General/
XR Analysis
XR Analysis
Under credible fixed exchange rate regimes and perfect capital mobility, which of the following must occur?
A. The central bank must use monetary policy rates to affect domestic output
B. In the absence of a risk premium, the domestic and foreign interest rates must be equal.
C. Faced with a shock, the economy must adjust rapidly
D. Inflation in the domestic country must be higher than that in the anchor economy.
B. In the absence of a risk premium, the domestic and foreign interest rates must be equal
When hit with a terms of trade shock, compared to pegs, in countries with a floating XR regime, the responses…:
a. … of real XR are larger and of GDP are smaller
b. … of real XR are smaller and of GDP are larger
c. … of both real XR and GDP are smaller
d. … of both real XR and GDP are larger
a. … of real XR are larger and of GDP are smaller
Which of the following is the work horse model in exchange rate assessment at the IMF?
a. The Current Account Approach
b. The REER approach
c. The External sustainability approach
d. None of the above
a. The Current Account Approach
What is NOT a common motive for FX interventions:
a. Smoothing the impact of commodity price fluctuations
b. Limiting excessive swings in the exchange rate
c. Building FX reserves
d. Attracting capital inflows
d. Attracting capital inflows
Which of the following is true about twin (and triple) crises:
a. They are usually accompanied by multiple weak and deteriorating economic fundamentals
b. Banking crises tend to coincide with, or precede currency crises and sovereign debt crises
c. They are far more severe than separate banking/currency/debt crises
d. All of the above
d. All of the above
WILDCARD!
Which country was the largest oil producer in 2019?
a. Saudi Arabia
b. Russia
c. USA
d. Canada
c. USA
Under relative PPP, with a domestic inflation of 5%, a foreign inflation of 2%, a nominal exchange rate depreciation of 3%, the real exchange rate:
a. Appreciates by 3%
b. Depreciates by 3%
c. Is unchanged
d. Depreciates by 6%
c. Is unchanged
For a successful adoption and maintenance of a pegged XR regime in a typical emerging economy:
a. Disciplined fiscal policy is desirable.
b. Disciplined fiscal policy is necessary.
c. Fiscal policy stance does not matter.
d. Fiscal and monetary policy decisions should support economic growth.
b. Disciplined fiscal policy is necessary.
WILDCARD!
What is the world's largest continent?
a. Asia
b. Europe
c. Africa
d. North America
a. Asia
For a typical emerging economy, maintaining FX reserves:
a. Results in a central bank profit of 0.5% of GDP
b. Has no costs
c. Costs around 0.5% of GDP
d. Costs above 2% of GDP
c. Costs around 0.5% of GDP
Besides multiple equilibria, what is a common feature of second-generation currency crises?
a. Self-fulfilling expectations
b. Bank runs
c. Sovereign default
d. Currency mismatches
a. Self-fulfilling expectations
Which indicator is better to use to identify currency crisis episodes?
a. Change in nominal exchange rate
b. Change in real exchange rate
c. Change in foreign exchange reserves
d. Change in exchange market pressure index
d. Change in exchange market pressure index
Under imperfect capital mobility:
a. Monetary policy can be used to affect prices/output
b. Monetary policy can be used to affect the exchange rate
c. Fiscal policy can be used to affect output
d. All of the above
d. All of the above
WILDCARD!
Which country held the first South East Asian Peninsular Games (SEAPG), the origin of South East Asian Games (SEAG)?
a. Cambodia
b. Lao’s
c. Thailand
d. Vietnam
c. Thailand
Which of the following is NOT true?
a. EBA is an assessment informed by model
b. EBA is an assessment informed by both model and judgement
c. EBA has a vetting process to ensure multilateral consistency
d. EBA takes into account desirable policies
a. EBA is an assessment informed by model
WILDCARD!
The Kyoto Protocol was an international treaty, which extended the 1992 United Nations Framework Convention on Climate Change (UNFCCC) that commits member countries to reduce greenhouse gas emissions. Which country has signed but never ratified the Protocol?
a. USA
b. UK
c. Germany
d. Australia
a. USA
Third generation currency crises arise because of:
a. Fiscal vulnerabilities
b. Financial sector vulnerabilities
c. High unemployment rates
d. Market manipulation
b. Financial sector vulnerabilities
Which threshold for classifying an observation as a currency crisis will likely result in more false alarms?
a. Sample mean of the exchange market pressure index + 1 standard deviation
b. Sample mean of the exchange market pressure index + 1.5 standard deviation
c. Sample mean of the exchange market pressure index + 2 standard deviation
d. Sample mean of the exchange market pressure index + 2.5 standard deviation
a. Sample mean of the exchange market pressure index + 1 standard deviation
WILDCARD!
Where is the world’s largest desert?
a. Asia
b. Africa
c. Latin America
d. Australia
e. Antarctica
e. Antarctica
Which of the following is NOT true
a. Advanced economies tend to have freely floating regimes
b. Developing economies tend to have pegged regimes
c. There are more de facto than de jure floats
d. There are more de jure than de facto floats
There are more de facto than de jure floats
Which of the following are desirable policies needed for CA balance model estimation
a. Fiscal balance and Public health expenditure
b. Credit/GDP and credit growth
c. FX intervention and capital control
d. All of the above
d. All of the above
In which of the following cases are higher FX reserves needed:
a. A fully fledged inflation targeting regime
b. Capital control measures on inflows
c. Capital control measures on outflows
d. Export structure: copper (55%), textiles (20%), processed food (15%) and miscellaneous (10%)
d. Export structure: copper (55%), textiles (20%), processed food (15%) and miscellaneous (10%)
WILDCARD!
As estimated by forbes.com in 2015 and Business Insider in 2018, who is the wealthiest royal in the world? (The estimation is based on their personal net worth, excluding properties held by the State, Government or Crown)
a. Thailand
b. Brunei
c. Saudi Arabia
d. United Arab Emirates
e. Morocco
a. Thailand
How to choose an optimal cut-off value for the crisis probability to signal a crisis?
a. Optimal cutoff probability should maximize Type 1 error + Type 2 error
b. Optimal cutoff probability should minimize Type 1 error + Type 2 error
c. Optimal cutoff probability should minimize Type 1 error
d. Optimal cutoff probability should maximize Type 2 error
b. Optimal cutoff probability should minimize Type 1 error + Type 2 error