Question 1

Swap arrangements are bilateral agreements between central banks to allow countries to temporarily borrow funds to ease current-account deficits and discourage speculative capital flows.

Accepted Answer

A) True 
 B)False

Question 2

Are international reserve needs different for different exchange rate regimes?

Accepted Answer

The need for international reserves tend...

Question 3

For developing countries such as Mexico and Brazil,severe economic problems in the 1980s were caused by:

Accepted Answer

A)   A fall in the world demand for products produced by developing countries
B)   High prices of basic raw materials and other commodities
C)   Low real interest rates in the United States
D)   High levels of income and imports for the United StatesE) None of the above
F) All of the above

Question 4

The supply of international reserves consists of owned reserves and borrowed reserves.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is a main central bank function of the International Monetary Fund?

Accepted Answer

A)   The conduct of open market operations
B)   The issuance of gold certificates
C)   The provision of monetary policy for member nations
D)   The granting of loans to member nationsE) C) and D)
F) B) and C)

Question 6

The value of the SDR is tied to a currency basket consisting of the U.S.dollar,German mark,Japanese yen,French franc,and British pound.

Accepted Answer

A) True 
 B)False

Question 7

The currencies generally referred to as "reserve currencies" are the:

Accepted Answer

A)   Japanese yen and U.S. dollar
B)   Swiss franc and Japanese yen
C)   British pound and U.S. dollar
D)   Swiss franc and British poundE) A) and C)
F) None of the above

Question 8

Which of the following does not represent a form of international liquidity?

Accepted Answer

A)   IMF reserve positions
B)   General arrangements to borrow
C)   U.S. government securities
D)   Reciprocal currency arrangementsE) A) and B)
F) B) and C)

Question 9

Which international reserve asset was officially phased out of the international monetary system by the United States in the early 1970s?

Accepted Answer

A)   Special drawing rights
B)   Swap agreements
C)   General arrangements to borrow
D)   GoldE) B) and D)
F) None of the above

Question 10

In 1975 the official price of gold was abolished as the unit of account for the international monetary system.As a result,gold was demonetized as an international reserve asset.

Accepted Answer

A) True 
 B)False

Question 11

Figure 17.1 Foreign Exchange Market
 
-Refer to Figure 17.1.Under a fixed exchange rate system,U.S.monetary authorities would have to supply 8 million pounds in exchange for dollars to keep the exchange rate at $3 per pound.

Accepted Answer

A) True 
 B)False

Question 12

Describe the eurocurrency market.

Accepted Answer

Eurocurrencies are deposits,denominated ...

Question 13

The purpose of international reserves is to finance:

Accepted Answer

A)   Short-term surpluses in the balance of payments
B)   Long-term surpluses in the balance of payments
C)   Short-term deficits in the balance of payments
D)   Long-term deficits in the balance of paymentsE) B) and D)
F) None of the above

Question 14

The U.S.gold outflow that began in the late 1940s and continued through the 1960s was due in part to:

Accepted Answer

A)   Crawling pegged exchange rates
B)   Freely floating exchange rates
C)   An undervalued dollar
D)   An overvalued dollarE) A) and B)
F) A) and D)

Question 15

Which of the following is not a condition of the international gold standard? That a nation must:

Accepted Answer

A)   Convert gold into paper currency, and vice versa, at a stipulated rate
B)   Permit gold to be freely imported and exported
C)   Tolerate wide fluctuations in its exchange rate
D)   Define its monetary unit in terms of a stipulated amount of goldE) None of the above
F) All of the above

Question 16

"Country risk" analysis is concerned with all of the following except:

Accepted Answer

A)   Depreciation of the borrowing country's currency
B)   Political instability in the borrowing country
C)   Economic growth in the borrowing country
D)   External debt of the borrowing countryE) C) and D)
F) A) and B)

Question 17

Which of the following is not a characteristic of the Eurodollar market? It:

Accepted Answer

A)   Is mainly located in the United Kingdom and continental Europe
B)   Operates as a financial intermediary, bringing together lenders and borrowers
C)   Deals in interest-bearing time deposits and loans to governments
D)   Grew in response to the deregulation of interest rate ceilings on U.S. savings accountsE) B) and C)
F) B) and D)

Question 18

Which of the following assets makes use of the basket valuation technique?

