Exam 30: The International Financial System

China began pegging its currency,the yuan,to the dollar in 1994.Because the yuan has been ________ at the pegged exchange rate,the Chinese government ________ its reserves of dollars as the government purchased more ________ to maintain the pegged exchange rate.

If currencies around the world are based on the gold standard,and the EU lowers the amount of gold for which the euro will trade,then holding all else constant,

Figure 30-9 -Refer to Figure 30-9.According to the graph,is there a surplus or shortage of Saudi Arabian riyal in exchange for U.S.dollars? To maintain the pegged exchange rate,will the Saudi central bank need to buy riyal in exchange for dollars or sell riyal in exchange for dollars? How many riyal will the Saudi central bank need to buy or sell?

If a country sets a pegged exchange rate that is above the equilibrium exchange rate,how can the country maintain the peg?

Figure 30-7 -Refer to Figure 30-7.If the Indian government pegs its currency to the dollar at a value above $.02/rupee,we would say the currency is

Figure 30-1 -Refer to Figure 30-1.Which of the following would cause the change depicted in the figure above?

Figure 30-6 -Refer to Figure 30-6.Which of the following would cause the change depicted in the figure above?

How were countries whose industries competed with Chinese industry affected by a yuan that was pegged to the dollar?

Countries that use the euro as their currency face similar concerns as countries did during the years of the gold standard in that each are (were)

In order to reduce or eliminate a chronic shortage in the market for a currency under a fixed exchange rate system,we must devalue the currency.

The "Big Mac Theory of Exchange Rates" tests the accuracy of the purchasing power parity theory.In July 2015,the Economist reported that the average price of a Big Mac in the United States was $4.79.In Mexico,the average price of a Big Mac at that time was 49 pesos.If the exchange rate between the dollar and the peso was 13.60 pesos per dollar,explain how it would be profitable to buy Big Macs in Mexico instead of in the United States.

The United States abandoned the ________ because the government wanted to rapidly expand the money supply in response to the Great Depression.

You decide to work in Japan for the next 10 years,accumulate some savings,then move back to the United States and convert your savings from yen to dollars.At the time of your move,economists predict that consumers in the United States have reignited their love of Japanese products,especially hybrid cars,and expect that this strong preference for Japanese products will continue for the next decade.How should this influence your decision to work and save in Japan?

When the value of a currency is determined ________,the exchange rate system is defined as managed float.

The Bretton Woods system was established in 1944 and remained in place until the early 1970s.

Foreign purchases of stocks and bonds issued by U.S.corporations ________ between 1995 and 2007 and ________ in 2014.

Under the gold standard,the government must have enough gold to back up any

An increase in the value of the U.S.dollar will