Exam 7: The International Monetary System and the Balance of Payments

The World Bank and the International Monetary Fund were created as part of the ________.

Which of the following was a key element of the Baker Plan?

Dell Computers invests excess cash balances overnight in a London bank to earn a higher interest rate than it could earn in a New York bank. Dell is most likely making a(n) ________.

The ________ refers to an international monetary system in which countries agreed to buy or sell their paper currencies in exchange for gold on the request of any individual or firm and to allow the free export of gold.

What are the four types of assets included in the Official Reserves Account?

What was created by the Bretton Woods system?

The ________ is a double-entry bookkeeping system designed to measure and record all economic transactions between residents of one country and residents of all countries during a particular time period.

Because countries pegged their currencies to gold, the gold standard was a fixed exchange rate system.

The sale of a Mercedes-Benz from Germany to France would be recorded as a merchandise export in the ________ account of Germany's balance of payments.

The International Finance Corporation is charged with promoting the development of the private sector in developing countries.

Why did some countries deliberately devalue their currencies following the end of the gold standard?

A country can borrow up to ________ percent of its quota from the IMF?

Briefly explain how exchange rates are determined under a fixed exchange rate system and a flexible exchange rate system.

Why was the International Development Association created? What is the purpose of the IDA? Do you think its loan guidelines are fair? Why or why not?

The term ________ means that a currency's value is determined by the forces of supply and demand.

What was created by the gold standard?

The World Bank follows what is called a soft loan policy.

The official settlements balance records the net impact of the central bank's interventions in the foreign-exchange market in support of the local currency.

How was the Bretton Woods system beneficial for international firms? Does the IMF benefit international firms? Why or why not?

During the gold standard, the international monetary system was also called the dollar-based gold standard.