#1
What is a fixed exchange rate system?
Rates are set by government and don't change
ExplanationGovernment determines and maintains currency exchange rates.
#2
Which international organization is responsible for overseeing the monetary system and providing financial assistance to member countries in times of need?
International Monetary Fund (IMF)
ExplanationIMF ensures global monetary stability and offers economic support.
#3
What is the term for a situation where a country intentionally lowers the value of its currency against other currencies?
Devaluation
ExplanationDeliberate reduction in a currency's value relative to others.
#4
What is the primary purpose of the International Monetary Fund (IMF) in the global economy?
Stabilizing exchange rates
ExplanationIMF works to maintain stability and balance in global currency values.
#5
What is the primary goal of the International Monetary System?
Stabilize exchange rates
ExplanationMaintaining stability in currency values globally.
#6
Which organization acts as the lender of last resort in the international monetary system?
International Monetary Fund (IMF)
ExplanationIMF provides financial assistance to countries facing economic crises.
#7
What is the Bretton Woods Agreement?
An agreement to regulate international monetary relations
ExplanationEstablished post-WWII monetary framework for global stability.
#8
What is a 'currency board'?
A monetary authority that issues a domestic currency at a fixed exchange rate
ExplanationCentralized entity maintaining a fixed exchange rate for a nation's currency.
#9
What is the term for a sudden and significant decrease in the value of a currency?
Currency crisis
ExplanationAbrupt decline in a currency's value leading to economic instability.
#10
In the context of exchange rate policies, what does the term 'dirty float' refer to?
Intervention in currency markets
ExplanationCentral bank interference to influence currency value.
#11
What is the term for a situation where a country's currency is worth more than its official exchange rate?
Overvaluation
ExplanationCurrency value exceeds its official exchange rate.
#12
What is the purpose of the Special Drawing Rights (SDRs) issued by the IMF?
To supplement member countries' official reserves
ExplanationAugmenting nations' reserve assets to address liquidity needs.
#13
Which country is known for adopting a managed float exchange rate system?
China
ExplanationChina allows market forces to influence currency value within certain limits.
#14
Under the gold standard, what determined the value of a currency?
The amount of gold held by the central bank
ExplanationCurrency value linked to the gold reserves backing it.
#15
What is the Plaza Accord, signed in 1985, primarily aimed at achieving?
Adjusting exchange rates
ExplanationMultilateral agreement to rebalance currency values for economic stability.
#16
What is the role of the Exchange Rate Mechanism (ERM) in the European Monetary System (EMS)?
Setting fixed exchange rates
ExplanationEstablishing and maintaining stable currency values among EMS members.