121.In the context of the 1997 Asian crisis, how did the International Monetary Fund's “one-size-fits-all” approach to macroeconomic policy affect South Korea?
A. It led to a decrease in the interest rates of short-term loans.
B. It made it difficult for companies to service their excessive short-term debt obligations.
C. It decreased the probability of widespread corporate defaults.
D. South Korea failed to recover from its financial crises.
E. South Korea was forced to increase restrictions on foreign direct investment.
122._____ arises when people behave recklessly because they know they will be saved if things go wrong.
A. Systemic risk
B. Moral hazard
C. Ethical dilemma
D. Tragedy of the commons
E. Risk compensation
123.Jade, a working professional, began driving rashly ever since she got her car insured against damage. She believed that the insurance claim would cover her in case of any accidents. Jade’s behavior is due to a situation known as _____.
A. cognitive dissonance
B. conflict of interest
C. systemic risk
D. moral hazard
E. tragedy of the commons
124.The International Monetary Fund been criticized for:
A. its lack of “one-size-fits-all” approach to macroeconomic policy.
B. encouraging moral hazard among banks.
C. its lack of power and authority.
D. using external experts to gain knowledge about a country.
E. keeping its operations open to outside scrutiny.
125.According to the critics of the International Monetary Fund (IMF), how should the problem of moral hazard exhibited by banks be resolved?
A. The IMF should use a “one-size-fits-all” approach to macroeconomic policy.
B. The IMF should establish a mechanism for accountability.
C. The IMF should free all banks from the obligation of financial reporting.
D. The banks should be forced to pay the price for their rash lending policies.
E. The IMF should bail out the banks whose loans gave rise to financial crises.
126.According to the noted economist Jeffrey Sachs, the International Monetary Fund should:
A. not be accountable to anyone as it is a powerful institution.
B. bail out the banks that have rash lending policies.
C. have a “one-size-fits-all” approach to macroeconomic policy.
D. keep its operations open to greater outside scrutiny.
E. lend only to countries with safe credit ratings.
127.The International Monetary Fund programs have been counterproductive, or only had limited success in _____.
A. Turkey
B. Iceland
C. Greece
D. Ireland
E. Latvia
128.In response to the global financial crisis of 2008–2009, the International Monetary Fund began to:
A. exercise tight controls on fiscal policy of the borrowing countries.
B. encourage activities that resulted in high inflation rates.
C. display inflexibility in policy responses.
D. urge countries to adopt policies that included fiscal stimulus and monetary easing.
E. adopt a “one-size-fits-all” approach to macroeconomic policy.
129.Which of the following observations about the International Monetary Fund (IMF) is true?
A. The IMF can force countries to adopt the policies required to correct economic mismanagement.
B. Internal political problems can affect a government's commitment to taking corrective action in return for an IMF loan.
C. In recent years, the IMF has begun to make its policies more tight and inflexible.
D. In response to the global financial crisis of 2008–2009, the IMF began to adopt a “one-size-fits-all” approach to macroeconomic policy.
E. In recent years, the IMF has begun to urge countries to oppose fiscal stimulus and monetary easing.
130.Which of the following poses a problem for international businesses in the long run?
A. Using exchange rate instruments like the forward market and swaps
B. Volatility of global exchange rate regime
C. Anti-inflationary monetary policies
D. Maintaining strategic flexibility by dispersing production to different locations
E. A policy of reduction in government spending
