BUS 280 Final (11-20)
Under the gold standard, what happens to Japan when they have a trade surplus?
Net flow of gold from US to Japan
A pegged exchange rate means the value of a currency is flexible against a set of currencies.
false
Advocates say that fixed exchange rates can help a country deal with economic crises.
false
Minimal government deficits are an underlying cause of a foreign debt crisis.
false
Under the Jamaica agreement, floating rates were declared unacceptable.
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
The Bretton Woods Agreement implemented a system of
fixed exchange rates
Increasingly, the International Monetary Fund (IMF) has been acting as the macroeconomic police of the world economy by
insisting that countries seeking significant borrowings adopt IMF-mandated macroeconomic policies.
A managed float is the exchange rate policy where the government
intervenes in the exchange rate system only in a limited way.
A banking crisis refers to
loss of confidence in the banking system
International Monetary Fund was created at the Bretton Woods conference to
maintain order in the international monetary system
The idea that each country should be allowed to choose its own inflation rate is called the
monetary autonomy
Nicaragua bases the valuation of its currency on the U.S. dollar. The value of Nicaragua's currency is changed based on the changes in the value of the dollar. This is an example of a
pegged exchange rate system
occurs when a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of the currency or forces authorities to expend large volumes of international currency reserves and sharply increase interest rates to defend the prevailing exchange rate.
A currency crisis
pegged exchange rate
Value of the currency is fixed relative to a reference currency, such as the US dollar, and then the exchange rate between that currency and other currencies is determined by the reference currency exchange rate.
If a country increases its money supply rapidly under a fixed exchange rate regime, then
the country will face high levels of price inflation.
A currency board can issue additional domestic notes and coins only when there are foreign exchange reserves to back it.
true
Speculative buying and selling of currencies can create volatile movements in exchange rates under the present foreign exchange system.
true
The Bretton Woods agreement called for a system of fixed exchange rates that would be policed by the International Monetary Fund.
true
Which of the following elements does NOT support the argument for floating exchange rates?
uncertainty
