Deck 15: Debt and Development

Question 1

Loans to poor developing country governments from which of the following have often resulted in default and political intervention?

A) Rich country governments
B) Multilateral development banks
C) Developing country private banks
D) Developed country private banks
E) The International Monetary Fund

Answer 1

D

Question 2

Under which ruler had the practice of lending become common practice?

A) Hammurabi of Babylon
B) Alexander the Great of Macedonia
C) Queen Nefertiti of Egypt
D) Genghis Khan of Mongolia
E) Humayun of India

Answer 2

A

Question 3

Why are the Medicis an object lesson for contemporary bankers?

A) Through early globalization, they realized the benefit of diversified risk.
B) By entering into politics, they put their financial empire at risk.
C) By recognizing the movement towards sovereign states, they were able to create sovereign wealth.
D) By providing dangerous loans to princes, they were put at risk when they defaulted.
E) They experienced the first known sub-prime mortgage housing crisis.

Answer 3

D

Question 4

International lending is said to go through which two phases?

A) Inflation and stagnation
B) Real growth and bubbles
C) High and low
D) Growth and decline
E) Stability and mania

Question 5

Which of the following is NOT a major change in global politics and economics associated with the end of the Second World War (some of which had roots in earlier decades)?

A) Decolonization
B) The Depression
C) International industrialization
D) The rise of major corporations
E) The advent of nuclear weapons

Question 6

The mania in the 1970s that led to a sharp increase in low-interest loans, followed by a peak in interest rates led to which of the following?

A) An economic boom
B) The debt crisis
C) New banking regulations
D) A surge in communism
E) A boost for the newly-emerging technology industry

Question 7

How are nuclear weapons linked to global economics?

A) The ability to have a nuclear program was an indication of economic status.
B) The US nuclear umbrella is used as a means of tied aid and economic advantage.
C) Nuclear weapons are a good example of dual use technology.
D) They are the extension of power in global institutions.
E) As nuclear weapons made conflict untenable, economics became a means of subjugation.

Question 8

What was the earliest post-war example of what would later be called structural adjustment programs?

A) Forcing the French to denationalize their key industries
B) Conditional loans made to the Soviet Union
C) Making the British Pound convertible to the dollar
D) Canadian integration with the American economy
E) The formation of the European Coal and Steel Community

Question 9

What was the "Heavily Indebted Poor Countries Initiative" designed to do?

A) Cancel unconditionally some of the debts of the poorest countries
B) Cancel some of the debts of the poorest countries if they implemented structural adjustment programs
C) Encourage debt repayment by drastically reducing interest rates on loans to extremely poor countries
D) Provide economic relief to the poorest countries
E) Draw attention to unjust lending practices

Question 10

Who took out the majority of loans in the 1970s?

A) Governments in the Global South
B) Governments in the Global North
C) International Financial Institutions
D) Private companies and banks in the Global South
E) Private companies and banks in the Global North

Question 11

What was the impact of quantitative easing?

A) Europe and the US created new money electronically
B) There was too much money for banks to use
C) It triggered a new lending mania to developing countries
D) All of the above
E) None of the above

Question 12

The financial crisis of the 1970s led to the introduction of which new economic model?

A) Socialism
B) Neocolonialism
C) Conservatism
D) Neoliberalism
E) Capitalism

Question 13

Neoliberalism is linked to which political philosophies?

A) Left-wing libertarian
B) Right-wing libertarian
C) Left-wing capitalist
D) Right-wing capitalist
E) Focused on the "core" versus the "periphery"

Question 14

What was an effect of neoliberalism in the 1980s?

A) Implementation of trade barriers
B) Rapid industrialization
C) Increasing inequality
D) Decreased lending and borrowing
E) Increased debt repayment

Question 15

The sharp increase in foreign holdings of US dollars at the start of the twenty-first century was caused by which of the following?

A) Financial crisis in East Asia
B) War in Iraq
C) American financial crisis
D) Both A and B
E) All of the above

Question 16

Traditionally, how have most countries developed?

A) By liberalizing their markets
B) By protecting their domestic industries
C) By protecting their currencies
D) By implementing comparative advantage policies
E) By implementing commodity control schemes

Question 17

Who introduced the concept of odious debt?

A) Anthony Sampson
B) Charles Kindleberger
C) Alexander Sack
D) John Perkins
E) Harry Truman

Question 18

Lending rules are now often inspired by which of the following?

A) International laws
B) Personal loan regulations
C) The international banking regulations
D) Consumer protection regulations
E) Domestic lending regulations

Question 19

Illegitimate debt reflects which of the following?

A) Ongoing economic instability
B) Misconduct by the borrower
C) Overly inflated interest rates
D) Lender-borrower disconnect
E) Loans improperly made by the lender

Question 20

Which of the following is true about the Jubilee 2000 campaign?

A) It made the issue of debt cancellation easier to understand.
B) It organized local debt campaigns.
C) It received a great deal of support.
D) All of the above
E) None of the above

Question 21

What caused the 2008 financial crisis?

A) Excessive market regulations
B) Trading in illegitimate debt
C) Failure to transition from infant industry protection
D) Incomes rising faster than house prices
E) Declining availability of natural resources

Question 22

Which of the following is true about US investment bank loans to Greece?

A) They violated European Union rules.
B) There were a global-level form of loan pushing and subprime lending.
C) They undermined the Euro.
D) All of the above
E) None of the above

Question 23

What is capitalism essentially based on?

A) Democracy
B) Democratic access to debt
C) Loans for productive investment
D) Solidarity
E) Babylonian banking systems

Question 24

Where did banking originate?

