Question 1

Under the current monetary regime, volatility of currency rates and misalignment of currency rates both occur regularly.

Accepted Answer

Under the current floating exchange rate system, currency rates are determined by market forces, leading to regular fluctuations in exchange rates. Additionally, misalignment of currency rates can occur when exchange rates do not accurately reflect the economic fundamentals of a country.

Question 2

An "optimum currency area" includes labor mobility.

Accepted Answer

Labor mobility, or the ability of workers to easily move from one region to another, is considered an important factor in determining whether a group of countries is an optimal currency area. This helps to ensure that labor resources can be efficiently allocated across the region, reducing disparities in employment and wages between different areas.

Question 3

The______________ records the net sum of debit and credit transactions that residents, firms, and governments have with the rest of the world over a one-year period.

Accepted Answer

The answer of The______________ records the net sum of debit...

Question 4

A government uses ___________________ to deal with a balance of payments deficit by lowering government spending and raising taxes.

Accepted Answer

The answer of A government uses ___________________ to deal with...

Question 5

In the ___________________ regime, central banks held their reserves in gold and major currencies, and each central bank fixed its currency exchange rate to a key currency with a fixed gold price.

Accepted Answer

The answer of In the ___________________ regime, central banks held...

Question 6

The IMF ensures that borrowers must agree to adopt specific economic policies through ______________ on its loans.

Accepted Answer

The answer of The IMF ensures that borrowers must agree...

Question 7

______________ refers to the ease with which an asset can be used in making payments.

Accepted Answer

The answer of ______________ refers to the ease with which...

Question 8

The______________ dilemma refers to the fact that the liquidity and confidence functions of a key currency can come into conflict.

Accepted Answer

The answer of The______________ dilemma refers to the fact that...

Question 9

National currencies traded and deposited in banks outside the home country are called ________________.

Accepted Answer

The answer of National currencies traded and deposited in banks...

Question 10

What options does a country have in dealing with a balance of payments deficit? Explore the tradeoffs between the monetarist and Keynesian approaches.

Accepted Answer

The answer of What options does a country have in...

Question 11

Do you think the U.S. deficit and foreign debt problems pose an economic and geopolitical threat to the country and to global finance? Why does the United States have these persistent problems?

Accepted Answer

The answer of Do you think the U.S. deficit and...

Question 12

Why was the Bretton Woods monetary regime unsustainable, and what role did the Triffin Dilemma and the eurocurrency market have in the breakdown of the regime?

Accepted Answer

The answer of Why was the Bretton Woods monetary regime...

Question 13

What was the reason for creating the SDR, and what role does it play in stabilizing the global monetary system?

Accepted Answer

The answer of What was the reason for creating the...

Question 14

What have the IMF's functions been in the global monetary regime? How did the shift from U.S. to multilateral management, and from pegged to floating exchange rates affect the role of the IMF in the global monetary regime?

Accepted Answer

The answer of What have the IMF's functions been in...

Question 15

What is the "Unholy Trinity"? Select a case study country and examine its macroeconomic indicators including the exchange rate over the past decade. How does the evidence illustrate the dilemmas inherent in the Trinity?

Accepted Answer

The answer of What is the "Unholy Trinity"? Select a...

Question 16

How much influence have DCs and LDCs had in IMF decision-making? Do you think this is likely to change in the future and why?

Accepted Answer

The answer of How much influence have DCs and LDCs...

Question 17

Why was the euro zone formed, and what are its current challenges?

Accepted Answer

The answer of Why was the euro zone formed, and...

Question 18

Are the euro, the Chinese renminbi, and/or the SDR likely to pose a challenge to the U.S. dollar as the key international currency? Explain your answers.

Accepted Answer

The answer of Are the euro, the Chinese renminbi, and/or...

Question 19

Explain the concept of the US's "exorbitant privilege" and what it entails. Do think it will fade over time? Why or why not? What would be the potential causes and effects of its demise?

Accepted Answer

The answer of Explain the concept of the US's "exorbitant...

Quiz 6: International Monetary Relations