The G20 and the Global Monetary and Financial Systems Video. Chapter 10
In 1944, 44 countries negotiated and signed the ________, which helped launch a new international monetary system. A. Bretton Woods Agreement B. Special Drawing Right C. Smithsonian Agreement D. Law of One Price E. Plaza Accord
A. Bretton Woods Agreement. In 1944, representatives from 44 nations met in the New Hampshire resort town of Bretton Woods to lay the foundation for a new international monetary system. The resulting Bretton Woods Agreement was an accord among nations to create a new international monetary system based on the value of the U.S. dollar. The new system was designed to balance the strict discipline of the gold standard with the flexibility that countries needed in order to deal with temporary domestic monetary difficulties.
The ________ is a group of finance ministers and central bank governors that meets to coordinate the policies of the monetary system and discuss issues related to foreign affairs, justice, energy, and terrorism. A. G20 B. IMF C. EU D. GDP E. ERM
A. G20 Formed in 1999, the G20 consists of 19 of the largest economies plus the European Union. Leaders realized that meetings were needed to discuss global issues, focus on the needs of emerging economies, and coordinate economic policies.
Most currencies use a ________, according to supply and demand. A. managed float system B. pegged exchange rate agreement C. free float system D. gold standard E. currency board
C. free float system A free float system is a system in which currencies float freely against one another without governments intervening in currency markets. Today's international monetary system remains in large part a managed float system, whereby most nations' currencies float against one another and governments engage in limited intervention to realign exchange rates.
Developed countries manage their currencies through a(n) ________ system whereas developing countries manage their currencies through a ________ system. A. changing; static B. gold standard; special drawing right C. international monetary; national monetary D. floating exchange; fixed rate exchange E. variable; consistent
D. floating exchange; fixed rate exchange In a managed float system exchange-rate system, currencies float against one another, with governments intervening to stabilize their currencies at particular target exchange rates.
The ________ is a collection of agreements and institutions that governs exchange rates. A. free float system B. gold standard C. Bretton Woods Agreement D. international monetary system E. inefficient market view
D. international monetary system Predictable and stable exchange rates are beneficial; however, inflation and interest rates affect currency values and, in turn, exchange rates. For these and other reasons, governments have created formal and informal agreements to control exchange rates
