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Int'l Bus.-BA251
Chapter 10-International Monetary System
Question | Answer |
---|---|
List the benefits of stable & predictable exchange rates? | improve accuracy of financial planning & reduce surprises of unexpected rates changes |
Discuss the law-of-one-price principle? | Identical item must have an identical price in all countries when expressed in a common currency |
Describe purchasing parity & the factors that affect exchange rates? | Relative ability of 2 nations' currencies to buy the same "basket" of goods in those 2 nations.Inflation: Money supply-monetary policy directly affects interest rates & money supply, employment-high employment raises wages whihc are embodied in consumer p |
Explain how the gold standard functioned? | International monetary system that linked nation's currencies to specific values of gold. 1700s-1939,reduced exchange-rate risk, restricted monetary policies, corrected trade imbalances, ended up "competitive devaluation" |
Discuss the experience with Brent Woods? | Internationl monetary system based on value of US dollar(1944-1973).fixed exchange rates,built-in flexibility,World Bank & IMF, ended by weak US dollar |
Describe today's international monetary system? | Managed float system, pegged exchange rates, currency board, European monetary system. |