The External Debt And Financial Crises(Economics ) Questions and Answers

Question 1. The Baker plan (1985) stressed _______ and the Brady Plan (1989) emphasized _______ respectively?
  1.    IMF decentralization; World Bank dissolution
  2.    new loans from multilateral agencies and surplus countries; debt reduction or write-downs
  3.    structural adjustment loans for LDCs experiencing unanticipated external shocks; renewed emphases on macroeconomic stabilization programs
  4.    debt relief for at leas three-fourths of the eligible HIPCs; shorter requirements for adjustment programs
Explanation:-
Answer: Option B. -> new loans from multilateral agencies and surplus countries; debt reduction or write-downs
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 2. Which of the following is will NOT reduce capital flight from source countries ?
  1.    dependable positive real interest rates
  2.    higher taxes on capital gains
  3.    more efficient state enterprises
  4.    market liberalization
Explanation:-
Answer: Option B. -> higher taxes on capital gains
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 3. The debt-service ratio is the______________?
  1.    long-term debt divided by GDP of a country in a given year
  2.    interest and principle payments divided by exports of goods and services
  3.    ratio of debt net of portfolio investment financing and foreign direct investment
  4.    default and reschedule debt minus annual export revenues that must be devoted to paying interest
Explanation:-
Answer: Option B. -> interest and principle payments divided by exports of goods and services
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 4. Which of the following country was not a major LDC debtor in 2001 ?
  1.    Brazil
  2.    Argentina
  3.    Thailand
  4.    Malaysia
Explanation:-
Answer: Option D. -> Malaysia
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 5. Shortly after 1979 World Bank introduced loans that emphasized reforms in trade, agriculture industry public enterprise financial energy education or other sectors and were known as ?
  1.    Structural adjustment loans
  2.    sectoral adjustment loans
  3.    internal adjustment loans
  4.    external leverage loans
Explanation:-
Answer: Option B. -> sectoral adjustment loans
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 6. Which of the following statement is Not true ?
  1.    The ratio of debt service to GNP is very good indicator of the debt burden
  2.    Many large LDC debtors borrowed heavily because of their excellent international credit ratings
  3.    Middle income countries account for almost four-fifths of the total outstanding debt of all LDCs
  4.    The debt-burden of sub Saharan African countries may be as heavy as for middle income countries
Explanation:-
Answer: Option A. -> The ratio of debt service to GNP is very good indicator of the debt burden
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 7. Initial conditions in the year before the crisis in Thailand Indonesia Malaysia the Philippines and Korea in 1997 indicate that ?
i. capital inflows/GDP were very low
ii. Nonperforming bank loan ratios were high
iii. current account deficits were high
iv. credit growth was fast
  1.    I and IV only
  2.    II and III only
  3.    I, II and III only
  4.    II, III and IV only
Explanation:-
Answer: Option D. -> II, III and IV only
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 8. In 1990, during the Persian Gulf War, the U.S government extended generous terms to two middle-income countries by canceling or reducing their debt The two countries were ?
  1.    Iraq and Iran
  2.    Egypt and Poland
  3.    Pakistan and Afghanistan
  4.    Saudi Arabia and Jordan
Explanation:-
Answer: Option B. -> Egypt and Poland
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 9. Which of the following is Not true about external debt ?
  1.    External debt accumulates with international balance on goods services and income deficcits
  2.    When debts are denominated in U.S dollars their appreciation during the 1990s increased the cost of servicing such debts
  3.    In the 19901s LDCs relied increasingly on aid from DCs
  4.    International lenders required LDC governments to guarantee private debt
Explanation:-
Answer: Option C. -> In the 19901s LDCs relied increasingly on aid from DCs
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 10. Highly-indebted poor countries (HIPCs) include________________?
I- Bolivia
II- Benin
III- Uganda
IV- Tanzania
  1.    I and II only
  2.    I, II , III only
  3.    I, III and IV only
  4.    I, II , III and IV
Explanation:-
Answer: Option D. -> I, II , III and IV
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
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