Question

List 1 1. Asset bubble 2. Currency crisis 3. Open capital markets 4. Sovereign debt 5. Sudden stop 6. Banking crisis 7. Credit boom 8. Private external debt 9. Trade deficit 10. Overvalued currency 11. Herd behavior List 2. Find the item in list 1 that is most closely associated with the following items a. Residents of a country are free to buy foreign assets and foreigners are free to lend to domestic residents b. The tendency of investors to take cues from what other investors are doing C. A significant and rapid decline in the value of a country's currency d. A significant number of bank defaults e. A sudden and significant rise in credit fueled by the Central Bank's purchase of government securities f. The inflow of foreign credit quickly comes to an end g. A country with a fixed exchange rate has a large trade deficit h. A country's government issues bonds back by the full faith and credit of that government i. An excess of the value of imports over the value of exports j. A real estate boom followed by a collapse in housing prices k. The debt of domestic businesses denominated in foreign currency

Answer 1

a. It is associated with Open Capital Market.

b. It is associated with Herd Behaviour.

c. It is associated with Currency Crisis.

d. It is associated with Banking Crisis.

e. It is associated with Credit Boom.

f.   It is associated with Sudden Stop.

g. It is associated with Overvalued Currency.

h. It is associated with Sovereign Debt .

i. It is associated with Trade Deficit.

j. It is associated with Asset Bubble.

k. It is associated with Private External Debt.