100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
ENC 306 Final Exam Practice Questions & Answers 2024/2025 $10.49   Add to cart

Exam (elaborations)

ENC 306 Final Exam Practice Questions & Answers 2024/2025

 3 views  0 purchase
  • Course
  • ENC 306
  • Institution
  • ENC 306

ENC 306 Final Exam Practice Questions & Answers 2024/2025 True or False Professor Bhagwati's phrase: "Trade in bhats is not the same as trade in bats" is intended to convey the view that a policy of free international capital mobility may not be socially optimal in contrast to a pol...

[Show more]

Preview 3 out of 27  pages

  • October 25, 2024
  • 27
  • 2024/2025
  • Exam (elaborations)
  • Questions & answers
  • ENC 306
  • ENC 306
avatar-seller
Bensuda
ENC 306 Final Exam Practice Questions
& Answers 2024/2025

True or False



Professor Bhagwati's phrase:



"Trade in bhats is not the same as trade in bats"



is intended to convey the view that a policy of free international capital mobility may not be socially
optimal in contrast to a policy of free trade. - ANSWERSTrue



Two nations are unable to smooth consumption across two states of nature because they lack a global
capital market.



Nation A's production is 40 in state 1 and 60 in state 2. Nation B's production is 60 in state 1 and 40 in
state 2.



Given these data, which below illustrates the type of consumption smoothing that can occur with a
global capital market?



a. Average consumption could become 50 and the variance of consumption 100

b. Average consumption could become 50 and the variance of consumption 0.

c. Average consumption could become 40 and the variance of consumption 100

d. Average consumption could become 60 and the variance of consumption 0

e. None of the above - ANSWERSb. Average consumption could become 50 and the variance of
consumption 0



Which of the following applies to Brady Bonds?

,a. They helped to resolve the Third World debt crisis precipitated by Mexico's default in 1982.

b. They helped replenish fund used for bailouts at the International Monetary Fund during the Asian
Crisis

c. Brady Bonds helped foreign investors protect their equity when investing in companies abroad by
guaranteeing their initial investment

d. All of the above

e. Only a & c - ANSWERSa. They helped to resolve the Third World debt crisis precipitated by Mexico's
default in 1982.



Which of the following can lead to international financial crises?



a. Waves of over-borrowing & over-lending

b. Failure to hedge foreign currency liabilities

c. Volatile global short-term lending

d. Contagion

e. All of the above - ANSWERSe. All of the above.



Which of the policies listed below are likely to make financial crises less likely to occur?



a. A nation strives to follow sound macroeconomic policies.

b. A nation provides incentives for short-term capital inflows

c. A nation eliminates the regulation & supervision of banks

d. A nation eliminates capital requirements for banks

e. All of the above actions make financial crises less likely - ANSWERSa. A nation strives to follow sound
macroeconomic policies.



Which of the following is NOT correct?

, a. Prior to WWI, large inflows of capital from Western Europe were instrumental in building railroads &
infrastructure in the areas of recent settlement

b. Private capital basically ignored poor nations from the 1930s to the 1970s

c. The crisis in Thailand, through a process of contagion, spread to other countries like South Korea and
Malaysia whose economic fundamentals were also unsound.

d. The recycling of petro-dollars in the mid-1970s led to a surge of private bank lending to poor nations,
especially to those having difficulties paying for their oil imports

e. All are correct - ANSWERSc. The crisis in Thailand, through a process of contagion, spread to other
countries like South Korea and Malaysia whose economic fundamentals were also unsound.



Knowing that IMF rescue packages are available leads nations to engage in riskier behavior when
borrowing. This is known as:



a. Global contagion

b. Moral hazard

c. Debt overhang

d. Debt restructuring

e. None of the above - ANSWERSb. Moral hazard.



In the diagram below, what happens to U.S. GNP when capital is permitted to flow freely between the
United States and Japan? - ANSWERSU.S. GNP rises by area d+e+f



In the diagram above, what happens to U.S. GDP when capital is permitted to flow freely between the
United States and Japan? - ANSWERSU.S. GDP RISES by area g+h+a+b+c+d+e+f



In the diagram above, what happens to World GDP when capital is permitted to flow freely between the
United States and Japan? - ANSWERSWorld GDP rises by area a+b+c+d+e+f



True or False



A unique aspect of the FX MKT is that you can make contracts today for future delivery or sale of
currency at a fixed price. - ANSWERSTrue

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller Bensuda. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $10.49. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

84866 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$10.49
  • (0)
  Add to cart