Question 1

Describe the role of commercial banks in the global financial sector. Provide a brief description of the activities performed by three different types of commercial banks.

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Question 2

Explain the belief that a persistent trade deficit is harmful to the national economy. Why was the Bretton Woods Agreement initiated and why was it terminated?

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Question 3

Describe four principles or organizations brought about by the Bretton Woods Agreement that remain important to international business and trade today. Why does the integration of financial and monetary activity worldwide continue to grow?

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Question 4

Explain the duties of central banks. How do central banks, such as the Federal Reserve, implement national monetary policies?

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Question 5

In a short essay, describe the underlying reasons for inflation. Provide an example of a nation that faced a high rate of inflation.

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Question 6

Describe the two main types of foreign exchange management used today. Provide examples of nations which use each type of system. What are the benefits of each system?

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Question 7

Explain why international financial and monetary activities are becoming more integrated. What are the risks and benefits of the growing integration of the two activities?

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Question 8

Explain the differences between the international monetary system and the International Monetary Fund. What are the three major types of crises most frequently addressed by the International Monetary Fund?

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Question 9

Explain the concept of currency risk. How can inflation and interest rates create currency risk?

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Quiz 11: The International Monetary and Financial Environment