【正文】 at richer countries have over poorer ones is exemplified by the fact that: A) richer countries have the ability to denominate their foreign debts in their own currencies. B) richer countries have the ability to denominate their foreign debts in foreign currencies. C) when demand falls for a richer country39。s goods, this leads to a significant wealth transfer from foreigners to the richer country, a kind of international insurance payment. D) A and C only. E) B and C only. Answer: D Question Status: Previous Edition 8) In 19811983, the world economy suffered a steep recession. Naturally, the fall in industrial countries39。 aggregate demand had a direct negative impact on the developing countries. What other mechanism was an even more important contributor to this event? A) the immediate, large rise in the interest burden that debtors had to pay B) the dollar39。s sharp depreciation in the foreign exchange market C) the collapse in primary modity prices, depressing terms of trade in many poor countries D) A and C only. E) All of the above. Answer: D Question Status: Previous Edition 17 9) With which country did the Debt Crisis of the early 1980s begin? A) France B) Mexico C) Argentina D) Japan E) Germany Answer: B Question Status: Previous Edition 10) In 1991, Argentina established a radical institutional reform after experiencing a decade marked by financial instability. This program was called the new Convertibility Law. What did this law do? A) made Argentina39。s currency fully convertible into . dollars at a fixed rate B) required that the moary base be backed pletely by gold or foreign currency C) placed limits on exports of modities D) A and B only. E) All of the above. Answer: D Question Status: Previous Edition 11) In the instances where a loan has been issued under certain terms and has to be repaid, what happens when the borrower does not uphold these stipulations? A) call B) option C) payment D) default E) All of the above. Answer: D Question Status: Previous Edition 12) There are many ways developing countries finance their external deficits except A) bank finance. B) portfolio investment in ownership of firms. C) bond finance. D) official lending. E) foreign exchange rates. Answer: E Question Status: Previous Edition 13) During the time period of 19801983 what dramatic world issue happened? A) political instability, insecure property rights B) stock market crashed C) world wide hyperinflation D) A world economic recession caused developing countries to not be able to make payments on foreign loans, in turn causing a universal default. E) None of the above. Answer: D Question Status: Previous Edition 18 14) The term Original Sin by two economists Barry Eichengreen and Ricardo Hausmann is used to describe what? A) lowine economy B) developing countries39。 inability to borrow in their own currencies C) a sin that is part of the Ten Commandments. D) borrows not able to receive loans E) not diversifying economies portfolios Answer: B Question Status: Previous Edition 15) How would you define exchange control? A) The government allocates foreign exchange through decree rather than through the market. B) a country NOT pegging its exchange rate C) a country pegging its exchange rate D) a country buying up excess current account so that CA=0 E) None of the above. Answer: A Question Status: New 16) As of 2022, how large is the debt of developing countries to the rest of the world? A) $350 million B) $350 billion C) $ trillion D) $35 trillion E) None of the above. Answer: C Question Status: New 17) Which of the following is a reason that developing countries are running large surpluses? A) They are required to do so by IMF. B) They have defaulted on international loans. C) They have pegged exchange rates and thus the growth of exports must drive surplus up. D) a strong desire to accumulate international reserves to protect against a sudden stop of capital inflows E) None of the above. Answer: D Question Status: New 18) Which Latin American country defaulted on loans in 2022 and paid off their creditors at only 1/3 value? A) Argentina B) Brazil C) Chile D) Colombia E) Mexico Answer: A Question Status: New 19 19) When a government defaults on its obligations, the event is called a A) sovereign default. B) magisterial default. C) private default. D) sudden stop default. E) None of the above. Answer: A Question Status: New 20) The following are all the forms of debt finance: A) bond, bank, and official finance. B) bond and bank finance. C) bond, bank, and portfolio finance. D) foreign direct and portfolio investment. E) None of the above. Answer: A Question Status: New 21) Why may equity finance be preferred to debt finance for developing countries? A) A fall in domestic ine automatically reduces the earnings of foreign shareholders without violating any loan agreement. B) There are laws insuring against any default with equity finance. C) The risk is shared between debtor and creditor with debt finance. D) The tax structure leaves equity finance unconstrained. E) None of the above. Answer: A Question Status: New 22) Since foreign credit dries up in crises when it is most needed, developing countries can protect themselves from default by A) cutting off imports of goods. B) allowing the exchange rate to float. C) using equity finance only. D) accumulating high levels of international reserves. E) None of the above. Answer: D Question Status: New 23) What factors lie behind capital inflows to the developing world? Answer: Many developing countries have received a lot