quiz 8 part 2

exchange rates are ______ under a pure "free float" system

determined by market forces

a country wanted to hold its currency against an important reference currency without a formal pegged rate. This is known as

dirty float

identify the currency that was convertible to gold under the Bretton woods system

dollar

the IMF does not expect governments to meet any obligations except to pay back the money it borrows

false

pegged exchange rate means that the value of a currency is

fixed relative to a reference currency

_____ exchange rates were declared as acceptable in the Jamaica agreement of the IMF

floating

the world's four major trading currencies, the Japanese yen, the U.S dollar, the British pound and the European union's euro, are all free to float against each other. what is this an example of?

floating exchange rate regime

which of the following is an exchange rate policy where the exchange rate is determined completely by market forces?

free float

the rise in the value of the dollar between 1985 and 1988

made imports relatively cheap

Under a _____ exchange rate regime, a country will attach the value of its currency to that of a major currency.

managed-float

the world bank was established at the Bretton woods conference to

promote general economic development

a country is said to be in balance of trade equilibrium when

the income its residents earn from exports is equal to the money its residents pay to other countries for imports

world bank offers low-interest loans to risky customers who's credit rating is often poor

true

and effective business strategy to reduce economic exposure is to contract out high value added manufacturing

false

gold standard called for fixed exchange rate against the US dollar

false

implementing a fixed exchange rate regiment increases the price inflation in countries

false

market forces have produced a stable dollar exchange rate under a floating exchange rate regime

false

a country that introduces a currency board commits itself to converting its domestic currency on demand into another currency at a fixed exchange rate

true

after the agreement reached at Bretton wood, the dollar was the only currency that could be convertible into gold.

true

the agreement reached at Bretton woods established the international monetary fund and the world bank

true

the currency system of foreign exchange is a mixed system of government intervention and speculative activity.

true

the international monetary systems refers to the institutional arrangements that govern exchange rates

true