The George Washington University

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THE GEORGE WASHINGTON UNIVERSITY School of Business BADM 2201 In!e"n#!ion#l $in#nci#l En%i"on&en! 'T#(e)ho&e E*#& of +#nu#", 22- 201. / 0 Weih! in !he 3l#ss G"#4e5 Ans6e"s Ans6e "s Due on o n Tues4#,Tues4#,- +#nu#", +#n u#", 272 7- 20 1.

(Please submit your answers as hard copies, not in electronic form.)  Each typewritten answer should be about one or two paragraphs per question.

1.

Please explain how the role of IMF has evolved since its beinnin in 1!"#. ($%)

&einnin in 1!"#, IMF was 'nown 'n own as a uardian of the &retton ood ood system. owever, IMF had no *ob from 1!+-$ since &retton oods oods system disappear. IMF became influential since  beinnin of 1!$ when they wor'ed as a /0 debt crisis manaer, title they had until 1!!. 2fter 1!!", IMF3s role was International financial crisis manaer. owever, with some failures in 2sia 2sia counties, they searched for a new *ob or mission from $%%-$%%. From F rom $%% to now, IMF3s role role is 4conomic 5ecretariat for 6-$% (rich countries). co untries).

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Plea Please se expl explai ain n and com compar paree the the trade trade the theor orie iess of 0av 0avid id 7ic 7icar ardo do and and ec' ec'sc sche herr-8h 8hli lin. n. ($%)

0avid 7icardo3s theory explains why oods are bein traded even when countries do not have absolute advantaes. (assumin only one homoeneous homoeneou s input 9 labor). is theory explains financial swaps (interest rate, commodity, and asset). ec'scher-8hlin assumes there are multiple inputs of labor, capital, land, etc. is theory explains how and why country c ountry will export products that utili:e abundant factors and important  products that utili:e scarce factors. hen hen the impact of difference of techonoly on productivity in controlled for, his theory ains predictive power. ;he main difference between their theories is that they attributed the rise of comparative advantae to differences in productivity and factor endowments endo wments respectively. respectively.

.

Plea Please se expla explain in and comp compar aree the the rol roles es of the the orld rld &an' &an' and and IF. IF. ($%) ($%)

4ssentially, 4ssentially, both roups  roups are in the orld orld &an' 6roup. owever, orld orld &an' (I&70 and I02) ive lon term loan to the overnment only. In contrast, IF ives out lon term loan to private sectors. urrently, IF is rowin much faster since many orani:ations that were previously owned by overnment are now becomin more privately owned.

".

hy was there a movement to create 2sian Monetary Fund in 2sia after the 2sian financial crisis< ($%)

First of all, IMF failed to help out 2sian countries durin financial crisis, mainly because they do not 'now how exactly 2sian economy wor's. IMF did not reali:e that what miht wor' in Mexico miht not wor' in 2sia. In addition, ashinton onsensus was not critical for  2sia. 5imply, 2sia countries believed that they were less represented at IMF.

#.

Please explain the followin terms. (1% points each)= (a) 2utar'y ;he complete absence of trade, also 'nown as closed economy.

(b) MI multilaterali:ation (MIM) ;he 1% members of 2542>?, plus on @on, created MIM to provide financial support throuh a networ' of bilateral currency swap arranements. It draws from a forein exchane reserves pool, total of A1$% billion. ;his was alternative to 2MF.

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