Exam 18: The International Financial System

Everything else held constant,if a central bank makes an unsterilized sale of foreign assets,then the domestic money supply will ________ and the domestic currency will ________.

The monetary policy strategy that does NOT allow the policy to focus on domestic considerations is

The current international financial system is a managed float exchange rate system because

A central bank ________ of domestic currency and corresponding ________ of foreign assets in the foreign exchange market leads to an equal decline in its international reserves and the monetary base,everything else held constant.

Under a fixed exchange rate regime,if the domestic currency is initially overvalued,that is,below par,the central bank must intervene to purchase the ________ currency by selling ________ assets.

Under the current managed float exchange rate regime,countries with balance of payments ________ frequently do not want to see their currencies ________ because it makes foreign goods more expensive for domestic consumers and can stimulate inflation.

Since the abandonment of the Bretton Woods system,balance of payments considerations have become ________ important,and exchange rate considerations ________ important in the conduct of monetary policy.

If a central bank does not want to allow the domestic currency to appreciate,it will ________ international reserves by selling its currency,thereby ________ the monetary base and increasing the risk of higher inflation.

The United States chooses to have ________ and ________ and therefore,cannot have a fixed exchange rate at the same time.

Under a fixed exchange rate regime,if the domestic currency is initially ________,that is,________ par,the central bank must intervene to sell the domestic currency by purchasing foreign assets.

Because central banks have not been willing to give up their option of intervening in the foreign exchange market,the current international financial system can best be described as a

Everything else held constant,if a central bank makes a sterilized sale of foreign assets,then the domestic currency will

Which of the following is NOT a disadvantage of controls on capital outflows?

When a country forgoes its own currency and starts using another country's currency as its own,we say that this country has

This agency acts like an international lender of last resort to cope with financial instability.

The German central bank gained international reserves in the early 1970s because it sold ________ to prevent mark ________.

If a central bank does not want to see its currency ________ in value,it may pursue contractionary monetary policy to raise the domestic interest rate,thereby ________ its currency.

In response to the overvalued dollar in the early 1970s,the German Bundesbank bought ________ and sold ________ to keep the exchange rate fixed,gaining international reserves.

Under a fixed exchange rate regime,if the domestic currency is initially undervalued,that is,above par,the central bank must intervene to sell the ________ currency by purchasing ________ assets.

Because the United States was the reserve-currency country under the Bretton Woods system,it could run large balance of payments ________ without ________ significant amounts of international reserves.