Exam 15: Exchange Rate Systems and Currency Crises

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

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

If the Japanese yen depreciates against other currencies in the exchange markets,this will:

Under the Bretton Woods System of 1944-1973,member countries could re-peg their currencies up to _____,without permission of the International Monetary Fund

Given a two-country world,suppose Japan devalues the yen by 20 percent and South Korea devalues the won by 15 percent.This results in:

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.

Under a floating exchange rate system,an increase in U.S.imports of Japanese goods will cause the demand schedule for Japanese yen to:

Which exchange-rate mechanism calls for frequent redefining of the par value by small amounts to remove a payments disequilibrium?

Since 1974,the major industrial countries have operated under a system of fixed exchange rates based on the gold standard.

Under a system of fixed exchange rates,if the exchange rate of a country is undervalued,then its central bank's effort to prevent the currency from ______ will lead to a (an) ______.

Small nations (e.g.,Tanzania) with more than one major trading partner tend to peg the value of their currencies to:

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

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.

Proponents of freely floating exchange rates maintain that:

Countries such as Bolivia and Costa Rica have adopted crawling pegged exchange rates.Under this system,a country

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

To defend a pegged exchange rate that overvalues its currency,a country could:

The exchange-rate system that best characterizes the present international monetary arrangement used by industrialized countries is:

Seigniorage refers to

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