The External Debt And Financial Crises MCQs

Option A: IMF decentralization; World Bank dissolution

Option B: new loans from multilateral agencies and surplus countries; debt reduction or write-downs

Option C: structural adjustment loans for LDCs experiencing unanticipated external shocks; renewed emphases on macroeconomic stabilization programs

Option D: debt relief for at leas three-fourths of the eligible HIPCs; shorter requirements for adjustment programs

Correct Answer: new loans from multilateral agencies and surplus countries; debt reduction or write-downs ✔

Option A: The ratio of debt service to GNP is very good indicator of the debt burden

Option B: Many large LDC debtors borrowed heavily because of their excellent international credit ratings

Option C: Middle income countries account for almost four-fifths of the total outstanding debt of all LDCs

Option D: The debt-burden of sub Saharan African countries may be as heavy as for middle income countries

Correct Answer: The ratio of debt service to GNP is very good indicator of the debt burden ✔

Option A: Structural adjustment loans

Option B: sectoral adjustment loans

Option C: internal adjustment loans

Option D: external leverage loans

Correct Answer: sectoral adjustment loans ✔

Option A: I and IV only

Option B: II and III only

Option C: I, II and III only

Option D: II, III and IV only

Correct Answer: I and IV only ✔

Option A: Brazil

Option B: Argentina

Option C: Thailand

Option D: Malaysia

Correct Answer: Malaysia ✔

Option A: long-term debt divided by GDP of a country in a given year

Option B: interest and principle payments divided by exports of goods and services

Option C: ratio of debt net of portfolio investment financing and foreign direct investment

Option D: default and reschedule debt minus annual export revenues that must be devoted to paying interest

Correct Answer: interest and principle payments divided by exports of goods and services ✔

Option A: dependable positive real interest rates

Option B: higher taxes on capital gains

Option C: more efficient state enterprises

Option D: market liberalization

Correct Answer: higher taxes on capital gains ✔

Option A: External debt accumulates with international balance on goods services and income deficcits

Option B: When debts are denominated in U.S dollars their appreciation during the 1990s increased the cost of servicing such debts

Option C: In the 19901s LDCs relied increasingly on aid from DCs

Option D: International lenders required LDC governments to guarantee private debt

Correct Answer: In the 19901s LDCs relied increasingly on aid from DCs ✔

Option A: Iraq and Iran

Option B: Egypt and Poland

Option C: Pakistan and Afghanistan

Option D: Saudi Arabia and Jordan

Correct Answer: Egypt and Poland ✔

Option A: I and II only

Option B: I, II , III only

Option C: I, III and IV only

Option D: I, II , III and IV

Correct Answer: I, II , III and IV ✔

Option A: screening of debtors based on their regional location

Option B: World Bank requiring LDCs seconded by a DC to get loan reduction

Option C: loan denial to crisis-stricken highly indebted countries

Option D: None of the above

Correct Answer: None of the above ✔

Option A: excessively committed to writing down LDC debt

Option B: a managed duopoly of policy advice

Option C: a U.S monoply

Option D: the initiator of HIPCs debt forgiveness

Correct Answer: a managed duopoly of policy advice ✔

Option A: unrealistic for IMF to intervene in the financial markets of poor countries during the crisis

Option B: impractical for the IMF to loan short term as reforms can only be effective in the middle to long run

Option C: crucial that the IMF intervene in the reform of fiscal policy of the country and not the monetary policy

Option D: None of the statements above is correct

Correct Answer: impractical for the IMF to loan short term as reforms can only be effective in the middle to long run ✔

Option A: Structural adjustment loans

Option B: sectoral adjustment loans

Option C: internal adjustment loans

Option D: external leverage loans

Correct Answer: sectoral adjustment loans ✔

Option A: trade account surplus

Option B: massive reverse outflows of capital

Option C: technological transfer from DCs

Option D: Symmetric informational in financial market

Correct Answer: massive reverse outflows of capital ✔

Option A: investment loans, and grants from overseas minus international resource outflows

Option B: net international resource flows minus net international interest payments and profit remittances

Option C: international resource outflows minus international balance of payments and profit remittances

Option D: foreign direct investment inflow minus investment loans and grants from overseas

Correct Answer: net international resource flows minus net international interest payments and profit remittances ✔

Option A: Singapore (1994)

Option B: Mexico (1994)

Option C: Russia (1998)

Option D: Brazil (1998)

Correct Answer: Singapore (1994) ✔

Option A: Argentina

Option B: Venezuela

Option C: Mexico

Option D: Canada

Correct Answer: Canada ✔

Option A: I and II only

Option B: III and IV only

Option C: I, II and III only

Option D: I, II and IV only

Correct Answer: I, II and III only ✔