Exam 3: Financial Environment

Each country has its own currency through which it expresses the value of its products.

Foreign exchange is not the monetary mechanism that allows the transfer of funds from one nation to another.

Computer automated float allows for a limited amount of government intervention to soften sudden swings in the value of a currency.

One of the most fundamental determinants of the exchange rate is ______________ whereby the exchange rate between the currencies of two countries is in equilibrium when it equates the prices of a basket of goods and services in both countries.

In 1994, China's devaluation of its currency was a cause of the Asian financial crisis.

In 1969, the IMF created ____________________________, which are special account entries on the IMF books designed to provide additional liquidity to support growing world trade.

The value of SDRs is determined by a weighted average of a basket of four currencies which are: the U.S.dollar, the Japanese yen, the euro, and British pound.

Thailand lost almost 60 percent of its baht's purchasing power in dollar terms in 1997.