INTB 3355 Module 8 Exam Rated A+ Verified

INTB 3355 Module 8 Exam Rated A+ Verified An international (monetary/credit) system allows for the payments, currency exchanges, and cross-border movements of capital required for international transactions. - Answer- Monetary Gold has long been the trusted way for governments to measure the value of money. As trade increased, it became impractical to carry and store large amounts of gold. As a result, the gold _________ was established as a system of valuing currency. - Answer- Standard The talks at Bretton Woods in 1944 were the basis for establishment of the international _________ system. - Answer- monetary Under the Bretton Woods system, par value was based on gold and the currency of which country? - Answer- United States Which of the following has been the most used central reserve asset in the world following World War II? - Answer- U.S. dollar What system is made up of institutions and processes that allow for the cross-border movements of capital required for international transactions? - Answer- international monetary system A ______ exchange rate system allows currency values to fluctuate against one another based on supply and demand. - Answer- floating Under the _____ _____, each country set a number of units of its currency equal to an ounce of gold, and the ratios of these units of gold equivalence established the exchange rate between any two currencies. - Answer- Gold Standard Select all that apply The Bretton Woods system is also called the _________. (Check all that apply.) - Answer- gold exchange standard fixed-rate system What term is given to assets held by a nation's central bank that are used to back up liabilities? - Answer- reserves At the end of June 2018, roughly ____% of the world's reserve assets were held in U.S. dollars. - Answer- 62 True or false: In a floating exchange rate system, currency values are based on supply and demand in the foreign exchange markets. - Answer- True The adoption of the U.S. dollar in El Salvador, Panama, and Ecuador is an example of which currency exchange arrangement? - Answer- exchange arrangement with no separate legal tender Which currency exchange arrangement is in use when a group of countries adopt a common currency, such as the euro? - Answer- exchange arrangement with no separate legal tender Which currency exchange arrangement commits the country's government to holding foreign reserves of a specific currency in an amount equal to its domestic currency supply and to exchanging the two at a fixed rate? - Answer- currency board arrangement Which arrangement allows a currency's exchange rates with a basket of currencies to fluctuate around a fixed rate within a narrow band of less than 1%? - Answer- conventional fixed-peg arrangement Another name for the currency exchange arrangement known as a pegged exchange rate within a horizontal band is a __________. - Answer- stabilized arrangement Hong Kong's government is committed to holding U.S. dollars in an amount equal to its domestic currency supply and to exchanging the two at a fixed rate. This scenario is an example of which currency exchange arrangement? - Answer- currency board arrangement Which currency exchange arrangement allows a currency to be readjusted periodically at a fixed rate or in response to changes in indicators? - Answer- crawling peg Which type of currency exchange arrangement readjusts the country's currency to maintain fluctuation margins around a central rate? - Answer- crawling band The currency exchange arrangement known as the conventional fixed-peg arrangement allows for a fluctuation in fixed rates within (1% or 10%). - Answer- 1% Exchange rate fluctuations greater than 1% are allowed in which type of currency exchange arrangement? - Answer- stabilized arrangements Select all that apply What are the main roles of the Bank for International Settlements? (Check all that apply.) - Answer- a banker for central banks a center for research an agent for governments in international financial arrangements a forum for international monetary cooperation True or false: As the supply of a currency increases, the price of the currency decreases. - Answer- True Nicaragua's arrangement with the U.S. dollar is an example of a _________ currency exchange arrangement. - Answer- crawling peg Central banks may use (vehicle/intervention) currency to buy up domestic currency to reduce its supply in the market. - Answer- intervention In the London foreign exchange markets, the crawling band currency exchange arrangement is referred to as _____. - Answer- a snake in the tunnel What is the term for a currency that is quoted as dollars per unit of currency instead of units of currency per dollar? - Answer- reciprocal currency Which institution is known as the most discreet financial institution in the world? - Answer- Bank for International Settlements Select all that apply Which of the following statements are accurate regarding currency value fluctuation? (Check all that apply.) - Answer- Central banks allow most major currencies to fluctuate freely against one another. Central banks buy and sell large amounts of currency in order to affect the supply and demand of that particular currency. Match the currency with the appropriate definition. Vehicle Currency Intervention Currency - Answer- currency used for international trade or investment currency used by central banks to intervene in the foreign currency exchange markets The amount of money in circulation within the United States is established by the government through a _________ policy. - Answer- monetary Which term refers to the process of simultaneously buying and selling to make a profit with no risk? - Answer- arbitrage