ch11

ch11
Student: ___________________________________________________________________________

1.

The international monetary system refers to the institutional arrangements that govern exchange rates.
True False

2.

A pegged exchange rate means the value of a currency is fixed relative to a reference currency.
True False

3.

A dirty float occurs when a country uses pegged exchange rates to value its currency.
True False

4.

The gold standard called for fixed exchange rates against the U.S. dollar.
True False

5.

The amount of a currency needed to purchase one ounce of gold was referred to as the gold par value under the gold standard.
True False

6.

A country is said to be in balance-of-trade equilibrium when it produces all the goods needed for domestic consumption.
True False

7.

The agreement reached at Bretton Woods established the International Monetary Fund (IMF) and the
World Bank.
True False

8.

Implementing a fixed exchange rate regime increases the price inflation in countries.
True False

9.

World Bank offers low-interest loans to risky customers whose credit rating is often poor.
True False

10. IDA loans receive direct funding from the World Bank.
True False
11. The fixed exchange rate system established at Bretton Woods failed due to speculative pressures on the
U.S. dollar.
True False
12. Gold was declared as the formal reserve asset in the Jamaica agreement of 1976.
True False
13. IMF members were permitted to sell their own gold reserves at the market price in the Jamaica agreement. True False
14. The value of U.S dollar increased between 1980 and 1985 despite running a growing trade deficit.
True False
15. The rise in the value of the dollar gave U.S goods a competitive advantage over others between 1985 and
1988.
True False
16. Market forces have produced a stable dollar exchange rate under a floating exchange rate regime.
True False

17. Advocates of a floating exchange rate regime argue that removal of the obligation to maintain exchange