Exam 10: International Money System

________ involves using taxes and government spending to influence the money supply indirectly.

The principle that a difference in nominal interest rates supported by two countries' currencies will cause an equal but opposite change in their spot exchange rates is called the ________.

________ was the first nation to implement the gold standard.

Which of the following was created by the Bretton Woods Agreement to enforce the rules of the international monetary system?

Stable exchange rates improve the accuracy of financial planning.

The ________ was an accord among nations to create a new international monetary system based on the value of the U.S. dollar.

Explain the impact of interest rates on exchange rates and purchasing power.

Scenario: Just-for-Kids, Inc. Just-for-Kids, Inc. is a toys and clothes manufacturer based in San Diego, California. The company has received an inquiry from an overseas company to do business. Tom Dodd is the owner of the company researching the opportunity and how exchange rates will affect its international business activities. -How do you explain to Tom what devaluation in a target market means?

The ________ stipulates that an identical product must have an identical price in all countries when price is expressed in a common currency.

An exchange rate tells us whether a specific product will actually cost more or less in a particular country.

The primary disadvantage of the gold standard was that it increased exchange-rate risk.

The principle that the nominal interest rate is the sum of real interest rate and expected rate of inflation over a specific period is called the ________.

Scenario: Just-for-Kids, Inc. Just-for-Kids, Inc. is a toys and clothes manufacturer based in San Diego, California. The company has received an inquiry from an overseas company to do business. Tom Dodd is the owner of the company researching the opportunity and how exchange rates will affect its international business activities. -If the nation had raised and not lowered its currency's value, its actions would be called ________.

The international monetary system based on fixed exchange rates ended in ________.

The international monetary system in which nations linked the value of their paper currencies to specific values of gold is referred to as the ________.

An international monetary system in which nations linked the value of their paper currencies to specific values of gold was called the ________.

A government might devalue its currency for any of these reasons EXCEPT to ________.

In the earliest days of international trade, ________ was the internationally accepted currency for payments of goods and services.

Scenario: Sam Dearing, Budding International Financier Sam Dearing is a summer intern in the arbitrage department at a prestigious Wall Street firm. Sam is hoping to be offered a full-time position at the firm after he graduates from college, and therefore, Sam knows that he must demonstrate a strong understanding of how exchange rates work. -Sam also knows that ________.

Inflation is the result of the supply and demand for a currency.