Chapter 17: International Banking: Reserves, Debt, and Risk
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Sample Questions
Q1) Why do countries hold international reserves?
Q2) Which organization is largely intended to make long-term reconstruction loans to developing nations?
A) Export-Import Bank
B) World Bank
C) International Monetary Fund
D) United Nations
Q3) Refer to Figure 17.1. If the exchange rate was allowed to rise to $4 per pound, U.S. monetary authorities would have to supply 6 million pounds to the foreign exchange market in exchange for dollars to maintain this rate.
A)True
B)False
Q4) When exchange rates are fixed by central bankers, international reserves are necessary for financing payments imbalances and the stabilization of exchange rates.
A)True
B)False
Q5) Are international reserve needs different for different exchange rate regimes?
Q6) Describe the eurocurrency market.
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