FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 10: The International Monetary System

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Essay

Review LaterAdd Note

Review Later

Why did the Bretton Woods system fail?

Correct Answer

verified

The Bretton Woods system started to fall...

View Answer

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

When a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of a currency,a(n) _____ has occurred.

A) foreign debt crisis
B) banking crisis
C) currency crisis
D) exchange crisis

E) A) and B)
F) All of the above

Correct Answer

verified

Show Answer

Question 43

Essay

Review LaterAdd Note

Discuss the international monetary system.What are the major trading currencies?

What is a currency board? Why do countries choose this type of system? What are the disadvantages of this type of arrangement?

Because of the long-term implications of volatile exchange rates,firms should:

Describe how exchange rates have been since the collapse of the fixed exchange rate system in 1973.What factors account for the changes in exchange rates since that time?

The Asian meltdown began in mid-1997 in Japan when it became clear that several key Japanese financial institutions were on the verge of default.

Under a strict currency board system,interest rates rise until investors eventually find holding the local currency attractive again.

The IMF has been criticized because of all of the following reasons except:

MNEs can hedge against currency fluctuations by dispersing production to different locations around the globe.

The Bretton Woods agreement differed from the gold standard in that it:

IMF loan packages typically include conditions such as cuts in public spending,higher interest rates,and tight monetary policy.

The Plaza Accord,signed in 1985,suggested that it would be desirable for most major currencies to fall relative to the U.S.dollar.

Discuss the arguments for a floating exchange rate system.

Compare and contrast a pegged exchange system and a dirty float system of exchange rates.

When a country cannot service its foreign debt obligations,a banking crisis has occurred.

When the income a country's residents earn from exports is equal to the money its residents pay to other countries for imports,the country is said to:

Discuss the notion of moral hazard.What is the relationship between moral hazard and the IMF?

In 1997,the currencies of several Asian nations including South Korea,Indonesia,and Thailand lost between 50 percent between 80 percent of the value against the U.S.dollar over the period of a few months.

How does a floating exchange rate regime differ from a dirty float system? Why would a country choose a dirty float system over a free float?