Exam 15: Exchange Rate Systems and Currency Crises

Under a system of fixed exchange rates,the purpose of currency revaluation is to cause the exchange value of a currency to ______,thus counteracting a balance-of-payments ______.

Sources of currency crisis for emerging countries have included all of the following except

An argument can be made for controls on the outflow of capital for developing countries because capital outflows forces a country to revalue its currency.

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.

A primary objective of dual exchange rates is to allow a country the ability to insulate its balance of payments from net:

Under managed floating exchange rates,if the rate of inflation in the United States is less than the rate of inflation of its trading partners,the dollar will likely:

Under a floating exchange-rate system,which of the following best leads to a depreciation in the value of the Canadian dollar?

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.

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 the demand for francs increases from D0 to D1.Under a fixed exchange rate system,the U.S.exchange stabilization fund could maintain a fixed exchange rate of $0.50 per franc by:

The Bretton Woods Agreement of 1944 established a monetary system based on:

Exchange rate controls

Under a floating exchange-rate system,if American exports decrease and American imports rise,the value of the dollar will:

The crawling peg is a

Figure 15.2 Market for the British Pound -Refer to Figure 15.2.Suppose the demand for pounds increases from D0 to D1.Under a fixed exchange rate system,the U.S.exchange stabilization fund could maintain a fixed exchange rate of $0.80 per pound by:

Today,special drawing rights (SDRs) represent the most important currency basket against which developing countries maintain pegged exchange rates.

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

Suppose Sweden's inflation rate is less than that of its trading partner.Under a floating exchange rate system,Sweden would experience a:

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.Under a floating exchange rate system,the new equilibrium exchange rate would be:

Assume that interest rates in London rise relative to those in Switzerland.Under a floating exchange-rate system,one would expect the pound (relative to the franc) to:

Under managed floating exchange rates,a central bank would initiate: