Exam 15: Exchange-rate Systems and Currency Crises

To help insulate their economies from inflation,currency depreciation,and capital flight,developing countries have implemented:

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,central bank intervention is used to offset temporary fluctuations in exchange rates that contribute to uncertainty in carrying out transactions in international trade and finance.

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

Small nations (e.g.,the Ivory Coast)whose trade and financial relationships are mainly with a single partner tend to utilize:

Suppose that Japan maintains a pegged exchange rate that overvalues the yen.This would likely result in:

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

If Uganda devalues its shilling by 10 percent and Burundi devalues its franc by 5 percent,the shilling's exchange value appreciates 10 percent against the franc.

What is an SDR?

The crawling peg is a

In 1973,the reform of the international monetary system resulted in the change from:

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:

Given an initial equilibrium in the money market and foreign exchange market,suppose the Federal Reserve decreases the money supply of the United States.Under a floating exchange rate system,the dollar would:

As a policy instrument,currency devaluation may be controversial since it:

The central bank of the United Kingdom could prevent the pound from appreciating by:

Table 15.1. The Market for Francs -Refer to Table 15.1.If monetary authorities fix the exchange rate at $0.10 per franc,there would be a:

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.

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

Under a pegged exchange-rate system,which does not explain why a country would have a balance-of-payments deficit?

A "dirty float" occurs when a nation used central bank intervention in the foreign exchange market to promote a depreciation of its currency's exchange value,thus gaining a competitive advantage compared to its trading partners.