Question Details

The International Development Association was established 



1. If the home currency begins to appreciate against other currencies, this should 
____________ the current account balance, other things equal (assume that substitutes are 
readily available in the countries, and that the prices charged by firms remain the same).
A) increase 
B) have no impact on 
C) reduce 
D) all of the above are equally possible

2. The International Financial Corporation was established to: 
A) enhance development solely in Asia through grants. 
B) enhance economic development through non-subsidized loans (at market rates). 
C) enhance economic development through low-interest rate loans (below-market rates). 
D) enhance economic development of the private sector through investment in stock of 
corporations.

3. The World Bank was established to: 
A) enhance development solely in Asia through grants. 
B) enhance economic development through non-subsidized loans (at market interest 
rates). 
C) enhance economic development through low-interest rate loans (below-market rates). 
D) enhance economic development of the private sector through investment in stock of 
corporations.

4. The International Development Association was established to: 
A) enhance development solely in Asia through grants. 
B) enhance economic development through non-subsidized loans (at market interest 
rates). 
C) enhance economic development through low-interest rate loans (below-market rates). 
D) enhance economic development of the private sector through investment in stock of 
corporations.

5. The "J curve" effect describes: 
A) the continuous long-term inverse relationship between a country's current account 
balance and the country's growth in gross national product. 
B) the short-run tendency for a country's balance of trade to deteriorate even while its 
currency is depreciating. 
C) the tendency for exporters to initially reduce the price of goods when their own 
currency appreciates. 
D) the reaction of a country's currency to initially depreciate after the country's inflation rate declines.




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