Chapter 2: World Trade and the International Monetary System

True/False

1. Markets
are integrated when an asset sells for the same price wherever it is traded.

2. The world’s financial markets are becoming
increasingly segmented as large international commercial banks achieve more and
more economic power.

3. Prices in the world’s financial markets are
becoming increasingly segmented as local political forces work to dismantle
many of the world’s largest countries, such as those of the former Soviet Union.

4. The
international monetary system refers to the global network of governmental and
commercial institutions within which currency exchange rates are determined.

5. The International Monetary Fund’s principal
mission is to provide funds for economic development in developing economies.

6. The Basel Accord established the
International Monetary Fund and the World Bank.

7. The “financial account” of the IMF’s Balance-of-Payments
Statistics measures the total financial wealth of citizens in each
reporting country.

8. The “trade balance”of the IMF’s Balance-of-Payments Statisticsis the net balance (exports minus imports) on
merchandise trade.

9. The “trade balance”of the IMF’s Balance-of-Payments Statisticsmeasures gross exports of goods and services.

.

10. In a fixed exchange rate system, governments
stand ready to buy and sell currency at official exchange rates.