Exam 19: The International Financial System

The monetary policy strategy that provides an automatic rule for the conduct of monetary policy is ________.

Under the current managed float exchange rate regime, countries with ________ in their balance of payments frequently do not want to see their currencies ________ because it makes their goods more expensive abroad and foreign goods cheaper in their countries.

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.

In the early 1970s, the United States ran large balance of payments ________, causing an ________ dollar and an ________ German mark.

The seignorage for a government is greater for ________ than for ________.

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

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

The East Asia currency crisis in 1997 started in ________.

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

Economists closely follow the current account balance because they believe it can provide information on the future movement of ________.

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.

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

Of the following, the one that appears in the current account of the balance of payments is ________.

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

Countries with surpluses in their balance of payments frequently do not want to see their currencies ________ because it makes their goods ________ expensive abroad.

Critics of the IMF contend that its lending in the Mexican crisis, which was used to bail out foreign ________, set the stage for the ________ crisis because these ________ expected to be bailed out if things went wrong.

Under the Bretton Woods system, if IMF loans were insufficient to prevent ________ of a currency, then the country was allowed to devalue its currency by setting a new, ________ exchange rate.

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.

Explain an additional disadvantage for a country undergoing dollarization compared to a currency board or other exchange-rate targeting regimes.

A foreign exchange intervention with an offsetting open market operation that leaves the monetary base unchanged is called ________.