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

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

What guidelines must the World Bank follow in making loans? Discuss at least three of these guidelines and explain whether you believe these guidelines are appropriate.

What determines a country's borrowing power from the IMF?

Why was the gold standard suspended during World War I?

Under Bretton Woods, the euro became the vehicle of choice for settling most international transactions.

Which of the following was created by the Bretton Woods Agreement to facilitate the expansion and balanced growth of international trade and to promote exchange stability?

What was the purpose and result of the Plaza Accord?

A ________ refers to the official price of a currency in terms of gold.

The interest rate on soft loans is traditionally set at ________.

What is the difference between a country's export of services and its imports of services?

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.

________ are those that bear significant risk of not being repaid.

What was the Triffin Paradox?

Under the Bretton Woods system, all countries agreed to peg the value of their currency to the U.S. dollar.

When firms had faith in a country's pledge to exchange its currency for gold, how did most prefer to be paid?

The gold standard effectively created a floating exchange rate system.

Country X, a member of the IMF, needs to borrow money from the IMF. The IMF has agreed to the loan if Country X agrees to close insolvent merchant banks and lower tariffs on many goods. Which term refers to the restrictions imposed on the loan?

The ________ records the purchases and sales of assets between residents of one country and those of another country.

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.

The BOP is a useful tool for detecting signs of trouble that could lead to governmental trade restrictions.