A) In China
B) In the Netherlands
C) Among nomads from Asia
D) In Babylonia
E) In South Africa

Question 25

What did bankruptcy laws replace in the nineteenth century?

A) Slavery as payment
B) The failure of payments due to weather conditions
C) the Hammurabi Code
D) Prison for debt
E) Risks of rich people who lend money

Question 26

How did bankruptcy laws change in the twentieth century?

A) They included home loss as an option
B) They became more liberal
C) They reinstituted prison for debt
D) They augmented the creditors' risk levels
E) They encouraged people to take higher risks

Question 27

What are interest payments?

A) The difference between deposits and loans
B) A percentage of the crops proportional to the loan each year
C) A percentage of the loan each year after it has been cancelled
D) A percentage of the outstanding loan each year
E) Excessive usury

Question 28

What is usury?

A) Excessive interest rates
B) Interest rates
C) Prison
D) A debtor working for a creditor
E) the principal loans

Question 29

What does the Qur'an say about lending?

A) It prohibits lending without interest but allows investing
B) It prohibits investing but allows lending at interest
C) It prohibits lending at interest but allows investing
D) It prohibits lending at interest and investing
E) It allows lending at interest and investing

Question 30

Why did some European countries invade Mexico the nineteenth century?

A) Because they did not want to pay Mexico for their debts
B) Because Ferdinand Maximilian became an Emperor
C) Mexico defaulted
D) Mexico annexed Central America
E) They were in war against each other

Question 31

The "principal" is the total amount of money borrowed that must be repaid.

Question 32

In the mid-1970s some poor countries had to repay less than they had borrowed.

Question 33

Credit-based banking first developed in the Mediterranean through the Italian city states such as Florence.

Question 34

Banks make higher-risk foreign loans during what Kindleberger's refers to as "the period of mania."

Question 35

The Cold War led to extensive lending to prop up and tie client dictators to Western powers.

Question 36

In the 1920s, American bankers where more like high pressure salesmen than traditional aloof bankers.

Question 37

Real interest rates peaked in 1976.

Question 38

Zaire under Mobutu was considered a kleptocracy.

Question 39

Debt cancellation has led to dramatic decrease in developing country debt.

Question 40

From the 1930s to the 1970s, development was primarily state-led in both capitalist and socialist countries.

Question 41

In the 1930s, borrowers underwent SAPs but without it being identified as such.

Question 42

Neoliberal policy strongly favours privatization.

Question 43

According to the OECD in 2015, the gap between rich and poor continues continued to widen.

Question 44

The Bretton Woods institutions are generally supportive of debt forgiveness.

Question 45

Foreign holdings of US dollars sharply decreased in the first few years of the twenty-first century.

Question 46

Traditionally, countries have developed by opening up their markets.

Question 47

According to Cheryl Payer, foreign loans commonly lead to successful development.

Question 48

The debt trap is when the borrower sinks deeper into debt in order to survive.

Question 49

Debt incurred by the Philippines for the building of the Bataan nuclear power station was forgiven on the grounds that the loan had been illegitimate.

Question 50

Odious debt refers to debt that is accumulated in the interest of a regime rather than a nation.

Question 51

House prices rising faster than incomes was unique to the US housing market.

Question 52

In 2015, the Greek parliament declared that its debt was reasonable and repayable.

Question 53

Sub-prime mortgages in the US were a form of illegitimate debt.

Question 54

Foreign governments lend loans to developing countries because many of these loans are profitable for both parties and are repaid.

Question 55

Growth is never linked to a rapid expansion of bank credit.

Question 56

Loan pushing is when banks and lending agencies desperately borrow money that they can pay back easily.

Question 57

In a growth period, lending can be profitable and promote productive investment.

Question 58

In the late 19th and early 20th centuries, loans were exclusively in the form of bonds.

Question 59

During World War I, the United States government became a substantial lender to the countries fighting against Germany.

Question 60

Since the US borrowed money from Britain in 1945, the United States required Britain to move quickly to free trade and to make the pound convertible to the dollar.

Question 61

The decade of the 1970s saw a sharp increase in loan pushing due to a surplus of capital.

Question 62

Over the decade, developing-country debt decreased sevenfold, to $494 billion in 1980.

Question 63

In 1982, Mexico could not pay the interest on its $60-billion debt and defaulted, ending a long period of a massive debt crisis.

Question 64

A "net transfer on debt" is new loans plus interest payments and principal repayments on old debts.

Question 65

Name the two major issues that are relevant to all discussions of lending and borrowing.

Question 66

Explain Kindleberger's theory of economic cycles and international lending.

Question 67

Explain loan pushing and its relationship to economic crisis.

Question 68

Outline the four ways the global economy and politics changed after World War II.

Question 69

Name some of the factors that led to the 1980s debt crisis.

Question 70

Briefly describe the importance of the Heavily Indebted Poor Countries Initiative.

Question 71

Describe the difference for international borrowers in the 1930s and those in the 1980s.

Question 72

Briefly explain the sharp increase in foreign holdings of US bonds in the early years of the twenty-first century.

Question 73

Explain some of the reasons foreign borrowing rarely facilitates development.

Question 74

Define "odious debt" and provide an example.

Question 75

How is consumer protection related to illegitimate debt?

Question 76

How has Norway operationalized the concept of odious debt?

Question 77

How can it be argued that much of the debt incurred by Zaire under Mobutu was illegitimate?

Question 78

How did international lenders respond to Greece during the 2008 financial crisis?

Question 79

What was the Jubilee Campaign?

Question 80

How is irresponsible lending related to the 2008 financial crisis in the US?