Question 1

The Greek debt crisis has generated a discussion about

Accepted Answer

The Greek debt crisis has brought into question the long-term viability of the European Monetary Union (EMU) and whether it is sustainable in the current form. The crisis has highlighted issues with the structure and functioning of the EMU, including the lack of fiscal integration among member states and the challenges of managing a common currency without a central fiscal authority.

Answer: E
 The Greek debt crisis has also raised questions about the role of China in financing European bailouts. Some have suggested that China, with its large foreign currency reserves, could provide needed financial support to struggling European countries. However, others have raised concerns about the implications of relying on China for funding and the potential for increased Chinese influence in Europe.

Question 2

Under the EMS system,the burden of maintaining fixed exchange rates fell principally upon

Accepted Answer

Under the EMS system, countries with high inflation had the burden of maintaining fixed exchange rates because they had to continually adjust their monetary policies to maintain the fixed exchange rate, which often required high interest rates and steep budget cuts.

Question 3

China's emergence as a creditor country has placed an emerging market economy in the center of the international monetary system for the first time in its history

Accepted Answer

China's increasing role as a creditor country has made it a significant player in the international monetary system, putting an emerging market economy in this position for the first time in history.

Question 4

In a compact known as the Plaza Accord in 1985,Germany,Britain,France,Italy and the United States consented to intervene in the foreign exchange markets whenever it appeared that the market was pushing the dollar up.

Accepted Answer

The Plaza Accord aimed to depreciate the US dollar in relation to the Japanese yen and the German Deutsche Mark through intervention in currency markets, not to prevent the dollar from rising.

Question 5

The U.S. government's Toxic Asset Relief Program (TARP)in 2008 to purchase risky assets from the largest banks authorized more than

Accepted Answer

The TARP program in 2008 authorized $700 billion to purchase risky assets from the largest banks.

Question 6

From its peak in 2002,the dollar has lost value steadily until,by 2010,it had returned to the value it held during much of the 1990s.

Accepted Answer

The statement accurately describes the devaluation of the dollar from 2002 to 2010, and therefore the answer is true.

Question 7

Why did the U.S.international investment position stabilize after 2004 in spite of continued heavy borrowing?

Accepted Answer

The answer of Why did the U.S.international investment position stabilize...

Question 8

According to Oatley,analysts seemed to agree that the financial turbulence which included "Black Monday" (October 19,1987)was a direct market response to the evident inability of the United States and Germany to find a cooperative solution to global current account imbalances.

Accepted Answer

Oatley indicates that the financial turbulence, including "Black Monday," was indeed seen by analysts as a direct response to the failure of the United States and Germany to cooperatively address global current account imbalances, highlighting the interconnectedness of global financial markets and the impact of geopolitical relations on economic stability.

Question 9

The financial crisis of 2007-2009 acquired a global dimension

Accepted Answer

The answer of The financial crisis of 2007-2009 acquired a...

Question 10

The 1970s had seen relatively small current-account imbalances in the major industrial countries generally adjust quickly.

Accepted Answer

The statement is true. In the 1970s, current-account imbalances in major industrial countries were relatively small and typically adjusted quickly.

Question 11

Discuss and analyze the contention that the US-German public squabbles over currency values and interest rates were responsible for "Black Monday" - (October 19,1987)the largest single day loss in percentage terms since WWI.

Accepted Answer

The answer of Discuss and analyze the contention that the...

Question 12

The cost of floating exchange rates is so small that European governments have had no problem in sacrificing domestic autonomy to stabilize exchange rates.

Accepted Answer

This statement is incorrect. The cost of floating exchange rates can be significant, and some European governments have chosen to relinquish some domestic autonomy in order to participate in exchange rate stabilization efforts (such as joining the Eurozone). However, not all European countries have done so and the decision to participate in exchange rate stabilization is often a contentious issue.

Question 13

Since the late 1970s,European governments have desired more stable intra-European exchange rates

Accepted Answer

The cost of floating in the EU is high due to the high level of interdependence between European countries, leading to greater economic instability. Thus, European governments have desired more stable intra-European exchange rates, even if it means sacrificing some domestic autonomy.

Question 14

Financial institutions that held mortgage-backed securities in large amounts only suffered small losses in the 2007-2009 real estate crisis.

Accepted Answer

This statement is false. Financial institutions that held mortgage-backed securities in large amounts suffered significant losses during the 2007-2009 real estate crisis, some even leading to bankruptcy.

Question 15

European governments attributed the U.S.current account deficit to the federal government budget deficit that emerged following the Bush tax cuts of 2001.

Accepted Answer

European governments did attribute the U.S. current account deficit to the federal government budget deficit that emerged following the Bush tax cuts of 2001.

Question 16

Governments recently have found themselves in fundamentally different types of distributive conflicts than those that brought down the Bretton Woods system in the early 1970s.

Accepted Answer

The answer of Governments recently have found themselves in fundamentally...

Question 17

Capital flows from Japan and Germany financed the US current-account deficits in the 1980s.

Accepted Answer

This is true. Japan and Germany were major creditors of the United States during the 1980s, and their capital flows helped fund the US current-account deficits of the time.

Question 18

Explain and discuss the divergent macroeconomic policies of the U.S.,Japan and Germany in the 1980s.

Accepted Answer

The answer of Explain and discuss the divergent macroeconomic policies...

Question 19

Discuss the issues and countries involved in the Plaza and Louvre Accords in mid 1980s.Were they successful?

Accepted Answer

The answer of Discuss the issues and countries involved in...

Question 20

Discuss and explain the evolution of current-account imbalances between 1996 and 2010.How were they different than similar problems in the 1980s?

Accepted Answer

The answer of Discuss and explain the evolution of current-account...

Quiz 11: Cooperation, conflict and Crisis in the Contemporary International Monetary System