Exam 20: The International Financial System

Under an exchange-rate targeting rule for monetary policy,a crawling peg ________.

The account that shows international transactions involving financial transactions (stocks,bonds,bank loans,etc.)is called the ________.

Explain and demonstrate graphically the situation of an overvalued exchange rate in a fixed exchange rate system.What alternative policies are available to eliminate the overvaluation of the exchange rate?

A monetary policy strategy that uses a fixed exchange rate regime that ties the value of a currency to the currency of a large,low inflation country is called ________ targeting.

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.

Emerging market countries are in effect between a rock and a hard place because ________.

Under a fixed exchange rate regime,if a country has an ________ exchange rate,then its central bank's attempt to keep its currency from appreciating will result in a ________ of international reserves.

Exchange-rate targeting is not an option for the U.S.because ________.

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

Capital ________ are Canadian purchases of foreign assets,and capital ________ are foreign purchases of American assets.

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

Under the Bretton Woods system,the United States was designated as the ________.

When a domestic currency is completely backed by a foreign currency and the note-issuing authority establishes a fixed exchange rate to this foreign currency,then the country is said to have ________.

Under a fixed exchange rate system,countries that ran large,persistent balance of payments surpluses would ________ international reserves,thereby pressuring them into ________ their exchange rate.

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

Exchange-rate targeting allows a central bank to ________,thus this will ________ the probability of policy developing a time-inconsistency problem.

Critics of the IMF contend that its lending in the ________ crisis,which was used to bail out foreign lenders,set the stage for the ________ crisis because these lenders expected to be bailed out if things went wrong and thus provided funds that were used to fuel excessive risk taking.

How would the Bank of Canada operate in a fixed exchange rate regime when the dollar is overvalued and undervalued? What are the effects on international reserves?

Because sterilized interventions mean offsetting open market operations,there is no impact on the monetary base and the money supply,and therefore a sterilized intervention ________.

The statistical discrepancy recorded in the Canadian balance of payments indicates ________.