Exam 14: Exchange Rate Adjustments and the Balance of Payments

Hong Kong provides an example of a country that has maintained a currency board.The purpose of its currency board is to

Other things equal, the central bank of the United Kingdom could prevent the pound from appreciating by

Which of the following is an example of currency manipulation that would likely move Japan's trade balance to a trade surplus?

In recent years, the United States has accused China of manipulating the yuan so as to gain an unfair competitive advantage in global trade.The United States has argued that the central bank of China has sold yuan and bought dollars, thus depreciating the yuan against the dollar

What is an SDR?

The Bretton Woods system of 1944-1973 was a flexible exchange rate system in which member countries allowed their currencies to float within wide bands.

The exchange rate system established by the Bretton Woods Agreement of 1944-1973 was an adjustable pegged system.

Figure 15.1 shows the market for the Swiss franc. In the figure, the initial demand for marks and supply of marks are depicted by D0 and S0 respectively. Figure 15.1. The Market for the Swiss Franc ? -Refer to Figure 15.1.Suppose that the United States increases its imports from Switzerland, resulting in a rise in the demand for francs from D₀ to D₁.Other things equal, under a floating exchange rate system, the new equilibrium exchange rate would be

Other things equal, a surplus nation can reduce its payments imbalance by

A central bank that desires a (an) ______ of its currency would likely implement a ______ monetary policy.

For the United States, its current exchange rate system is generally considered to be a

Under the Bretton Woods system of 1944-1973

Under a floating exchange rate system, other things equal, if there occurs a fall in the dollar price of the Swiss franc

Countries tend to be less served by a fixed exchange rate system when

Today, fixed exchange rates are used primarily by small, developing countries that tie their currencies to a key currency such as the U.S.dollar.

In 2016, the U.S.Treasury department found that China met ____________of the criteria of currency manipulation.

The "impossible trinity" explains the relationship between

A "key currency" is one that is widely traded on world money markets, has demonstrated relatively stable values over time, and has widely been accepted as a means of international settlement.

An argument can be made for controls on the inflow of capital for developing countries because capital inflows can lead to a lending boom, speculation, and excessive risk taking.

Assume that interest rates in London increase relative to those in Switzerland.Other things equal, under a floating exchange rate system one would expect the pound (relative to the Swiss franc) to