#1
What is the primary function of the International Monetary Fund (IMF)?
Stabilize exchange rates and assist with monetary cooperation
ExplanationMaintains stability in global financial systems.
#2
Which currency is used as the primary reserve currency by many central banks and international institutions?
United States Dollar (USD)
ExplanationUSD serves as the dominant reserve currency.
#3
What is the main purpose of the World Bank Group?
To provide financial assistance to developing countries for development projects
ExplanationSupports development initiatives in poorer nations.
#4
Which agreement established the European Union's single currency, the Euro?
Maastricht Treaty
ExplanationLegal framework for the Euro's introduction.
#5
Which of the following is NOT a function of the Bank for International Settlements (BIS)?
Regulating global financial markets
ExplanationNot directly involved in market regulation.
#6
Which country was the first to adopt a floating exchange rate system?
United States
ExplanationPioneered the shift to floating exchange rates.
#7
What does the term 'Balance of Payments' refer to in international finance?
The total value of a country's foreign assets and liabilities
ExplanationSum of a nation's economic transactions with the rest of the world.
#8
What is the purpose of Special Drawing Rights (SDRs) issued by the IMF?
To supplement the official reserves of member countries
ExplanationAugments member countries' reserves.
#9
What is a 'currency peg' in the context of exchange rate systems?
A fixed exchange rate system where a currency's value is tied to another currency or a basket of currencies
ExplanationFixes a currency's value to another currency or basket.
#10
What is the primary objective of the Bretton Woods Conference held in 1944?
To establish the International Monetary Fund (IMF)
ExplanationEstablishment of a post-WWII monetary system.
#11
Which international financial institution is primarily responsible for providing loans to developing countries for infrastructure projects?
World Bank Group
ExplanationFunding for infrastructure in developing nations.
#12
What is the 'Impossible Trinity' also known as?
The Mundell-Fleming trilemma
ExplanationNamed after economists Mundell and Fleming.
#13
What is the 'Impossible Trinity' in international finance?
The concept that a country cannot have fixed exchange rates, independent monetary policy, and free capital movement simultaneously
ExplanationConstraints on simultaneous policy objectives.
#14
Which country is known for implementing a 'currency board' system?
Argentina
ExplanationArgentina's unique currency regulation.
#15
What is the 'Triffin dilemma' in international finance?
The inherent contradiction between a national currency's role as a domestic medium of exchange and its role as a global reserve currency
ExplanationConflict arising from the dual roles of reserve currencies.
#16
Which country operates under a dual exchange rate system, consisting of both an official and a parallel market rate?
Iran
ExplanationIran's dual exchange rate regime.