1.	Members of the European Monetary Union community that have met the
convergence criteria do not include
	a. 	Portugal
	b.	Luxembourg
	c. 	Greece
        d.	Belgium
	e. 	All are included now

2.	An increase in the current account deficit will place _______
pressure on the home currency value, other things being equal.
a.	Upward
b.	Downward
c.	No
d.	Upward or downward (depending on the size of the deficit).

3. 	The “J-curve effect” shows:
		 a.	The initial deterioration and the eventual improvement of a
country’s trade balance following 	currency depreciation.
    	 b. 	The initial improvement and the eventual depreciation of a
country’s trade balance following currency depreciation.
  	 c. 	The trade balance’s lack of responsiveness to the exchange
rate changes
	d. 	None of the above.

4.	Which of the following could potentially result in a trade deficit?
      a. 	Rapid domestic economic growth
      b. 	A domestic currency that is “overvalued”
      c. 	A rapidly industrializing developing country
      d. 	None of the above
      e. 	All of the above

5.	Which of the following is NOT a credit entry in a nation’s balance
of payment?
      a. 	Exports of merchandise
      b. 	A U.S. domestic company borrows funds from foreign financial
markets
      c. 	Foreign firm issues bonds in New York to finance its
domestic affiliates
      d. 	All of the above

6.	The purchase of real estate in California by a Japanese insurance
company in Tokyo would be recorded in the U.S. balance of payments as
a:
      a. 	Credit on the current account
      b. 	Debit on the current account
      c. 	Credit on the capital account
      d. 	Debit on the capital account

7.	Ruritania’s balance of payments records the following transactions
in 1997: exports 60, imports 50, capital inflows 35, capital outflows
12, unilateral transfer (outward) 18. Ruritania’s balance of payments
position can described as:
      a. 	Current account surplus
      b. 	Capital account deficit
      c. 	Capital account surplus
      d. 	All of the above

8.	 Which of the following is NOT one of the major aims of  the
International Monetary Fund?
a.  To administer the exchange rate agreements agreed upon the member
countries.
b.  To provide member countries with financial resources to  correct
temporary payment  imbalances.
c.  To provide a forum from which member countries could consult on
international monetary  issues of common  concern.
d.  To provide a forum from which member countries could collaborate
on international monetary issues of common  concern.
e.  To  facilitate fundamental technology transfer.

9.	 Which of the following is NOT one of the normal IMF conditions
attached to financial assistance?
a.  Reductions in public sector/government spending.
b.  Reductions in tariffs and trade restrictions.
c.  Elimination of subsidies and controls within the domestic economy.
d.  Achievement of a realistic currency exchange rate.
e.  Open and free elections

10.	   The situation in regional economic integration where resources
shift from the least to the most efficient producers is called
a.	trade creation
b.	trade diversion
c.	common internal tariffs
d.	common external tariffs

11.	  Which of the following is not a function of the International
Monetary Fund?  (IMF)
a.	to establish a multilateral system of trade payments.
b.	To eliminate exchange restrictions
c.	To prevent competitive currency devaluation.
d.	To create standby reserves

12.	  The Special Drawing Right (SDR) is
a.	the same as gold
b.	comprised of a basket of 16 currencies.
c.	A unit of account based on the value of 5 currencies.
d.	Designed to replace international reserve

13. TABLE: Simplified Balance of Payments for Country XYZ
Merchandise Trade Net -66.1
Services Net 49.8
Investment Income Net -9.2
Unilateral Transfers Net +20.7
Current Account Balance	X
U.S. Private Assets Abroad Debit 411.1	
Foreign Private Assets in the U.S. Credit 450.1		
Capital Account Balance	Y
Net Change in Official Reserves	Z
Statistical Discrepancy	-20.5
1.  Based on the Table above, please calculate X,Y, and Z
2. Is country creditor or debtor to the rest of the world a A.
creditor ; B. debtor?
3. According to the Table have the country official reserves A.
Increased;  B. decreased?

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Request for Question Clarification by elmarto-ga on 11 Jun 2003 20:07 PDT

Do you require an explanation and sources for each of the qustions? Or
just the correct choice will do? If not, do you need a long or brief
explanation of choice?

Best regards,
elmarto

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Clarification of Question by defaultuser-ga on 12 Jun 2003 04:09 PDT

Well, I've handed in the assignment, now I'd just like to make sure I
understand the stuff (which I pretty much do already).  I'd also like
to confirm that my assessment of the prof's interest/competency is
accurate (e.g., #12 is four currencies, right?).  How about a few
(2-3) sentences of discussion (or just a link that is straightforward)
for each, and maybe something slightly more robust (5-6 sentences) for
2, 4, 11, and 13; anything else is deep into tip territory, and is
considerably cheaper than my tuition.

I'm shakiest on calculating the BOP stuff (Q13), so a nice and easily
understandable bonus link or two there would be appreciated.  Also,
scratch #8 altogether, as technology transfer is the obvious answer.