Accepted Answer

A)   Swap agreements
B)   Oil facility
C)   Buffer stock facility
D)   Special drawing rightsE) All of the above
F) A) and D)

Question 19

Figure 17.1 Foreign Exchange Market
 
-Refer to Figure 17.1.If the exchange rate was allowed to rise to $4 per pound,U.S.monetary authorities would have to supply 6 million pounds to the foreign exchange market in exchange for dollars to maintain this rate.

Accepted Answer

A) True 
 B)False

Question 20

The Federal Reserve's swap network represents:

Accepted Answer

A)   Efforts to stabilize only the value of the dollar
B)   Efforts to stabilize only the value of foreign currencies
C)   Long-term borrowing among countries
D)   Short-term borrowing among countriesE) A) and C)
F) None of the above

Exam 17: International Banking: Reserves, debt, and Risk

The U.S.gold outflow that began in the late 1940s and continued through the 1960s was due in part to:

Correct AnswerverifiedShow Answer

Which of the following is not a condition of the international gold standard? That a nation must:

Correct AnswerverifiedShow Answer

Figure 17.1 Foreign Exchange Market -Refer to Figure 17.1.If the exchange rate was allowed to rise to $4 per pound,U.S.monetary authorities would have to supply 6 million pounds to the foreign exchange market in exchange for dollars to maintain this rate.

Correct AnswerverifiedShow Answer

For developing countries such as Mexico and Brazil,severe economic problems in the 1980s were caused by:

Correct AnswerverifiedShow Answer

Which of the following is a main central bank function of the International Monetary Fund?

Correct AnswerverifiedShow Answer

Which international reserve asset was officially phased out of the international monetary system by the United States in the early 1970s?

Correct AnswerverifiedShow Answer

In 1975 the official price of gold was abolished as the unit of account for the international monetary system.As a result,gold was demonetized as an international reserve asset.

Correct AnswerverifiedShow Answer

Are international reserve needs different for different exchange rate regimes?

Correct AnswerverifiedThe need for international reserves tend...View AnswerShow Answer

The purpose of international reserves is to finance:

Correct AnswerverifiedShow Answer

The currencies generally referred to as "reserve currencies" are the:

Correct AnswerverifiedShow Answer

Which of the following is not a characteristic of the Eurodollar market? It:

Correct AnswerverifiedShow Answer

Figure 17.1 Foreign Exchange Market -Refer to Figure 17.1.Under a fixed exchange rate system,U.S.monetary authorities would have to supply 8 million pounds in exchange for dollars to keep the exchange rate at $3 per pound.

Correct AnswerverifiedShow Answer

The Federal Reserve's swap network represents:

Correct AnswerverifiedShow Answer

Which of the following assets makes use of the basket valuation technique?

Correct AnswerverifiedShow Answer

The value of the SDR is tied to a currency basket consisting of the U.S.dollar,German mark,Japanese yen,French franc,and British pound.

Correct AnswerverifiedShow Answer

Swap arrangements are bilateral agreements between central banks to allow countries to temporarily borrow funds to ease current-account deficits and discourage speculative capital flows.

Correct AnswerverifiedShow Answer

The supply of international reserves consists of owned reserves and borrowed reserves.

Correct AnswerverifiedShow Answer

"Country risk" analysis is concerned with all of the following except:

Correct AnswerverifiedShow Answer

Describe the eurocurrency market.

Correct AnswerverifiedEurocurrencies are deposits,denominated ...View AnswerShow Answer

Which of the following does not represent a form of international liquidity?

Correct AnswerverifiedShow Answer

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The need for international reserves tend...
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Eurocurrencies are deposits,denominated ...
View Answer

Correct Answer
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