1) Which of the following did NOT contribute to the exchange rate collapse in emerging
markets in the 1990s?
A) infrastructure weaknesses
B) speculation on the part of market participants
C) the sharp reduction of cross-border foreign direct investment
D) All of the above contributed to the emerging markets exchange rate collapse of the
1990s.
2) The ________ provides a means to account for international cash flows in a
standardized and systematic manner.
A) parity conditions
B) asset approach
C) balance of payments
D) International Fisher Effect
3) ________ is defined as the spread of a crisis in one country to its neighboring countries
and other countries with similar characteristics.
A) Speculation
B) Contagion
C) Capital market liquidity
D) Political science
4) Critics of the balance of payments approach to exchange rate determination point to the
emphasis on ________ of currency and capital rather than ________ of money or financial
assets.
A) flows; stocks
B) stocks; flows
C) import; export
D) export; import
5) Which of the following versions of PPP is thought to be the most relevant to possibly
explaining what drives exchange rate values?
A) The Law of One Price
B) Absolute Purchasing Power Parity
C) Relative Purchasing Power Parity
D) The International Fisher Effect
6) The Asian Currency crisis appeared to begin in:
A) South Korea.
B) Taiwan.
C) Thailand.
D) Japan.
7) The “tequila effect” is a slang term used to describe a form of financial panic called:
A) run on the market.
B) speculation.
C) contrary investing.
D) contagion.
8) Prior to July 2, 1997, the Thai government:
A) allowed the Thai Bhat to float against major currencies.
B) fixed the Bhats value against the Korean won only.
C) fixed the Bhats value against major currencies especially the U.S. dollar.
D) none of the above
9) The authors refer to the practice of many Asian firms being largely controlled by
families of groups related to the governing body of the country as:
A) illegal.
B) insider trading.
C) cronyism.
D) not in my back yard.
10) The principle focus of the IMF bailout efforts during the Asian financial crisis was:
A) banking liquidity.
B) shareholders wealth.
C) reestablishing fixed currency exchange rates in Asia.
D) dollarization of Asian currencies.
11) ________, traditionally referred to as chartists, focus on price and volume data to
determine past trends that are expected to continue into the future.
A) Mappists
