INTB3353 review2 - INTB 3353 FINAL REVIEW QUIZZES CHAPTERS...

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INTB 3353 FINAL REVIEW QUIZZES CHAPTERS 11 AND 12 QUIZ QUESTIONS AND CORRECT ANSWERS 1. When the Federal Reserve does an open market operation to increase the U.S. money supply, it buys bonds from individuals and financial institutions . 2. The global economic crisis that started in 2007 had its origins in the development of global imbalances after 2000 between high-saving countries and high-consumption countries. 3. Crises due to volatile capital flows are: Made more likely when a nation’s financial sector is weak Represented by the Asian financial crisis in 1997 Made more likely by technological advances that allow rapid capital flows 4. An increase in government spending is an example of expansionary fiscal policy. 5. Assume Japan begins with its economy running on full employment. If the Japanese government increases government expenditures the AS/AD model shows that in the short run, the AD curve will shift out, causing an increase in Japanese output and in the Japanese price level. 6. If foreign inflation is higher than domestic inflation, the real exchange rate will remain constant if the nominal exchange rate of the domestic country appreciates against the foreign country currency. 7. The Basel Accord and Basel II endeavor to improve banking practices by recommending best practices for Capital requirements Supervisory review Information disclosure 8. Argentina experienced a serious recession beginning in 1999. The following are true
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