Exam 15: Exchange-rate Systems and Currency Crises

Unlike floating exchange rates,fixed exchange rates are not characterized by par values and central bank intervention in the foreign exchange market.

Under a floating exchange-rate system,if the U.S.dollar depreciates against the Swiss franc:

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

Which exchange-rate mechanism is intended to insulate the balance of payments from short-term capital movements while providing exchange rate stability for commercial transactions?

Under the historic adjustable pegged exchange-rate system,member countries were permitted to correct persistent and sizable payment deficits (i.e.,fundamental disequilibrium)by:

An objective of the dollarization of the Mexican economy would be to:

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

A market-determined decrease in the dollar price of the pound is associated with:

Rather than constructing their own currency baskets,many nations peg the value of their currencies to a currency basket defined by the International Monetary Fund.Which of the following illustrates this basket?

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

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.

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

If Mexico dollarizes its economy,it essentially

When pursued over the long run,a policy of increasing the domestic money supply to offset an appreciation of the home country's currency results in inflation and a decrease in home-country competitiveness in key industries.

It is universally recognized that Europe fulfills the conditions of an optimum currency area.

A potential disadvantage of freely floating exchange rates is that there would:

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

Proponents of freely floating exchange rates maintain that:

Which exchange-rate system does not require monetary reserves for official exchange-rate intervention?

Under a system of floating exchange rates,a U.S.trade deficit with Japan will cause: