Exam 16: The International Financial System

A central bank sale of ________ to purchase ________ in the foreign exchange market results in an equal rise in its international reserves and the monetary base.

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

The Bretton Woods system was a fixed exchange rate regime in which central banks bought and sold their own currencies to keep their exchange rates fixed.

An unsterilized intervention in which domestic currency is purchased by selling foreign assets leads to a rise in international reserves,a decrease in the money supply,and an appreciation of the domestic currency.

A current account ________ indicates that the United States is ________ its claims on foreign wealth.

Many believe that the statistical discrepancy is primarily the result of

An anchor currency provides the base for a floating exchange rate system.

A central bank ________ of domestic currency and corresponding ________ of foreign assets in the foreign exchange market leads to an equal ________ in its international reserves and the monetary base.

What features of the European Monetary Union caused problems during the global financial crisis?

In a fixed exchange rate system,a country whose currency is undervalued will lose international reserves.

The official reserve transactions balance is referred to as

A sterilized intervention leaves the money supply changed and has a direct way of affecting interest rates or the expected future exchange rate.

Holding other factors constant,which of the following would decrease the size of the U.S.current account deficit?

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

Which of the following policies is not part of the "policy trilemma"?

An argument that supports the view that the world needs an international lender of last resort such as the IMF is that

Under a fixed exchange rate regime,when the domestic currency is undervalued,the central bank must ________ the domestic currency to keep the exchange rate fixed; as a result,it ________ international reserves.

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.

Holding other factors constant,which of the following would increase the size of the U.S.current account deficit?

An unsterilized intervention in which domestic currency is sold to purchase foreign assets leads to