Exam 2: The International Monetary System

A small economy country whose GDP is heavily dependent on trade with the United States could use a(n) ________ exchange rate regime to minimize the risk to their economy that could arise due to unfavorable changes in the exchange rate.

Of the following, which is NOT a trade-off that must be dealt with in any exchange rate regime?

The euro is an example of a rigidly fixed system, acting as a single currency for its member countries. However, the euro itself is an independently floating currency against all other currencies.

Bretton Woods required less in the way of cooperation among countries than did the gold standard.

Which of the following factors make it difficult for emerging market economies to choose a specific currency regime?

Since 2009 the IMF's exchange rate regime classification system uses a "de facto classification" methodology. Under this system, currencies that are predominantly market-driven are considered to be:

Among IMF member countries since 2010, the dominating exchange rate regime has been:

Under the terms of Bretton Woods, countries tried to maintain the value of their currencies to within 1% of a hybrid security made up of the U.S. dollar, British pound, and Japanese yen.

The countries that use the euro as their currency have:

Although the contemporary international monetary system is typically referred to as a "floating regime," it is clearly not the case for the majority of the world's nations.

Which of the following led to the eventual demise of the fixed currency exchange rate regime worked out at Bretton Woods?

Which of the following is NOT a required convergence criterion to become a full member of the European Economic and Monetary Union (EMU)?

Which of the following statements is NOT true?

The IMF's methodology for classifying exchange rate regimes today is based on the official policy statement of the respective governments, de jure classification.

According to the authors, what is the single most important mandate of the European Central Bank?

A review of the evolution of the Global Monetary System shows that capital flows dominate trade in which of the following eras EXCEPT:

The International Monetary Fund (IMF):

Members of the International Monetary Fund may settle transactions among themselves by transferring Special Drawing Rights (SDRs).

Explain how all exchange rate regimes must deal with the trade-off between rules and discretion, as well as between cooperation and independence. List and classified two International Monetary Systems based on these four quadrants.

List and explain three benefits the euro would generate for the states participating in the European Economic and Monetary Union.