THE GLOBAL MONETARY SYSTEM
The acronym IMF stands for
International Monetary Fund
Which of the following IS TRUE regarding the WORLD BANK?
It was created together with the IMF in Bretton Woods
The Bretton Woods system of fixed exchange rates was established in 1944. The central currency of this system was the
U.S. Dollar.
Under the exchange rate system established by the Bretton Woods agreement, the value of most currencies in terms of _____ was fixed for long periods and was allowed to change only under a specific set of circumstances.
U.S. dollars
In 1998 Russia's currency, the ruble was dramatically devaluated. The following events caused this fact, EXCEPT
US$ got stronger in international markets
Which of the following influenced the end of Bretton Woods system?
a lack of confidence in the US dollar in the late 60s
The IMF's involvement in Russia in 1998 came about as the result of
a persistent decline in the value of the Russian ruble.
Under a floating exchange rate regime, market forces have produced
a volatile dollar exchange rate.
The great strength claimed for the gold standard was that it contained a powerful mechanism for simultaneously obtained ______ for all countries.
balance-of-trade equilibrium
The Bretton Woods system called for ______ exchange rates against the U.S. dollar.
fixed
By 1880, most of the world's major trading nations, including Great Britain, Germany, Japan, and the United States, had adopted the
gold standard
The major problem with the ______ was that no multinational institution could stop countries from engaging in competitive devaluations.
gold standard
The initial mission of the World Bank was to
help finance the building of Europe's economy after the World War II by providing low-interest loans.
Floating exchange rates are determined by
market forces.
As stipulated by the Bretton Woods conference, the goal of the World Bank was to
promote development.
The Bretton Woods conference created two major international institutions. These are
the International Monetary Fund and the World Bank.
In the context of the global money system, in August 1971 President Nixon made the following announcement:
the dollar was no longer convertible into gold
You are a president of the Central Bank of country 'A' (an IMF member), operating under a flexible (totally free) exchange rate system, and you see that your currency is devaluating quickly because some large investors from your country are selling your currency. What should you do?
you ask for money from the IMF to buy your own currency