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Federal Reserve Bank of Boston Economic Quiz

Don't Cry for Me, Argentina 1. In January 2002, the South American nation of Argentina plunged into economic and political crisis triggered by: A disastrous earthquake. A political coup. A debt default. A severe drought. 2. The last four presidents of Argentina were in power for a combined total of: 34 years. 16 years. 3 ½ years. Less than a year. 3. Before January, the Argentine peso was tied to the American dollar at a rate of one peso to one dollar. This arrangement is known as a 'fixed exchange rate' or a 'currency peg' and was set up in the early 1990s to give the currency creditability in a time of rampant inflation. In January, believing the peso was over-valued, President Duhalde first devalued the currency and then in February removed the peg allowing the peso to 'float,' with an exchange rate that is largely determined by the market. How did Duhalde think this change would help the nation? It would make imports cheaper. It would make exports cheaper. It would allow the Central Bank to shed reserves. It would prevent inflation. 4. Just how bad is it in Argentina? Which of the following statistics is true regarding the current economic status of Argentina? The unemployment rate is 22%. Gross domestic product in the first quarter of 2002 shrank 22% saar. Consumer confidence is down 78% from a year ago. 50% of the population lives in poverty. All of the above. Created with QuizScript

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Economic quiz written by: Mary Fitzgerald - August 26, 2002 Views expressed in the economic quiz are those of the individual author.