Exam 14: Exchange Rate Adjustments and the Balance of Payments

In recent years, members of the International Monetary Fund have adopted exchange rate systems including

By the early 1970s, gold had been phased out of the international monetary system.

The Bretton Woods system of 1944-1973 was essentially a system of

If a central bank was to prevent its currency from depreciating, it would likely adopt a (an) ______ monetary policy to ______ the domestic interest rate, thus strengthening its currency.

To offset an appreciation in the dollar's exchange value, the Federal Reserve can nudge interest rates down in the United States, which results in net investment outflows.

Because there is no exchange stabilization fund under floating exchange rates, any holdings of international reserves serve as working balances rather than to maintain a given exchange rate for any currency.

Members of the International Monetary Fund agree that

Other things equal, to temporarily offset an appreciation in the dollar's exchange value, the Federal Reserve could ____ the U.S.money supply, which would promote a (an) ____ in U.S.interest rates and a ____ in investment flows to the United States.

Other things equal, to temporarily offset a depreciation in the dollar's exchange value, the Federal Reserve could ____ the U.S.money supply, which would promote a (an) ____ in U.S.interest rates and a (an) ____ in investment flows to the United States.

Developing nations with more than one major trading partner tend to peg the value of their currencies to

Other things equal, to keep the pound's exchange value from depreciating against the Swiss franc the British exchange stabilization fund would sell pounds for Swiss francs on the foreign exchange market.

The Australian dollar is currently regarded as the key currency of the international monetary system.

The U.S.dollar is generally regarded as the major "key currency" of the international monetary system.

Under managed floating exchange rates, market forces are allowed to determine exchange rates in the short run while central bank intervention is used to stabilize exchange rates in the long run.

If Mexico dollarizes its economy, it essentially

Other things equal, a market-determined increase in the dollar price of the pound is associated with

For a developing country, a _____ can promote economic instability because it forces the country to ______.

For Ecuador, the result of adopting the dollar as its official currency is that

Other things equal, under a floating exchange rate system, if the U.S.dollar depreciates against the Swiss franc

The crawling peg is a