Correct AnswerverifiedUnder a pegged exchange rate regime a co...View AnswerShow Answer

Under a pegged exchange rate regime, a country will peg the value of its currency to

Correct AnswerverifiedShow Answer

______ can lead to inflation, which puts downward pressure on fixed exchange rates.

Correct AnswerverifiedE

The acronym IMF stands for

Correct AnswerverifiedShow Answer

Fixed exchange rates are seen as a mechanism for achieving the following two objectives

Correct AnswerverifiedShow Answer

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The World Bank was established by the 19...
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In a free floating system ther...
View Answer

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B

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False

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Under a pegged exchange rate regime a co...
View Answer

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E

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