Exam 9: Global Money and Banking: Where Central Banks Fit Into the World Economy

In the context of recent events that have adversely affected nations participating in the European Monetary and Economic Union, "PIIGS" refers to two connected issues: Porfolio Interdependence and Integration of Global Services.

Which of the following types of effects have some economists proposed as a reason why sterilized interventions might influence interest rates and other economic variables?

A stimulus to economic activity in one nation that results from an increase in economic activity in another country is called a locomotive effect.

Acting as a fiscal agent is a central bank's role as an agent of its government's finance ministry or treasury department, in which the central bank issues, services, and redeems debts on the government's behalf.

Central bank interventions to support or speed along the current trend in the market exchange value of its nation's currency entail:

Which one of the following countries is a "PIIGS" nation?

The world-s first central bank was established in England.

An example of a sterilized foreign exchange market intervention is a purchase of foreign exchange reserves that is exactly matched by an open market purchase.

The M1 monetary aggregate includes which of the following?

If a central bank sells $10 million in foreign exchange reserves, sterilizing its intervention requires ____________ in domestic credit in order to _________ the monetary base.

An exchange rate adjustment resulting from changes in government or central bank holdings of foreign currency denominated financial instruments that influence the equilibrium prices of the instruments is known as the announcement effect.

Economists refer to the development of institutions and procedures through which central banks share data and inform one another about their policy objectives and strategies as:

A central banking function in which the central bank stands willing to extend credit to any temporarily illiquid but otherwise solvent banking institution to prevent its illiquid position from leading to a general loss of confidence in that institution is known as:

Central bank adjustments of an interest rate on advances extended at an above-market interest rate constitute:

A set of nations that opt to utilize a common currency is called a free-currency area.

Structural interdependence involves interconnectedness of national markets for goods, services, and financial assets causing events in one nation to affect the economies of other nations.

Economists refer the joint determination of monetary policies by a group of central banks for the intended combined benefit of the nations they represent as international policy cooperation.

A geographic area within which labor is sufficiently mobile to permit speedy adjustments to payment imbalances and regional unemployment to permit exchange rates to be fixed and a common currency to be adopted is known as an optimal

A beggar-thy-neighbor effect arises when an expansionary policy action in one nation causes a _________ effect on another nation-s economy due to structural __________.

The monetary base includes which of the following?