Business Final Exam
Chapter #10
International Monetary System: Institutional arrangements that countries adopt to govern exchange rates.
Floating exchange: exists when a country allows the foreign exchange market to determine the relative value of a currency.
Pegged exchange rate: means the value of the currency is fixed relative to a reference currency.
Fixed exchange: rate system exists when countries fix their currencies against each other.
Value of the currency: is determined by market forces.
The gold standard: had its origin in the use of gold coins as a medium of exchange, unit of account, and store of value. Is pegging currencies to gold and guaranteeing convertibility.
Gold per value: the amount of a currency needed to purchase one ounce of gold .
Balance-of-trade equilibrium: when the income its residents earn from exports is equal to the money its residents pay to other countries for imports. The Bretton Woods System: it established two multinational institutions: the International Monetary Fund (IMF) and the World Bank. The task of the IMF would be to maintain order in the international monetary system and that of the World Bank would be to promote general economic development.
The aim of the Bretton Woods System: was to try to avoid a repetition of that chaos through a combination of discipline and flexibility.
The official name for the World Bank is the International Bank for Reconstruction and Development. The bank lends money under two schemes: * Under the IBRD scheme * International Development Association (IDA)
Bretton Woods System worked well until the late 1960’s. It collapse when huge increases in welfare programs and the Vietnam War were financed by increasing the money supply.
The Floating Exchange Rate Regime: it was formalizes in January 1979 when IMF members met in Jamaica and agreed to the rules for the international monetary system that are in place today. The main elements of the Jamaica agreement include the
International Monetary System: Institutional arrangements that countries adopt to govern exchange rates.
Floating exchange: exists when a country allows the foreign exchange market to determine the relative value of a currency.
Pegged exchange rate: means the value of the currency is fixed relative to a reference currency.
Fixed exchange: rate system exists when countries fix their currencies against each other.
Value of the currency: is determined by market forces.
The gold standard: had its origin in the use of gold coins as a medium of exchange, unit of account, and store of value. Is pegging currencies to gold and guaranteeing convertibility.
Gold per value: the amount of a currency needed to purchase one ounce of gold .
Balance-of-trade equilibrium: when the income its residents earn from exports is equal to the money its residents pay to other countries for imports. The Bretton Woods System: it established two multinational institutions: the International Monetary Fund (IMF) and the World Bank. The task of the IMF would be to maintain order in the international monetary system and that of the World Bank would be to promote general economic development.
The aim of the Bretton Woods System: was to try to avoid a repetition of that chaos through a combination of discipline and flexibility.
The official name for the World Bank is the International Bank for Reconstruction and Development. The bank lends money under two schemes: * Under the IBRD scheme * International Development Association (IDA)
Bretton Woods System worked well until the late 1960’s. It collapse when huge increases in welfare programs and the Vietnam War were financed by increasing the money supply.
The Floating Exchange Rate Regime: it was formalizes in January 1979 when IMF members met in Jamaica and agreed to the rules for the international monetary system that are in place today. The main elements of the Jamaica agreement include the