#1
Which international currency system was established after World War II?
Bretton Woods System
ExplanationEstablished fixed exchange rates and US dollar as the primary reserve currency.
#2
What is the primary currency used in international trade and finance?
United States Dollar
ExplanationWidely accepted and dominant currency for global transactions.
#3
What is the main purpose of the International Monetary Fund (IMF)?
To provide loans and financial assistance to member countries
ExplanationAims to stabilize international exchange rates and support countries in economic difficulties.
#4
Which country is known for implementing a 'pegged' exchange rate system?
China
ExplanationMaintains a stable exchange rate by pegging to a basket of currencies.
#5
What is the nickname given to the currency issued by the European Central Bank (ECB)?
Eurodollar
ExplanationCommon term for euros issued by the ECB.
#6
Which agreement led to the creation of the Eurozone and the adoption of the euro as a common currency?
Maastricht Treaty
ExplanationEstablished criteria for euro adoption and economic convergence.
#7
What is the 'Impossible Trinity' in international economics referring to?
The inability to maintain a fixed exchange rate, independent monetary policy, and free capital movement simultaneously
ExplanationConstraints faced in managing monetary policy and exchange rates simultaneously.
#8
What was the name of the precursor to the European Union's common currency (Euro)?
European Currency Union (ECU)
ExplanationA basket currency used for accounting before the introduction of the euro.
#9
What is the significance of the Plaza Accord?
It coordinated efforts to depreciate the US dollar
ExplanationAimed to reduce US trade deficit through coordinated currency interventions.
#10
What is the purpose of the Special Drawing Rights (SDR) issued by the International Monetary Fund (IMF)?
To serve as a supplementary reserve asset
ExplanationProvides liquidity and acts as a reserve asset supplementing member countries' reserves.
#11
Which of the following is NOT a reserve currency?
Indian Rupee
ExplanationNot widely held in global reserves like the US dollar, euro, or yen.
#12
Which international organization is responsible for monitoring and promoting global financial stability?
Bank for International Settlements (BIS)
ExplanationServes as a hub for central banks to foster monetary cooperation.
#13
Which of the following is NOT a characteristic of a currency crisis?
Stable exchange rates
ExplanationCurrency crises involve rapid depreciation or devaluation, not stability.
#14
What is the primary role of the Bank of International Settlements (BIS) in the international monetary system?
Facilitating cooperation among central banks and supervising banking activities
ExplanationPromotes monetary and financial stability through collaboration and oversight.