Chap002 20 - D all of the above 84 The Asian Currency...

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82. Prior to the peso crisis, Mexico depended on foreign portfolio capital to finance its economic development. This foreign capital influx A. caused higher domestic inflation. B. led to an over valued peso. C. helped Mexico's trade balances. D. a) and b) are correct 83. The Mexican peso crisis is significant in that A. it is perhaps the first serious international financial crisis touched off by cross-border flight of portfolio capital. B. selling by international portfolio managers had a highly destabilizing, contagious effect on the world financial system. C. it provides a cautionary tale that as the world's financial markets are becoming more integrated, this type of contagious financial crisis is likely to occur more often.
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Unformatted text preview: D. all of the above. 84. The Asian Currency Crisis A. happened just prior to the Mexican peso crisis. B. turned out to be far more serious than the Mexican peso crisis in terms of the extent of contagion. C. was limited to Asian currencies. D. was almost over before anyone outside the pacific rim noticed. 85. Generally speaking, liberalization of financial markets when combined with a weak, underdeveloped domestic financial system tends to A. strengthen the domestic financial system in the short run. B. create an environment susceptible to currency and financial crises. C. raise interest rates and lead to domestic recession. D. none of the above...
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This note was uploaded on 11/09/2011 for the course FIN IFMG201 taught by Professor Eun during the Spring '11 term at Michigan Flint.

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