Economics and Finance Flashcards
7 cards from real CFPT practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Economics and Finance flashcards as text
Which international institution serves as the 'lender of last resort' for countries facing balance-of-payments crises?
Answer: International Monetary Fund
The IMF provides emergency financing to member countries experiencing severe balance-of-payments difficulties, functioning as a global lender of last resort.
When a country's currency depreciates sharply, what is the typical immediate effect on its export competitiveness?
Answer: Exports become more competitive because they are cheaper in foreign currency terms
A depreciated currency makes a country's goods cheaper for foreign buyers, boosting export competitiveness in the short run.
What does the term 'current account deficit' indicate about a country's economy?
Answer: The country is importing more goods, services, and transfers than it is exporting
A current account deficit means the value of a country's imports of goods, services, and transfer payments exceeds its exports.
For consular officers, understanding remittances is important because they represent:
Answer: Money transfers sent by migrants to family members in their home countries
Remittances are cross-border money transfers sent by migrants to relatives back home, often constituting a major share of developing countries' GDP.
What is 'purchasing power parity' (PPP) used to compare?
Answer: The relative value of currencies based on what they can buy domestically
PPP compares currencies by measuring what an equivalent basket of goods costs in each country, giving a more accurate picture of living standards than nominal exchange rates.
Economic sanctions imposed by the U.S. government are primarily administered by which agency?
Answer: Treasury Department's Office of Foreign Assets Control
OFAC (Office of Foreign Assets Control) administers and enforces U.S. economic and trade sanctions based on foreign policy and national security goals.
In international finance, what does 'dollarization' refer to?
Answer: A country adopting the U.S. dollar as its official or primary currency
Dollarization occurs when a country officially replaces its domestic currency with the U.S. dollar, as Ecuador and El Salvador have done.