Inter econ final 2

In evaluating the economic impact of regional trade agreements (RTAs), which of the following best describes the concept of "trade diversion"?

• The shift of production to more efficient producers within the RTA

• The replacement of efficient external producers with less efficient RTA members

• The overall reduction in trade volumes following RTA formation

• The increase in trade between RTA members and non-members

During the 2008 Global Financial Crisis, the primary reason for international policy coordination through the G20 was to:

• Prevent competitive devaluations and protectionist responses

• Establish new international financial institutions

• Eliminate all capital controls

• Standardize banking regulations globally

The "impossible trinity" in international economics suggests that a country cannot simultaneously achieve:

• Economic growth, price stability, and full employment

• Fixed exchange rates, free capital movement, and monetary policy autonomy

• Trade liberalization, financial regulation, and fiscal sovereignty

• Exchange rate stability, inflation targeting, and fiscal discipline

When analyzing currency crises, which statement best describes "first-generation" crisis models?

• They focus on self-fulfilling speculative attacks

• They emphasize government fiscal deficits and monetary policy inconsistency

• They highlight contagion effects between countries

• They stress the role of financial sector weaknesses

In the context of international financial agreements, the Basel III Accords primarily address:

• Exchange rate coordination between central banks

• Bank capital requirements and liquidity standards

• International debt restructuring mechanisms

• Cross-border tax cooperation

The concept of "original sin" in international finance refers to:

• The inability of developing countries to borrow internationally in their domestic currency

• The first default by a sovereign borrower

• The initial creation of the gold standard

• The establishment of the Federal Reserve System

A country's financial account in the balance of payments records:

• Only government borrowing from foreign sources

• Changes in ownership of financial assets between residents and non-residents

• All international monetary transactions

• Only foreign direct investment flows

If a country is experiencing a current account deficit, which of the following must be true by definition?

• The country must be losing international competitiveness

• The country must reduce government spending

• The country must be a net borrower from the rest of the world

• The country's currency must depreciate

In balance of payments accounting, transfer pricing by multinational corporations most directly affects:

• The capital account balance

• The current account balance

• Official reserve transactions

• The statistical discrepancy

When analyzing a country's International Investment Position (IIP), which statement best describes the valuation effects?

• They only affect direct investment positions

• They reflect changes in exchange rates and asset prices

• They are always equal to financial account flows

• They only occur for debt instruments