Exam 18: The International Financial System

The Bretton Woods system was one in which central banks

The Bretton Woods agreement created the ________,which was given the task of promoting the growth of world trade by setting rules for the maintenance of fixed exchange rates and by making loans to countries that were experiencing balance of payments difficulties.

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

Both France and the United Kingdom successfully used exchange-rate targeting to lower inflation in the late 1980s and early 1990s by tying the value of their currencies to the

Under the Bretton Woods system,a country running a balance of payments ________ lost international reserves,and had to implement ________ monetary policy to strengthen its currency.

Under the Exchange Rate Mechanism of the European Monetary System,when the British pound depreciated below its lower limit against the German mark,the Bank of England was required to buy ________ and sell ________,thereby ________ international reserves.

An advantage of an international lender of last resort is its ability to prevent ________,in which a successful speculative attack on one currency leads to attacks on others; its disadvantage is the problem of ________ if creditors expect to be protected if a crisis occurs.

The monetary policy strategy that directly ties down the price of internationally traded goods is

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?

A balance of payments ________ is associated with a loss of international reserves,while a balance of payments ________ is associated with a gain.

Under a fixed exchange rate regime,if a central bank must intervene to purchase the ________ currency by selling ________ assets,then,like an open market sale,this action reduces the monetary base and the money supply,causing the interest rate on domestic assets to rise.

If the current account balance shows a surplus,and the capital account also shows a surplus,then the official reserve transactions balance

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

China chooses to have ________ and ________ and therefore,cannot have free capital mobility at the same time.

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

The monetary policy strategy that results in the loss of an independent monetary policy is

Under the Bretton Woods system,a country running a balance of payments surplus ________ international reserves,and had to implement ________ monetary policy to weaken its currency.

Which of the following appears in the capital account part of the balance of payments?

Which of the following does not appear in the current account part of the balance of payments?