INTB 3350 Test 2 - Ch. 7: The International Monetary System...

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International Monetary System – Establishes the rules by which countries value and exchange their currencies. Balance of Payments (BOP) Accounting System – Records international transactions and supplies vital information about the health of a national economy and likely changes in its fiscal and monetary policies. Gold Standard – Which countries agree to buy or sell their paper currencies in exchange for gold on the request of any individual or firm and, was the international monetary system in place in the nineteenth century. Exchange Rate – The price of currency in terms of a second currency. Fixed Exchange Rate System – The price of a given currency does not change relative to each other currency. Pegged – “Tied” the value of its currency in gold. Par Value – Official price in terms of gold. Sterling-Based Gold Standard – The international monetary system was frequently referred to this. Float – The pound’s value would be determined by the forces of supply and demand. Beggar-Thy-Neighbor Policy – Nations deliberately devalued their currencies in the hope of making their goods cheaper in the world marketplace. The International Bank for Reconstruction and Development (The World Bank ) – Established in 1945 to finance reconstruction of war-torn European economies, and when this was completed, focused on building the economies of lesser-developed nations. World Bank Group – The World Bank has created three affiliated organizations consisting of: the International Development Association, the International Finance Corporation, and the Multilateral Investment Guarantee Agency. Hard Loan Policy – It may make a loan only if there is a reasonable expectation that the loan will be repaid. International Development Association (IDA) – Established in response to criticism from poorer countries that World Bank policies favored countries well along the path to economic development. Soft Loans – Loans that bear some significant risk of not being repaid. International Finance Corporation (IFC) – Charged with promoting the development of the private sector in developing countries. Multilateral Investment Guarantee Agency (MIGA) – Encourages direct investment in developing countries by offering private investors insurance against noncommercial risk. Regional Development Banks – Promote the economic development of poorer countries within their region. International Monetary Fund (IMF) – Primary responsibility is to oversee the functioning of the international monetary system. Quota – To join the IMF, countries must pay a deposit called the quota. IMF Conditionality – IMF policy allows additional borrowings contingent on the member country’s agreeing to IMF-imposed restrictions. Convertible Currencies
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INTB 3350 Test 2 - Ch. 7: The International Monetary System...

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