Exam 29: The International Monetary System: Past, Present, and Future

The "Asian crisis" of 1997-1998 importantly involved movement of short-term financial Capital __________ countries such as Thailand and Malaysia, with a consequent __________ of their currencies, which in turn caused __________ in the trade balances of other countries of the world.

In the economic and monetary union in Europe (EMU), the member countries

In a target zone system in which the money supply is to be varied in response to exchange rate variations as the exchange rate hits the ceiling or floor, if a country's exchange rate (units of home currency per unit of foreign currency) hits the ceiling, the monetary authorities would be required to __________ the money supply; this change in the money supply would be carried out in order to __________ the value of the home currency.

In the Bretton Woods international monetary system, a country's currency, unless its par Value or parity value were officially changed, could not deviate more than __________ from its par value or parity value. If the country's currency depreciated to its low point in this range, central banks needed to __________ the currency in the exchange markets in order to keep the currency's value within the specified range.

Compare and contrast the "target zone system" and the "world central bank" system for organizing exchange rates and the international monetary system. Which of the two systems would you prefer and why?

If a country's currency's external value is tied or pegged to the currency values of the country's leading trading partners, this arrangement is known as a

In order for monetary union to occur, why are "convergence criteria" desirable?

Under the original Bretton Woods agreement,

In the current international monetary system, countries

The original monetary unit in the European monetary system (EMS) in which currencies' Parity values were defined was the

Why did the Bretton Woods system break down? Do you think that that breakdown and the subsequent adoption of much greater flexibility in the value of the dollar have been "good" from the standpoint of the United States? Why or why not?

When a country joins the International Monetary Fund, the country is assigned a quota, or Subscription fee. At the present time, this quota is paid

In the Williamson "target zone" plan, the major industrialized countries would negotiate mutually consistent __________ target exchange rates, and there would be __________ deviation permitted from these target rates.

If a country ties its currency to a specific foreign currency and allows its holdings of that currency to govern the country's money supply, this arrangement is known as a

Do you think that "conditionality" on IMF loans to developing country is desirable or undesirable? Why? From what standpoint should "conditionality" be assessed - the IMF's or the developing countries'?

Suppose that, using a system of multiple exchange rates, India wishes to discourage investors from sending their funds abroad relative to employing the funds in production for export. If the exchange rate for exports were set at 33⅓ Indian rupees = $1.00, then which one of the following exchange rates for capital transactions would potentially be appropriate for implementing the strategy?

At the present time in the international monetary system,

Two of the "convergence criteria" pertaining to initial membership in the EMU were that a country's ratio of government debt to GDP must be __________ and that a country's ratio of government budget deficit to GDP must __________.

The post-Bretton Woods international monetary system is generally thought to have been characterized by all except one of the following features. Which one does NOT seem to have been a characteristic of the system?

Under the Bretton Woods system set up at the end of World War II, exchange rates were